Document:

<PAGE>

                                                                     EXHIBIT 4.1

                         UNIVERSAL DETECTION TECHNOLOGY

                          2008 - EQUITY INCENTIVE PLAN

<PAGE>

                         UNIVERSAL DETECTION TECHNOLOGY
                          2008 - Equity Incentive Plan
                          ----------------------------

         Universal Detection Technology, Inc. hereby adopts the 2008 - Equity
Incentive Plan, effective as of February 6, 2008, as follows:

                                   SECTION 1
                        BACKGROUND, PURPOSE AND DURATION

         1.1 BACKGROUND AND EFFECTIVE DATE. The Plan provides for the granting
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares.
The Plan is adopted and effective as of February 6, 2008. The Company will seek
stockholder approval in the manner and to the degree required under Applicable
Laws. If the Company fails to obtain stockholder approval of the Plan within
twelve (12) months after the date this Plan is adopted by the Board, pursuant to
Section 422 of the Code, any Option granted as an Incentive Option at any time
under the Plan will not qualify as an Incentive Option within the meaning of the
Code and will be deemed to be a Non-Statutory Option.

         1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
success, and enhance the value, of the Company by aligning the interests of
Participants with those of the Company's shareholders, and by providing
Participants with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of outstanding individuals, upon whose
judgment, interest, and special effort the success of the Company largely is
dependent.

         1.3 DURATION OF THE PLAN. The Plan shall commence on the date specified
in Section 1.1 and subject to Section 12 (concerning the Board's right to amend
or terminate the Plan), shall remain in effect thereafter.

                                   SECTION 2
                                   DEFINITIONS

         The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:

         2.1 "1934 ACT" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the Exchange Act or regulation thereunder
shall include such section or regulation, any valid regulation promulgated under
such section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such section or regulation.

         2.2 "AFFILIATE" means any corporation or any other entity (including,
but not limited to, partnerships and joint ventures) controlling, controlled by,
or under common control with the Company (e.g., a parent or subsidiary of the
Company).

         2.3 "AFFILIATED SAR" means an SAR that is granted in connection with a
related Option, and which automatically will be deemed to be exercised at the
same time that the related Option is exercised.

         2.4 "APPLICABLE LAWS" means the requirements relating to the
administration of equity plans under U. S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on
which the Shares are listed or quoted and the applicable laws of any foreign
country or jurisdiction where Awards are, or will be, granted under the Plan.

                                      -1-
<PAGE>

         2.5 "AWARD" means, individually or collectively, a grant under the Plan
of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units, or Performance Shares.

         2.6 "AWARD AGREEMENT" means the written agreement setting forth the
terms and provisions applicable to each Award granted under the Plan.

         2.7 "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors of the
Company.

         2.8 "CHANGE IN CONTROL" is defined in Section 15.4.

         2.9 "CODE" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.

         2.10 "COMMITTEE" means the committee appointed by the Board to
administer the Plan pursuant to Section 3.1, or if no committee has been so
appointed, then Committee means the Board.

         2.11 "COMPANY" means Universal Detection Technology, a California
corporation, or any successor thereto.

         2.12 "CONSULTANT" means an individual who provides bona fide services
to the Company and/or an Affiliate.

         2.13 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.

         2.14 "DISABILITY" means a permanent and total disability within the
meaning of Code Section 22(e)(3).

         2.15 "EMPLOYEE" means an employee of the Company or of an Affiliate,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan.

         2.16 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific section of ERISA shall include such section,
any valid regulation promulgated thereunder, and any comparable provision of any
future legislation amending, supplementing or superseding such section.

         2.17 "FAIR MARKET VALUE" means as of any date, the value of a Share
determined as follows:

              (a) If the Shares are listed on any established stock exchange or
a national market system, its Fair Market Value shall be the closing sales price
for such Share (or the closing bid, if no sales were reported) as quoted on such
exchange or system on the day of, or the last market trading day prior to, the
day of determination, as reported in The Wall Street Journal or such other
source as the Committee deems reliable;

              (b) If the Shares are regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of the Share
shall be the mean between the high bid and low asked prices for the Shares on
the day of, or the last market trading day prior to, the day of determination,
as reported in The Wall Street Journal or such other source as the Committee
deems reliable; or

                                      -2-
<PAGE>

              (c) the Fair Market Value shall be determined in good faith by the
Committee.

         2.18 "FREESTANDING SAR" means a SAR that is granted independently of
any Option.

         2.19 "INCENTIVE STOCK OPTION" OR "ISO" means an option to purchase
Shares, which is designated as an Incentive Stock Option and is intended to meet
the requirements of Section 422 of the Code.

         2.20 "NONQUALIFIED STOCK OPTION" means an option to purchase Shares
which is not intended to be an Incentive Stock Option.

         2.21 "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option.

         2.22 "OPTION PRICE" means the price at which a Share may be purchased
pursuant to an Option.

         2.23 "PARTICIPANT" means an Employee, Consultant or Director who has an
outstanding Award.

         2.24 "PERFORMANCE SHARE" means an Award granted to an Employee pursuant
to Section 8 having an initial value equal to the Fair Market Value of a Share
on the date of grant.

         2.25 "PERFORMANCE UNIT" means an Award granted to an Employee pursuant
to Section 8 having an initial value (other than the Fair Market Value of a
Share) that is established by the Committee at the time of grant.

         2.26 "PERIOD OF RESTRICTION" means the period during which the transfer
of Shares of Restricted Stock are subject to restrictions.

         2.27 "PLAN" means the Universal Detection Technology 2008 - Equity
Incentive Plan, as set forth in this instrument and as hereafter amended from
time to time.

         2.28 "RESTRICTED STOCK" means an Award granted to a Participant
pursuant to Section 7.

         2.29 "RETIREMENT" means, in the case of an Employee, a Termination of
Employment by reason of the Employee's retirement at or after age 62.

         2.30 "RULE 16B-3" means Rule 16b-3 promulgated under the 1934 Act, and
any future regulation amending, supplementing or superseding such regulation.

         2.31 "SECTION 16 PERSON" means a person who, with respect to the
Shares, is subject to Section 16 of the 1934 Act.

         2.32 "SHARES" means the shares of common stock of the Company.

         2.33 "STOCK APPRECIATION RIGHT" OR "SAR" means an Award, granted alone
or in connection with a related Option, that pursuant to the terms of Section 7
is designated as an SAR.

                                      -3-
<PAGE>

         2.34 "SUBSIDIARY" means any "subsidiary corporation" (other than the
Company) as defined in Code Section 424(f).

         2.35 "TANDEM SAR" means an SAR that is granted in connection with a
related Option, the exercise of which shall require forfeiture of the right to
purchase an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the same extent).

         2.36 "TERMINATION OF EMPLOYMENT" means a cessation of the
employee-employer or director or other service arrangement relationship between
an Employee, Consultant or Director and the Company or an Affiliate for any
reason, including, but not by way of limitation, a termination by resignation,
discharge, death, Disability, Retirement, or the disaffiliation of an Affiliate,
but excluding any such termination where there is a simultaneous reemployment or
re-engagement by the Company or an Affiliate.

                                   SECTION 3
                                 ADMINISTRATION

         3.1 THE COMMITTEE. The Plan shall be administered by the Board of
Directors or by a committee of the Board that meets the requirements of this
Section 3.1 (hereinafter referred to as "THE COMMITTEE"). The Committee shall
consist of not less than two (2) Directors. The members of the Committee shall
be appointed from time to time by, and shall serve at the pleasure of, the Board
of Directors. At such time as the Company has independent directors, any
Committee shall be comprised solely of Directors who are both "outside
directors" under Rule 16b-3 and "independent directors" under the requirements
of any national securities exchange or system upon which the Shares are then
listed and/or traded.

         3.2 AUTHORITY OF THE COMMITTEE. The Committee shall have all powers and
discretion necessary or appropriate to administer the Plan and to control its
operation, including, but not limited to, the power (a) to determine which
Employees, Consultants and Directors shall be granted Awards, (b) to prescribe
the terms and conditions of such Awards, (c) to interpret the Plan and the
Awards, (d) to adopt rules for the administration, interpretation and
application of the Plan as are consistent therewith, and (e) to interpret, amend
or revoke any such rules.

                  The Committee, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or any part of its authority and
powers under the Plan to one or more directors and/or officers of the Company;
PROVIDED, HOWEVER, that the Committee may not delegate its authority and powers
with respect to Section 16 Persons.

         3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee shall be final, conclusive, and binding on all persons, and shall be
given the maximum deference permitted by law.

                                   SECTION 4
                           SHARES SUBJECT TO THE PLAN

         4.1 SHARES AVAILABLE.

              4.1.1 MAXIMUM SHARES AVAILABLE UNDER PLAN. The aggregate number of
Shares available for issuance under the Plan may not exceed Three Hundred
Million (300,000,000) Shares.

                                      -4-
<PAGE>

              4.1.2 ADJUSTMENTS. All Share numbers in this Section 4.1 are
subject to adjustment as provided in Section 15.

         4.2 NUMBER OF SHARES. The following rules will apply for purposes of
the determination of the number of Shares available for grant under the Plan:

              (a) While an Award is outstanding, it shall be counted against the
authorized pool of Shares, regardless of its vested status.

              (b) The grant of an Option or Restricted Stock shall reduce the
Shares available for grant under the Plan by the number of Shares subject to
such Award.

              (c) The grant of a Tandem SAR shall reduce the number of Shares
available for grant by the number of Shares subject to the related Option (i.e.,
there is no double counting of Options and their related Tandem SARs); PROVIDED,
HOWEVER, that, upon the exercise of such Tandem SAR, the authorized Share pool
shall be credited with the appropriate number of Shares representing the number
of shares reserved for such Tandem SAR less the number of Shares actually
delivered upon exercise thereof or the number of Shares having a Fair Market
Value equal to the cash payment made upon such exercise.

              (d) The grant of an Affiliated SAR shall reduce the number of
Shares available for grant by the number of Shares subject to the SAR, in
addition to the number of Shares subject to the related Option; provided,
however, that, upon the exercise of such Affiliated SAR, the authorized Share
pool shall be credited with the appropriate number of Shares representing the
number of shares reserved for such Affiliated SAR less the number of Shares
actually delivered upon exercise thereof or the number of Shares having a Fair
Market Value equal to the cash payment made upon such exercise.

              (e) The grant of a Freestanding SAR shall reduce the number of
Shares available for grant by the number of Freestanding SARs granted; PROVIDED,
HOWEVER, that, upon the exercise of such Freestanding SAR, the authorized Share
pool shall be credited with the appropriate number of Shares representing the
number of shares reserved for such Freestanding SAR less the number of Shares
actually delivered upon exercise thereof or the number of Shares having a Fair
Market Value equal to the cash payment made upon such exercise.

              (f) The Committee shall in each case determine the appropriate
number of Shares to deduct from the authorized pool in connection with the grant
of Performance Units and/or Performance Shares.

              (g) To the extent that an Award is settled in cash rather than in
Shares, the authorized Share pool shall be credited with the appropriate number
of Shares having a Fair Market Value equal to the cash settlement of the Award.

         4.3 LAPSED AWARDS. If an Award is cancelled, terminates, expires, or
lapses for any reason (with the exception of the termination of a Tandem SAR
upon exercise of the related Option, or the termination of a related Option upon
exercise of the corresponding Tandem SAR), any Shares subject to such Award
again shall be available to be the subject of an Award.

                                   SECTION 5
                                  STOCK OPTIONS

         5.1 GRANT OF OPTIONS. Options may be granted to Employees, Consultants
and Directors at any time and from time to time, as determined by the Committee
in its sole discretion. The Committee, in its sole discretion, shall determine
the number of Shares subject to Options granted to each Participant. The
Committee may grant ISOs, NQSOs, or a combination thereof.

                                      -5-
<PAGE>

         5.2 AWARD AGREEMENT. Each Option shall be evidenced by an Award
Agreement that shall specify the Option Price, the expiration date of the
Option, the number of Shares to which the Option pertains, any conditions to
exercise of the Option, and such other terms and conditions as the Committee, in
its discretion, shall determine. The Award Agreement also shall specify whether
the Option is intended to be an ISO or a NQSO.

         5.3 OPTION PRICE. Subject to the provisions of this Section 5.3, the
Option Price for each Option shall be determined by the Committee in its sole
discretion.

              5.3.1 NONQUALIFIED STOCK OPTIONS. In the case of a Nonqualified
Stock Option, the Option Price shall be not less than one hundred percent (100%)
of the Fair Market Value of a Share on the date that the Option is granted.

              5.3.2 INCENTIVE STOCK OPTIONS. In the case of an Incentive Stock
Option, the Option Price shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share on the date that the Option is granted;
PROVIDED, HOWEVER, that if at the time that the Option is granted, the Employee
(together with persons whose stock ownership is attributed to the Employee
pursuant to Section 424(d) of the Code) owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any of
its Subsidiaries, the Option Price shall be not less than one hundred and ten
percent (110%) of the Fair Market Value of a Share on the date that the Option
is granted.

              5.3.3 SUBSTITUTE OPTIONS. Notwithstanding the provisions of
Sections 5.3.1 and 5.3.2, in the event that the Company or an Affiliate
consummates a transaction described in Section 424(a) of the Code (e.g., the
acquisition of property or stock from an unrelated corporation), persons who
become Employees, Consultants or Directors on account of such transaction may be
granted Options in substitution for options granted by their former employer. If
such substitute Options are granted, the Committee, in its sole discretion, may
determine that such substitute Options shall have an exercise price less than
100% of the Fair Market Value of the Shares on the date the Option is granted.

         5.4 EXPIRATION OF OPTIONS. Unless the applicable stock option agreement
provides otherwise, each Option shall terminate upon the first to occur of the
events listed in Section 5.4.1, subject to Section 5.4.2.

              5.4.1 EXPIRATION DATES.

                   (a) The date for termination of the Option set forth in the
Award Agreement;

                   (b) The expiration of ten years from the date the Option was
granted, or

                   (c) The expiration of three months from the date of the
Participant's Termination of Employment for a reason other than the
Participant's death, Disability or Retirement, or

                   (d) The expiration of twelve months from the date of the
Participant's Termination of Employment by reason of Disability, or

                   (e) The expiration of twelve months from the date of the
Participant's death, if such death occurs while the Participant is in the employ
or service of the Company or an Affiliate.

                                      -6-
<PAGE>

              5.4.2 COMMITTEE DISCRETION. The Committee shall provide, in the
terms of each individual Option, when such Option expires and becomes
unexercisable. After the Option is granted, the Committee, in its sole
discretion may extend the maximum term of such Option. The foregoing
discretionary authority is subject to the limitations and restrictions on
Incentive Stock Options set forth in Section 5.8.

         5.5 EXERCISE OF OPTIONS. Options granted under the Plan shall be
exercisable at such times, and subject to such restrictions and conditions, as
the Committee shall determine in its sole discretion. After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option.

         5.6 PAYMENT. The Committee shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the
case of an Incentive Stock Option, the Committee shall determine the acceptable
form of consideration at the time of grant. Such consideration may consist
entirely of:

              (a) cash;

              (b) check;

              (c) full recourse promissory note;

              (d) other Shares which (i) in the case of Shares acquired upon
exercise of an Option, have been owned by the Participant for more than six (6)
months on the date of surrender, and (ii) have a Fair Market Value on the date
of surrender equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised;

              (e) consideration received by the Company from a licensed broker
under a cashless exercise program implemented by the Company to facilitate "same
day" exercises and sales of Options;

              (f) a reduction in the amount of any Company liability to the
Participant, including any liability attributable to the Participant's
participation in any Company-sponsored deferred compensation program or
arrangement;

              (g) any combination of the foregoing methods of payment; or

              (h) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

         5.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of an Option,
as it may deem advisable, including, but not limited to, restrictions related to
Federal securities laws, the requirements of any national securities exchange or
system upon which such Shares are then listed and/or traded, and/or any blue sky
or state securities laws.

         5.8 CERTAIN ADDITIONAL PROVISIONS FOR INCENTIVE STOCK OPTIONS.

              5.8.1 EXERCISABILITY. The aggregate Fair Market Value (determined
at the time the Option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by any Employee during any
calendar year (under all plans of the Company and its Subsidiaries) shall not
exceed $100,000.

                                      -7-
<PAGE>

              5.8.2 TERMINATION OF EMPLOYMENT. No Incentive Stock Option may be
exercised more than three months after the Participant's termination of
employment for any reason other than Disability or death, unless (a) the
Participant dies during such three-month period, and (b) the Award Agreement
and/or the Committee permits later exercise. No Incentive Stock Option may be
exercised more than one year after the Participant's termination of employment
on account of Disability, unless (a) the Participant dies during such one-year
period, and (b) the Award Agreement and/or the Committee permit later exercise.

              5.8.3 EMPLOYEES ONLY. Incentive Stock Options may be granted only
to persons who are Employees of the Company and/or a Subsidiary at the time of
grant.

              5.8.4 EXPIRATION. No Incentive Stock Option may be exercised after
the expiration of 10 years from the date such Option was granted; PROVIDED,
HOWEVER, that if the Option is granted to an Employee who, together with persons
whose stock ownership is attributed to the Employee pursuant to Section 424(d)
of the Code, owns stock possessing more than 10% of the total combined voting
power of all classes of the stock of the Company or any of its Subsidiaries, the
Option may not be exercised after the expiration of 5 years from the date that
it was granted.

         5.9 NONTRANSFERABILITY OF OPTIONS. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, the laws of descent and distribution, or as provided under
Section 9. All Options granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by such Participant.

                                   SECTION 6
                            STOCK APPRECIATION RIGHTS

         6.1 GRANT OF SARS. An SAR may be granted to an Employee, Consultant or
Director at any time and from time to time as determined by the Committee, in
its sole discretion. The Committee may grant Affiliated SARs, Freestanding SARs,
Tandem SARs, or any combination thereof. The Committee shall have complete
discretion to determine the number of SARs granted to any Participant, and
consistent with the provisions of the Plan, the terms and conditions pertaining
to such SARs. However, the grant price of a Freestanding SAR shall be at least
equal to the Fair Market Value of a Share on the date of grant. The grant price
of Tandem or Affiliated SARs shall equal the Option Price of the related Option.

         6.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

              6.2.1 ISOS. Notwithstanding any contrary provision of the Plan,
with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem
SAR shall expire no later than the expiration of the underlying ISO; (ii) the
value of the payout with respect to the Tandem SAR shall be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR shall be
exercisable only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.

         6.3 EXERCISE OF AFFILIATED SARS. An Affiliated SAR shall be deemed to
be exercised upon the exercise of the related Option. The deemed exercise of an
Affiliated SAR shall not necessitate a reduction in the number of Shares subject
to the related Option.

                                      -8-
<PAGE>

         6.4 EXERCISE OF FREESTANDING SARS. Freestanding SARs shall be
exercisable on such terms and conditions as the Committee, in its sole
discretion, shall determine.

         6.5 SAR AGREEMENT. Each SAR shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Committee, in its sole
discretion, shall determine.

         6.6 EXPIRATION OF SARS. An SAR granted under the Plan shall expire upon
the date determined by the Committee, in its sole discretion, and set forth in
the Award Agreement. Notwithstanding the foregoing, the rules of Section 5.4
(pertaining to Options) also shall apply to SARs.

         6.7 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:

              (a) The difference between the Fair Market Value of a Share on the
date of exercise over the grant price; times

              (b) The number of Shares with respect to which the SAR is
exercised.

              At the discretion of the Committee, the payment upon SAR exercise
may be in cash, in Shares of equivalent value, or in some combination thereof.

         6.8 NONTRANSFERABILITY OF SARS. No SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, the laws of descent and distribution, or as permitted under
Section 9. An SAR granted to a Participant shall be exercisable during the
Participant's lifetime only by such Participant.

                                   SECTION 7
                                RESTRICTED STOCK

         7.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Employees, Consultants or Directors in such amounts as the
Committee, in its sole discretion, shall determine.

         7.2 RESTRICTED STOCK AGREEMENT. Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Committee, in its sole discretion, shall determine. Unless the Committee
determines otherwise, shares of Restricted Stock shall be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.

         7.3 TRANSFERABILITY. Except as provided in this Section 7, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction.
All rights with respect to the Restricted Stock granted to a Participant under
the Plan shall be available during his or her lifetime only to such Participant.

         7.4 OTHER RESTRICTIONS. The Committee, in its sole discretion, may
impose such other restrictions on any Shares of Restricted Stock as it may deem
advisable including, without limitation, restrictions based upon the achievement
of specific performance goals (Company-wide, divisional, and/or individual),
and/or restrictions under applicable Federal or state securities laws; and may
legend the certificates representing Restricted Stock to give appropriate notice
of such restrictions. For example, the Committee may determine that some or all
certificates representing Shares of Restricted Stock shall bear the following
legend:

                                      -9-
<PAGE>

         "The sale or other transfer of the shares of stock represented by this
         certificate, whether voluntary, involuntary, or by operation of law, is
         subject to certain restrictions on transfer as set forth in the
         Universal Detection Technology 2008 - Equity Incentive Plan, and in a
         Restricted Stock Agreement. A copy of the Plan and such Restricted
         Stock Agreement may be obtained from the Secretary of Universal
         Detection Technology."

         7.5 REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Section 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall be released from escrow as soon as practicable after
the last day of the Period of Restriction. The Committee, in its discretion, may
accelerate the time at which any restrictions shall lapse, and/or remove any
restrictions. After the restrictions have lapsed, the Participant shall be
entitled to have any legend or legends under Section 7.4 removed from his or her
Share certificate, and the Shares shall be freely transferable by the
Participant.

         7.6 VOTING RIGHTS. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Committee determines otherwise.

         7.7 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Participants holding Shares of Restricted Stock shall be entitled
to receive all dividends and other distributions paid with respect to such
Shares, unless otherwise provided in the Award Agreement. If any such dividends
or distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

         7.8 RETURN OF RESTRICTED STOCK TO COMPANY. Subject to the applicable
Award Agreement and Section 7.5, upon the earlier of (a) the Participant's
Termination of Employment, or (b) the date set forth in the Award Agreement, the
Restricted Stock for which restrictions have not lapsed shall revert to the
Company and, subject to Section 4.3, again shall become available for grant
under the Plan.

         7.9 REPURCHASE OPTION. Unless the Committee determines otherwise, the
Award Agreement shall grant the Company a repurchase option exercisable upon the
voluntary or involuntary termination of the Participant's service with the
Company for any reason (including death or Disability). The purchase price for
Shares repurchased pursuant to the Award Agreement shall be the original price
paid by the Participant and may be paid by cancellation of any indebtedness of
the Participant to the Company. The repurchase option shall lapse at a rate
determined by the Committee.

         7.10 UNRESTRICTED SHARES. Notwithstanding anything to the contrary in
this Section 7, and subject to Applicable Laws, the Committee may issue Shares
of Restricted Stock without any applicable restrictions.

                                   SECTION 8
                    PERFORMANCE UNITS AND PERFORMANCE SHARES

         8.1 GRANT OF PERFORMANCE UNITS/SHARES. Performance Units and
Performance Shares may be granted to Employees, Consultants or Directors at any
time and from time to time, as shall be determined by the Committee, in its sole
discretion. The Committee shall have complete discretion in determining the
number of Performance Units and Performance Shares granted to each Participant.

         8.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to the
Participants. The time period during which the performance goals must be met
shall be called the "PERFORMANCE PERIOD".

                                      -10-
<PAGE>

         8.3 EARNING OF PERFORMANCE UNITS/SHARES. After the applicable
Performance Period has ended, the holder of Performance Units/Shares shall be
entitled to receive a payout of the number of Performance Units/Shares earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance goals have been achieved.
After the grant of a Performance Unit/Share, the Committee, in its sole
discretion, may adjust and/or waive the achievement of any performance goals for
such Performance Unit/Share.

         8.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of
earned Performance Units/Shares shall be made as soon as practicable after the
expiration of the applicable Performance Period. The Committee, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.

         8.5 CANCELLATION OF PERFORMANCE UNITS/SHARES. Subject to the applicable
Award Agreement, upon the earlier of (a) the Participant's Termination of
Employment, or (b) the date set forth in the Award Agreement, all remaining
Performance Units/Shares shall be forfeited by the Participant to the Company,
and subject to Section 4.3, the Shares subject thereto shall again be available
for grant under the Plan.

         8.6 NONTRANSFERABILITY. Performance Units/Shares may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, the laws of descent and distribution, or as permitted under
Section 9. A Participant's rights under the Plan shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's legal
representative.

                                   SECTION 9
                             BENEFICIARY DESIGNATION

         If permitted by the Committee, a Participant may name a beneficiary or
beneficiaries to whom any unpaid vested Award shall be paid in event of the
Participant's death. Each such designation shall revoke all prior designations
by the same Participant and shall be effective only if given in a form and
manner acceptable to the Committee. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate and, subject to the terms of the Plan, any unexercised
vested Award may be exercised by the Committee or executor of the Participant's
estate.

                                   SECTION 10
                                    DEFERRALS

         The Committee, in its sole discretion, may permit a Participant to
defer receipt of the payment of cash or the delivery of Shares that would
otherwise be due to such Participant under an Award. Any such deferral elections
shall be subject to such rules and procedures as shall be determined by the
Committee in its sole discretion.

                                   SECTION 11
                       RIGHTS OF EMPLOYEES AND CONSULTANTS

         11.1 NO EFFECT ON EMPLOYMENT OR SERVICE. Nothing in the Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without cause.

                                      -11-
<PAGE>

         11.2 PARTICIPATION. No Employee, Consultant or Director shall have the
right to be selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award.

                                   SECTION 12
                      AMENDMENT, SUSPENSION, OR TERMINATION

         The Board, in its sole discretion, may alter, amend or terminate the
Plan, or any part thereof, at any time and for any reason. However, as required
by Applicable Laws, no alteration or amendment shall be effective without
further stockholder approval. Neither the amendment, suspension, nor termination
of the Plan shall, without the consent of the Participant, alter or impair any
rights or obligations under any Award theretofore granted. No Award may be
granted during any period of suspension nor after termination of the Plan.

                                   SECTION 13
                                 TAX WITHHOLDING

         13.1 WITHHOLDING REQUIREMENTS. Prior to the delivery of any Shares or
cash pursuant to an Award, the Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes required to be withheld
with respect to such Award.

         13.2 SHARES WITHHOLDING. The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy the minimum statutory tax withholding obligation, in
whole or in part, by delivering to the Company Shares already owned for more
than six (6) months having a value equal to the amount required to be withheld.
The value of the Shares to be delivered will be based on their Fair Market Value
on the date of delivery.

                                   SECTION 14
                                 INDEMNIFICATION

         Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, notion, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan or any Award Agreement and against and from any and all amounts paid by
him or her in settlement thereof, with the Company's approval, or paid by him or
her in settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

                                   SECTION 15
  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET SALE

         15.1 CHANGES IN CAPITALIZATION; NO AWARD REPRICING. Subject to any
required action by the shareholders of the Company, the number of Shares covered
by each outstanding Award, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an

                                      -12-
<PAGE>

Award, as well as the price per Share covered by each such outstanding Award,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, or any other increase or decrease
in the number of issued Shares effected without receipt of consideration by the
Company; PROVIDED, HOWEVER, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an Award. Further, except for the adjustments provided
herein, no Award may be amended to reduce its initial exercise price, and no
Award may be cancelled and replaced with an Award with a lower price.

         15.2 DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Committee shall notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. The Committee in its discretion may provide for a Participant to
have the right to exercise his or her Award until ten (10) days prior to such
transaction as to all of the Shares covered thereby, including Shares as to
which the Award would not otherwise be exercisable. In addition, the Committee
may provide that any Company repurchase option applicable to any Shares
purchased upon exercise of an Award shall lapse as to all such Shares, provided
the proposed dissolution or liquidation takes place at the time and in the
manner contemplated. To the extent it has not been previously exercised, an
Award will terminate immediately prior to the consummation of such proposed
action.

         15.3 MERGER OR ASSET SALE. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding Award shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Award, the Participant shall fully vest in and have
the right to exercise the Award as to all of the Shares as to which it would not
otherwise be vested or exercisable. If an Award becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Committee shall notify the Participant in writing or
electronically that the Award shall be fully vested and exercisable for a period
of fifteen (15) days from the date of such notice, and the Award shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Award shall be considered assumed if, following the merger or sale of assets,
the option or right confers the right to purchase or receive, for each Share
subject to the Award immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Shares for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); PROVIDED, HOWEVER, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Committee may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of
the Award, for each Share subject to the Award, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Shares in the merger or sale of assets.

         15.4 CHANGE IN CONTROL. In the event of a Change of Control (as defined
below), except as otherwise determined by the Board, the Participant shall fully
vest in and have the right to exercise the Awards as to all of the Shares,
including Shares as to which it would not otherwise be vested or exercisable. If
an Award becomes fully vested and exercisable as the result of a Change of
Control, the Committee shall notify the Participant in writing or electronically
prior to the Change of Control that the Award shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Award shall terminate upon the expiration of such period. For purposes of
this Agreement, a "Change of Control" means the happening of any of the
following events:

                                      -13-
<PAGE>

         (a) When any "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, a Subsidiary or a Company employee
benefit plan, including any trustee of such plan acting as trustee) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election of directors;
or

         (b) The stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve an agreement for the sale or disposition by the Company of all
or substantially all the Company's assets; or

         (c) A change in the composition of the Board of Directors of the
Company, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either (A)
are directors of the Company as of the date the Plan is approved by the
stockholders, or (B) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).

                                   SECTION 16
                       CONDITIONS UPON ISSUANCE OF SHARES

         16.1 LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

         16.2 INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Award, the Company may require the Participant exercising such Award to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

         16.3 NO RIGHTS AS STOCKHOLDER . No Participant will have any of the
rights of a stockholder with respect to any shares of Common Stock until the
Shares are issued to the said Participant. After Shares are issued to the
Participant, the Participant will be a stockholder and will have all the rights
of a stockholder with respect to such shares of Common Stock, including the
right to vote and receive all dividends or other distributions made or paid with
respect to such shares.

                                   SECTION 17
                          INABILITY TO OBTAIN AUTHORITY

         The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

                                   SECTION 18
                              RESERVATION OF SHARES

         The Company, during the term of this Plan, will at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

                                      -14-
<PAGE>

                                   SECTION 19
                               LEGAL CONSTRUCTION

         19.1 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.

         19.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

         19.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all Applicable Laws.

         19.4 GOVERNING LAW. The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of
California.

         19.5 CAPTIONS. Captions are provided herein for convenience only, and
shall not serve as a basis for interpretation or construction of the Plan.

                                * * * * * * * * *

                                      -15-Exhibit 4.1

 

EXECUTION COPY

 

INDENTURE

 

Dated as of March 2,
2007

 

Among

 

THE READER’S
DIGEST ASSOCIATION, INC.,

 

THE GUARANTORS
NAMED ON THE SIGNATURE PAGES HERETO

 

and

 

THE BANK OF NEW
YORK,

as Trustee

 

9% SENIOR
SUBORDINATED NOTES DUE 2017

 

 

CROSS-REFERENCE
TABLE*

 

	
  Trust
  Indenture Act Section

  	
   

  	
  Indenture Section

  
	
   

  	
   

  	
   

  	
   

  
	
  310

  	
  (a)(1)

  	
   

  	
  7.10

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  
	
   

  	
  (a)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(5)

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.10

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  311

  	
  (a)

  	
   

  	
  7.11

  
	
   

  	
  (b)

  	
   

  	
  7.11

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  312

  	
  (a)

  	
   

  	
  2.05

  
	
   

  	
  (b)

  	
   

  	
  14.03

  
	
   

  	
  (c)

  	
   

  	
  14.03

  
	
  313

  	
  (a)

  	
   

  	
  7.06

  
	
   

  	
  (b)(1)

  	
   

  	
  N.A.

  
	
   

  	
  (b)(2)

  	
   

  	
  7.06;7.07

  
	
   

  	
  (c)

  	
   

  	
  7.06;14.02

  
	
   

  	
  (d)

  	
   

  	
  7.06

  
	
  314

  	
  (a)

  	
   

  	
  4.03;14.02;
  14.05

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
  (c)(1)

  	
   

  	
  14.04

  
	
   

  	
  (c)(2)

  	
   

  	
  14.04

  
	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (d)

  	
   

  	
  N.A.

  
	
   

  	
  (e)

  	
   

  	
  14.05

  
	
   

  	
  (f)

  	
   

  	
  N.A.

  
	
  315

  	
  (a)

  	
   

  	
  7.01

  
	
   

  	
  (b)

  	
   

  	
  7.05;14.02

  
	
   

  	
  (c)

  	
   

  	
  7.01

  
	
   

  	
  (d)

  	
   

  	
  7.01

  
	
   

  	
  (e)

  	
   

  	
  6.14

  
	
  316

  	
  (a)(last sentence)

  	
   

  	
  2.09

  
	
   

  	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  6.04

  
	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  
	
   

  	
  (b)

  	
   

  	
  6.07

  
	
   

  	
  (c)

  	
   

  	
  2.12;9.04

  
	
  317

  	
  (a)(1)

  	
   

  	
  6.08

  
	
   

  	
  (a)(2)

  	
   

  	
  6.12

  
	
   

  	
  (b)

  	
   

  	
  2.04

  
	
  318

  	
  (a)

  	
   

  	
  14.01

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
  (c)

  	
   

  	
  14.01

  

 

N.A. means not
applicable.

*  This Cross-Reference Table is not part of the
Indenture.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 DEFINITIONS
  AND INCORPORATION BY REFERENCE

  	
  1

  
	
   

  	
   

  
	
  Section 1.01

  	
  Definitions.

  	
  1

  
	
  Section 1.02

  	
  Other Definitions.

  	
  27

  
	
  Section 1.03

  	
  Incorporation by
  Reference of Trust Indenture Act.

  	
  29

  
	
  Section 1.04

  	
  Rules of
  Construction.

  	
  29

  
	
  Section 1.05

  	
  Acts of Holders.

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 THE NOTES

  	
  31

  
	
   

  	
   

  
	
  Section 2.01

  	
  Form and Dating;
  Terms.

  	
  31

  
	
  Section 2.02

  	
  Execution and
  Authentication.

  	
  32

  
	
  Section 2.03

  	
  Registrar and Paying
  Agent.

  	
  32

  
	
  Section 2.04

  	
  Paying Agent to Hold
  Money in Trust.

  	
  33

  
	
  Section 2.05

  	
  Holder Lists.

  	
  33

  
	
  Section 2.06

  	
  Transfer and Exchange.

  	
  33

  
	
  Section 2.07

  	
  Replacement Notes.

  	
  34

  
	
  Section 2.08

  	
  Outstanding Notes.

  	
  35

  
	
  Section 2.09

  	
  Treasury Notes.

  	
  35

  
	
  Section 2.10

  	
  Temporary Notes.

  	
  35

  
	
  Section 2.11

  	
  Cancellation.

  	
  35

  
	
  Section 2.12

  	
  Defaulted Interest.

  	
  36

  
	
  Section 2.13

  	
  CUSIP Numbers

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 REDEMPTION

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Notices to Trustee.

  	
  36

  
	
  Section 3.02

  	
  Selection of Notes to
  Be Redeemed or Purchased.

  	
  37

  
	
  Section 3.03

  	
  Notice of Redemption.

  	
  37

  
	
  Section 3.04

  	
  Effect of Notice of
  Redemption.

  	
  38

  
	
  Section 3.05

  	
  Deposit of Redemption
  or Purchase Price.

  	
  38

  
	
  Section 3.06

  	
  Notes Redeemed or
  Purchased in Part.

  	
  38

  
	
  Section 3.07

  	
  Optional Redemption.

  	
  39

  
	
  Section 3.08

  	
  Mandatory Redemption.

  	
  40

  
	
  Section 3.09

  	
  Offers to Repurchase by
  Application of Excess Proceeds.

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 COVENANTS

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Payment of Notes.

  	
  41

  
	
  Section 4.02

  	
  Maintenance of Office
  or Agency.

  	
  42

  
	
  Section 4.03

  	
  Reports and Other
  Information.

  	
  42

  
	
  Section 4.04

  	
  Compliance Certificate.

  	
  44

  
	
  Section 4.05

  	
  Taxes.

  	
  44

  
	
  Section 4.06

  	
  Stay, Extension and
  Usury Laws.

  	
  44

  
	
  Section 4.07

  	
  Limitation on
  Restricted Payments.

  	
  45

  
	
  Section 4.08

  	
  Dividend and Other
  Payment Restrictions Affecting Restricted Subsidiaries.

  	
  51

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 4.09

  	
  Limitation on
  Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred
  Stock.

  	
  53

  
	
  Section 4.10

  	
  Asset Sales.

  	
  58

  
	
  Section 4.11

  	
  Transactions with
  Affiliates.

  	
  61

  
	
  Section 4.12

  	
  Liens.

  	
  63

  
	
  Section 4.13

  	
  Corporate Existence.

  	
  63

  
	
  Section 4.14

  	
  Offer to Repurchase
  Upon Change of Control.

  	
  63

  
	
  Section 4.15

  	
  Additional Subsidiary
  Guarantees.

  	
  65

  
	
  Section 4.16

  	
  Limitation on Layering.

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 SUCCESSORS

  	
  66

  
	
   

  	
   

  
	
  Section 5.01

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

  	
  66

  
	
  Section 5.02

  	
  Successor Entity
  Substituted.

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 DEFAULTS AND
  REMEDIES

  	
  68

  
	
   

  	
   

  
	
  Section 6.01

  	
  Events of Default.

  	
  68

  
	
  Section 6.02

  	
  Acceleration.

  	
  71

  
	
  Section 6.03

  	
  Other Remedies.

  	
  71

  
	
  Section 6.04

  	
  Waiver of Past
  Defaults.

  	
  72

  
	
  Section 6.05

  	
  Control by Majority.

  	
  72

  
	
  Section 6.06

  	
  Limitation on Suits.

  	
  72

  
	
  Section 6.07

  	
  Rights of Holders of
  Notes to Receive Payment.

  	
  73

  
	
  Section 6.08

  	
  Collection Suit by
  Trustee.

  	
  73

  
	
  Section 6.09

  	
  Restoration of Rights
  and Remedies.

  	
  73

  
	
  Section 6.10

  	
  Rights and Remedies
  Cumulative.

  	
  73

  
	
  Section 6.11

  	
  Delay or Omission Not
  Waiver.

  	
  73

  
	
  Section 6.12

  	
  Trustee May File
  Proofs of Claim.

  	
  73

  
	
  Section 6.13

  	
  Priorities.

  	
  74

  
	
  Section 6.14

  	
  Undertaking for Costs.

  	
  74

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 TRUSTEE

  	
  75

  
	
   

  	
   

  
	
  Section 7.01

  	
  Duties of Trustee.

  	
  75

  
	
  Section 7.02

  	
  Rights of Trustee.

  	
  75

  
	
  Section 7.03

  	
  Individual Rights of
  Trustee.

  	
  77

  
	
  Section 7.04

  	
  Trustee’s Disclaimer.

  	
  77

  
	
  Section 7.05

  	
  Notice of Defaults.

  	
  77

  
	
  Section 7.06

  	
  Reports by Trustee to
  Holders of the Notes.

  	
  77

  
	
  Section 7.07

  	
  Compensation and
  Indemnity.

  	
  78

  
	
  Section 7.08

  	
  Replacement of Trustee.

  	
  78

  
	
  Section 7.09

  	
  Successor Trustee by
  Merger, etc.

  	
  79

  
	
  Section 7.10

  	
  Eligibility;
  Disqualification.

  	
  79

  
	
  Section 7.11

  	
  Preferential Collection
  of Claims Against the Issuer.

  	
  80

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 LEGAL
  DEFEASANCE AND COVENANT DEFEASANCE

  	
  80

  
	
   

  	
   

  
	
  Section 8.01

  	
  Option to Effect Legal
  Defeasance or Covenant Defeasance.

  	
  80

  
	
  Section 8.02

  	
  Legal Defeasance and
  Discharge.

  	
  80

  
	
  Section 8.03

  	
  Covenant Defeasance.

  	
  80

  

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 8.04

  	
  Conditions to Legal or
  Covenant Defeasance.

  	
  81

  
	
  Section 8.05

  	
  Deposited Money and
  Government Securities to Be Held in Trust; Other Miscellaneous Provisions.

  	
  82

  
	
  Section 8.06

  	
  Repayment to the
  Issuer.

  	
  83

  
	
  Section 8.07

  	
  Reinstatement.

  	
  83

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 AMENDMENT,
  SUPPLEMENT AND WAIVER

  	
  83

  
	
   

  	
   

  
	
  Section 9.01

  	
  Without Consent of
  Holders of Notes.

  	
  83

  
	
  Section 9.02

  	
  With Consent of Holders
  of Notes.

  	
  84

  
	
  Section 9.03

  	
  Compliance with Trust
  Indenture Act.

  	
  86

  
	
  Section 9.04

  	
  Revocation and Effect
  of Consents.

  	
  86

  
	
  Section 9.05

  	
  Notation on or Exchange
  of Notes.

  	
  86

  
	
  Section 9.06

  	
  Trustee to Sign
  Amendments, etc.

  	
  87

  
	
  Section 9.07

  	
  Payment for Consent.

  	
  87

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10
  SUBORDINATION

  	
  87

  
	
   

  	
   

  
	
  Section 10.01

  	
  Agreement To
  Subordinate.

  	
  87

  
	
  Section 10.02

  	
  Liquidation,
  Dissolution, Bankruptcy.

  	
  87

  
	
  Section 10.03

  	
  Default on Senior
  Indebtedness of the Issuer.

  	
  88

  
	
  Section 10.04

  	
  Acceleration of Payment
  of Notes.

  	
  89

  
	
  Section 10.05

  	
  When Distribution Must
  Be Paid Over.

  	
  89

  
	
  Section 10.06

  	
  Subrogation.

  	
  89

  
	
  Section 10.07

  	
  Relative Rights.

  	
  89

  
	
  Section 10.08

  	
  Subordination
  May Not Be Impaired by the Issuer.

  	
  90

  
	
  Section 10.09

  	
  Rights of Trustee and
  Paying Agent.

  	
  90

  
	
  Section 10.10

  	
  Distribution or Notice
  to Representative.

  	
  90

  
	
  Section 10.11

  	
  Article 10 Not To
  Prevent Events of Default or Limit Right To Accelerate.

  	
  90

  
	
  Section 10.12

  	
  Trust Moneys Not
  Subordinated.

  	
  90

  
	
  Section 10.13

  	
  Trustee Entitled To
  Rely.

  	
  91

  
	
  Section 10.14

  	
  Trustee To Effectuate
  Subordination.

  	
  91

  
	
  Section 10.15

  	
  Trustee Not Fiduciary
  for Holders of Senior Indebtedness of the Issuer.

  	
  91

  
	
  Section 10.16

  	
  Reliance by Holders of
  Senior Indebtedness of the Issuer on Subordination Provisions.

  	
  91

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 GUARANTEES

  	
  92

  
	
   

  	
   

  
	
  Section 11.01

  	
  Guarantee.

  	
  92

  
	
  Section 11.02

  	
  Limitation on Guarantor
  Liability.

  	
  93

  
	
  Section 11.03

  	
  Execution and Delivery.

  	
  94

  
	
  Section 11.04

  	
  Subrogation.

  	
  94

  
	
  Section 11.05

  	
  Benefits Acknowledged.

  	
  94

  
	
  Section 11.06

  	
  Release of Guarantees.

  	
  94

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12
  SUBORDINATION OF GUARANTEES

  	
  95

  
	
   

  	
   

  
	
  Section 12.01

  	
  Agreement To
  Subordinate.

  	
  95

  
	
  Section 12.02

  	
  Liquidation,
  Dissolution, Bankruptcy.

  	
  95

  
	
  Section 12.03

  	
  Default on Senior
  Indebtedness of a Guarantor.

  	
  96

  
	
  Section 12.04

  	
  Demand for Payment.

  	
  97

  

 

iii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 12.05

  	
  When Distribution Must
  Be Paid Over.

  	
  97

  
	
  Section 12.06

  	
  Subrogation.

  	
  97

  
	
  Section 12.07

  	
  Relative Rights.

  	
  97

  
	
  Section 12.08

  	
  Subordination
  May Not Be Impaired by a Guarantor.

  	
  98

  
	
  Section 12.09

  	
  Rights of Trustee and
  Paying Agent.

  	
  98

  
	
  Section 12.10

  	
  Distribution or Notice
  to Representative.

  	
  98

  
	
  Section 12.11

  	
  Article 12 Not To
  Prevent Events of Default or Limit Right To Demand Payment.

  	
  98

  
	
  Section 12.12

  	
  Trust Moneys Not
  Subordinated.

  	
  98

  
	
  Section 12.13

  	
  Trustee Entitled To
  Rely.

  	
  99

  
	
  Section 12.14

  	
  Trustee To Effectuate
  Subordination.

  	
  99

  
	
  Section 12.15

  	
  Trustee Not Fiduciary
  for Holders of Senior Indebtedness of Guarantors.

  	
  99

  
	
  Section 12.16

  	
  Reliance by Holders of
  Senior Indebtedness of a Guarantor on Subordination Provisions.

  	
  99

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 SATISFACTION
  AND DISCHARGE

  	
  100

  
	
   

  	
   

  
	
  Section 13.01

  	
  Satisfaction and
  Discharge.

  	
  100

  
	
  Section 13.02

  	
  Application of Trust
  Money.

  	
  101

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14
  MISCELLANEOUS

  	
  101

  
	
   

  	
   

  
	
  Section 14.01

  	
  Trust Indenture Act
  Controls.

  	
  101

  
	
  Section 14.02

  	
  Notices.

  	
  101

  
	
  Section 14.03

  	
  Communication by
  Holders of Notes with Other Holders of Notes.

  	
  102

  
	
  Section 14.04

  	
  Certificate and Opinion
  as to Conditions Precedent.

  	
  102

  
	
  Section 14.05

  	
  Statements Required in
  Certificate or Opinion.

  	
  103

  
	
  Section 14.06

  	
  Rules by Trustee
  and Agents.

  	
  103

  
	
  Section 14.07

  	
  No Personal Liability
  of Directors, Officers, Employees and Stockholders.

  	
  103

  
	
  Section 14.08

  	
  Governing Law.

  	
  103

  
	
  Section 14.09

  	
  Waiver of Jury Trial.

  	
  103

  
	
  Section 14.10

  	
  Force Majeure.

  	
  104

  
	
  Section 14.11

  	
  No Adverse
  Interpretation of Other Agreements.

  	
  104

  
	
  Section 14.12

  	
  Successors.

  	
  104

  
	
  Section 14.13

  	
  Severability.

  	
  104

  
	
  Section 14.14

  	
  Counterpart Originals.

  	
  104

  
	
  Section 14.15

  	
  Table of Contents,
  Headings, etc.

  	
  104

  
	
  Section 14.16

  	
  Qualification of
  Indenture.

  	
  104

  
	
   

  	
   

  	
   

  
	
  Appendix A

  	
  Provisions Relating to
  Initial Notes, Additional Notes and Exchange Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Initial
  Note

  	
   

  
	
  Exhibit B

  	
  Form of Exchange
  Note

  	
   

  
	
  Exhibit C

  	
  Form of Transferee
  Letter of Representation

  	
   

  
	
  Exhibit D

  	
  Form of
  Supplemental Indenture to Be Delivered by Subsequent Guarantors

  	
   

  

 

iv

 

INDENTURE, dated as of March 2,
2007, among The Reader’s Digest Association, Inc., a Delaware corporation
(“Reader’s Digest”), the Guarantors (as defined herein) listed on the
signature pages hereto and The Bank of New York, as Trustee.

 

WITNESSETH

 

WHEREAS, in connection
with the Transactions (as defined herein), Doctor Acquisition Co., a Delaware
corporation (“Acquisition Co.”), has been merged with and into Reader’s
Digest in accordance with the terms of the Merger Agreement (as defined
herein);

 

WHEREAS, Reader’s Digest
and the Guarantors have executed a Joinder Agreement to the Purchase Agreement
dated the date hereof pursuant to which Reader’s Digest and the Guarantors have
become party to the Purchase Agreement dated February 27, 2007, among
Acquisition Co. and the Initial Purchasers (as defined herein), relating to the
initial sale and issuance of the Initial Notes (as defined below);

 

WHEREAS, Reader’s Digest
has duly authorized the creation of and issue of $600,000,000 aggregate
principal amount of 9% Senior Subordinated Notes due 2017 (the “Initial
Notes”);  and

 

WHEREAS, Reader’s Digest
and each of the Guarantors has duly authorized the execution and delivery of
this Indenture.

 

NOW, THEREFORE, Reader’s
Digest, the Guarantors and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Notes.

 

ARTICLE 1

 

DEFINITIONS AND
INCORPORATION BY REFERENCE

 

Section 1.01                                Definitions.

 

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

 

(1)           Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Restricted Subsidiary of
such specified Person, including Indebtedness incurred in connection with, or
in contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and

 

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

 

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

 

“Additional Notes”
means additional Notes (other than the Initial Notes and other than Exchange
Notes for such Initial Notes) issued from time to time under this Indenture in
accordance with Sections 2.01 and 4.09 hereof.

 

“Affiliate” of any
specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person.  For purposes of this definition,
“control” (including, with correlative meanings, the terms “controlling,” “controlled
by” and “under common control with”), as used with respect to any Person, shall
mean the

 

 

possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise.

 

“Agent” means any
Registrar or Paying Agent.

 

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

 

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

 

(2)           the excess, if any, of (a) the present value at
such Redemption Date of (i) the redemption price of such Note at February 15,
2012 (such redemption price being set forth in Section 3.07 hereof), plus (ii) all required interest
payments due on such Note through February 15, 2012 (excluding accrued but
unpaid interest to the Redemption Date), computed using a discount rate equal
to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b) the principal amount of
such Note.

 

“Asset Sale”
means:

 

(1)                           the sale, conveyance, transfer or other
disposition, whether in a single transaction or a series of related
transactions, of property or assets (including by way of a Sale and Lease-Back
Transaction) of the Issuer or any of its Restricted Subsidiaries (each referred
to in this definition as a “disposition”); or

 

(2)           the issuance or sale of Equity Interests of any
Restricted Subsidiary, whether in a single transaction or a series of related
transactions;

 

in each case,
other than:

 

(a)           any disposition of Cash Equivalents or Investment
Grade Securities or obsolete or worn out equipment in the ordinary course of
business or any disposition of inventory or goods (or other assets) held for
sale in the ordinary course of business;

 

(b)           the disposition of all or substantially all of the
assets of the Issuer in a manner permitted pursuant to the provisions described
under Section 5.01 hereof or any disposition that constitutes a Change of
Control pursuant to this Indenture;

 

(c)           the making of any Restricted Payment or Permitted
Investment that is permitted to be made, and is made, under Section 4.07
hereof;

 

(d)           any transaction or series of related transactions for
which an aggregate fair market value of less than $5.0 million is
received; provided that the aggregate fair market value of such
dispositions shall not exceed $15.0 million in the aggregate during any fiscal
year;

 

(e)           any disposition of property or assets or issuance of
securities by a Restricted Subsidiary of the Issuer to the Issuer or by the
Issuer or a Restricted Subsidiary of the Issuer to another Restricted
Subsidiary of the Issuer;

 

(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 sub-lease of any real or
personal property in the ordinary course of business;

 

2

 

(h)           any issuance or sale of Equity Interests in, or
Indebtedness or other securities of, or assets of an Unrestricted Subsidiary;

 

(i)            foreclosures on assets;

 

(j)            any financing transaction with respect to property
built or acquired by the Issuer or any Restricted Subsidiary after the Issue Date,
including Sale and Lease-Back Transactions and asset securitizations, permitted
by this Indenture;

 

(k)           the issuance by a Restricted Subsidiary of Preferred
Stock that is permitted to be made under Section 4.09 hereof; and

 

(l)            the licensing of intellectual property.

 

“Bankruptcy Law”
means Title 11, U.S. Code or any similar federal or state law for the relief of
debtors.

 

“beneficial ownership”
has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of
any particular “person” (as such term is used in Section 13(d)(3) of
the Exchange Act), such “person” shall be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire, whether such
right is currently exercisable or is exercisable only after the passage of
time.

 

“Business Day”
means each day which is not a Legal Holiday.

 

“Capital Stock”
means:

 

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

 

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

 

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

 

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

 

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

 

“Cash Equivalents”
means:

 

(1)           United States dollars, Euros or any national currency
of any participating member state of the EMU, or such local currencies held by
the Company and its Restricted Subsidiaries from time to time in the ordinary
course of business;

 

(2)           securities issued or directly and fully and
unconditionally guaranteed or insured by the U.S. government or a member nation
of the European Union (or any agency or instrumentality thereof the securities
of which are unconditionally guaranteed as a full faith and

 

3

 

credit obligation of the
U.S. government) with maturities of not more than 12 months from the date of
acquisition;

 

(3)           certificates of deposit, time deposits and eurodollar
time deposits with maturities of 12 months or less from the date of
acquisition, bankers’ acceptances with maturities not exceeding 12 months and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $250.0 million, or the U.S. dollar equivalent in the
case of non-U.S. banks;

 

(4)           fully collateralized repurchase obligations for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;

 

(5)           commercial paper maturing within 12 months after the
date of acquisition and having a rating of at least P-2 from Moody’s or A-2
from S&P or carrying an equivalent rating by a nationally recognized rating
agency if both of the two named rating agencies cease publishing ratings of
investments;

 

(6)           readily marketable direct obligations issued by any
state, commonwealth or territory of the United States or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody’s or S&P (or one of the two highest rating categories
obtainable from a nationally recognized rating agency if both of the two named
rating agencies cease publishing ratings of investments) with maturities of 12
months or less from the date of acquisition;

 

(7)           instruments equivalent to those referred to in clauses
(1) through (6) of this definition denominated in euros or any other
foreign currency comparable in credit quality and tenor to those referred to in
such clauses and customarily used by corporations for cash management purposes
in any jurisdiction outside the United States to the extent reasonably required
in connection with any business conducted by any Restricted Subsidiary
organized in such jurisdiction;

 

(8)           Investments in funds investing substantially all of
their assets in Cash Equivalents of the types described in clauses (1) through
(7) of this definition; and

 

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

 

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

 

(1)           the sale, assignment, transfer, lease, conveyance or
other disposition, in one or more related transactions, of all or substantially
all of the properties and assets of the Issuer and its Subsidiaries, taken as a
whole, to any Person other than a Permitted Holder; or

 

(2)           the Issuer becomes aware of (by way of a report or any
other filing pursuant to Section 13(d) of the Exchange Act, proxy,
vote, written notice or otherwise) the acquisition by (x) any Person
(other than one or more Permitted Holders) or (y) any Persons that
together (i) are a group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision), or
(ii) are acting, for the purpose of acquiring, holding or disposing of
securities (within the meaning of Rule 13d-5(b)(1) under the Exchange
Act) (other than, in the case of clauses (i) and (ii), Permitted Holders),
in a single transaction or in a related series of

 

4

 

transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership, directly or indirectly, of 50% or more of the total voting power of
the Voting Stock of the Issuer or any of its direct or indirect parent
entities.

 

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

 

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

 

(1)           consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, to the extent such expense was
deducted (and not added back) in computing Consolidated Net Income (including (a) amortization
of original issue discount resulting from the issuance of Indebtedness at less
than par, (b) all commissions, discounts and other fees and charges owed
with respect to letters of credit or bankers’ acceptances, (c) non-cash
interest payments (but excluding any non-cash interest expense attributable to
the movement in the mark to market valuation of Hedging Obligations or other
derivative instruments pursuant to GAAP), (d) the interest component of
Capitalized Lease Obligations, and (e) net settlement payments, if any,
made pursuant to interest rate Hedging Obligations with respect to Indebtedness
(less any net settlement payments, if any, received pursuant to interest rate
Hedging Obligations with respect to Indebtedness), and excluding (A) any
Additional Interest, (B) amortization of deferred financing fees, debt
issuance costs, commissions, fees and expenses, (C) any expensing of
bridge, commitment and other financing fees relating to any financings and (D) any
annual agency or similar fees paid under any Credit Facilities; plus

 

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

 

(3)           interest income for such period of such Person and its
Restricted Subsidiaries.

 

For purposes of this
definition, interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by such Person to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

 

“Consolidated Leverage
Ratio”, with respect to any Person as of any date of determination, means
the ratio of (x) Consolidated Total Indebtedness of such Person as of the
end of the most recent fiscal quarter for which internal financial statements
are available to (y) the aggregate amount of EBITDA of such Person for the
period of the most recently ended four full consecutive fiscal quarters for
which internal financial statements are available. In the event that the Issuer
or any Restricted Subsidiary incurs, assumes, guarantees, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred under any
revolving credit facility unless such Indebtedness has been permanently repaid
and has not been replaced) or issues or redeems Disqualified Stock or Preferred
Stock subsequent to the commencement of the period for which the Consolidated
Leverage Ratio is being calculated but prior to or simultaneously with the
event for which the calculation of the Consolidated Leverage Ratio is made (the
“Consolidated Leverage Ratio Calculation Date”), then the Consolidated
Leverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, guarantee, redemption,
retirement or extinguishment of Indebtedness, or such issuance or redemption of
Disqualified Stock or Preferred Stock, as if the same had occurred at the
beginning of the applicable four-quarter period.

 

5

 

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

 

For purposes of this
definition, whenever pro forma
effect is to be given to an investment, acquisition, disposition, merger or
consolidation (including the Transactions) and the amount of income or earnings
relating thereto, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Issuer; provided that such calculations are
set forth in an Officer’s Certificate signed by the Issuer’s chief financial
officer stating (i) that such calculations are based on the reasonable
good faith beliefs of the Officers executing such Officer’s Certificate at the
time of such execution and (ii) that any related incurrence of
Indebtedness is permitted pursuant to this Indenture.

 

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

 

(1)           any after-tax effect of extraordinary, non-recurring
or unusual gains or losses (less all fees and expenses relating thereto) or
expenses (including relating to the Transactions to the extent incurred on or
prior to December 31, 2007), severance, relocation costs and curtailments
or modifications to pension and post-retirement employee benefit plans shall be
excluded,

 

(2)           the cumulative effect of a change in accounting
principles during such period shall be excluded,

 

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

 

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

 

(5)           the Net Income for such period of any Person that is
not a Subsidiary, or that is an Unrestricted Subsidiary, or that is accounted
for by the equity method of accounting, shall be excluded; provided that
Consolidated Net Income of the Issuer shall be increased by the Net Income of
such Person to the extent of the amount of dividends or distributions or other
payments made by such Person 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; provided  further, that

 

6

 

such increase shall not
apply for purposes of determining the amount payable for Restricted Payments
under clause 3(a) of Section 4.07(a) hereof, to the extent such
dividends or distributions or other payments are included in clause 3(d) of
Section 4.07(a) hereof,

 

(6)           solely for the purpose of determining the amount
available for Restricted Payments under clause (3)(a) of Section 4.07(a),
the Net Income for such period of any Restricted Subsidiary (other than any
Guarantor) shall be excluded to the extent 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 similar distributions has been legally
waived; provided that Consolidated Net Income of the Issuer shall be
increased by the Net Income of such person to the extent of the amount of
dividends or other distributions or other payments actually paid in cash (or to
the extent converted into cash) by such Person to the Issuer or a Restricted
Subsidiary thereof in respect of such period, to the extent not already
included therein,

 

(7)           any impairment charge or asset write-off pursuant to
Financial Accounting Standards Board Statements No. 142 and No. 144
and the amortization of intangibles arising pursuant to Financial Accounting
Standards Board Statement No. 141 shall be excluded,

 

(8)           effects of adjustments (including the effects of such
adjustments pushed down to the Issuer and its Restricted Subsidiaries) in any
line item in such Person’s consolidated financial statements pursuant to GAAP
resulting from the application of purchase accounting in relation to the
Transactions or any consummated acquisition shall be excluded,

 

(9)           any after-tax effect of income (loss) from the early
extinguishment of Indebtedness or Hedging Obligations or other derivative
instruments shall be excluded,

 

(10)         any fees and expenses incurred during such period, or
any amortization thereof for such period, in connection with any acquisition, Investment,
Asset Sale, issuance or repayment of Indebtedness, issuance of Equity
Interests, refinancing transaction or amendment or modification of any debt
instrument (in each case, including any such transaction consummated prior to
the Issue Date and any such transaction undertaken but not completed) and any
charges or non-recurring merger costs incurred during such period as a result
of any such transaction shall be excluded,

 

(11)         non-cash income or charges resulting from
mark-to-market accounting under Financial Accounting Standard No. 52
relating to Indebtedness denominated in foreign currencies shall be excluded,

 

(12)         any non-cash compensation expense recorded from grants
of stock appreciation or similar rights, stock options, restricted stock or other
rights shall be excluded, and

 

(13)         accruals and reserves that are established within 12
months after the Issue Date that are required to be established in accordance
with GAAP as a result of the Transactions shall be excluded.

 

Notwithstanding the foregoing,
for the purpose of the covenant described under Section 4.07 hereof only
(other than clause (3)(d) thereof), there shall be excluded from
Consolidated Net Income any income arising from any sale or other disposition
of Restricted Investments made by the Issuer and its

 

7

 

Restricted Subsidiaries,
any repurchases and redemptions of Restricted Investments from the Issuer and
its Restricted Subsidiaries, any repayments of loans and advances which constitute
Restricted Investments by the Issuer or any of its Restricted Subsidiaries, any
sale of the stock of an Unrestricted Subsidiary or any distribution or dividend
from an Unrestricted Subsidiary, in each case only to the extent such amounts
increase the amount of Restricted Payments permitted under such covenant
pursuant to clause (3)(d) thereof. For purposes of this definition,
amounts distributed, dividended, loaned or otherwise transferred to any direct
or indirect parent pursuant to clause (14) of Section 4.07(b) hereof
shall be deducted in calculating Consolidated Net Income without duplication of
other expenses reflected in Consolidated Net Income.

 

“Consolidated Total
Indebtedness” means, as at any date of determination, an amount equal to
the sum of (1) the aggregate amount of all outstanding Indebtedness of the
Issuer and its Restricted Subsidiaries on a consolidated basis consisting of
Indebtedness for borrowed money, Obligations in respect of Capitalized Lease
Obligations and debt obligations evidenced by promissory notes and similar
instruments and (2) the aggregate amount of all outstanding Disqualified
Stock of the Issuer and all Preferred Stock of its Restricted Subsidiaries on a
consolidated basis, with the amount of such Disqualified Stock and Preferred
Stock equal to the greater of their respective voluntary or involuntary
liquidation preferences and maximum fixed repurchase prices, in each case
determined on a consolidated basis in accordance with GAAP. For purposes
hereof, the “maximum fixed repurchase price” of any Disqualified Stock or
Preferred Stock that does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Stock or Preferred Stock as
if such Disqualified Stock or Preferred Stock were purchased on any date on
which Consolidated Total Indebtedness shall be required to be determined
pursuant to this Indenture, and if such price is based upon, or measured by,
the fair market value of such Disqualified Stock or Preferred Stock, such fair market
value shall be determined reasonably and in good faith by the Issuer.

 

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

 

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

 

(2)            to advance or supply funds

 

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

 

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

 

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

 

“Corporate Trust
Office of the Trustee” shall be at the address of the Trustee specified in Section 14.02
hereof or such other address as to which the Trustee may give notice to the
Holders and the Issuer.

 

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

 

8

 

(ii) the Stock
Acquisition Agreement, dated as of January 23, 2007, among Direct Holdings
U.S. Corp., RDA Holding Co. and the members of Direct Holdings Worldwide L.L.C.
named therein.

 

“Credit Facilities”
means, with respect to the Issuer or any of its Restricted Subsidiaries, one or
more debt facilities, including the Senior Credit Facility, or other financing
arrangements (including, without limitation, commercial paper facilities or
indentures) providing for revolving credit loans, term loans, letters of credit
or other long-term indebtedness, including any notes, mortgages, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and any amendments, supplements, modifications, extensions,
renewals, restatements or refundings thereof and any indentures or credit
facilities or commercial paper facilities that replace, refund or refinance any
part of the loans, notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing facility or indenture
that increases the amount permitted to be borrowed thereunder or alters the
maturity thereof (provided that such increase in borrowings is permitted
under Section 4.09 hereof) or adds Restricted Subsidiaries as additional
borrowers or guarantors thereunder and whether by the same or any other agent,
lender or group of lenders.

 

“Custodian” means
the Trustee, as custodian with respect to the Notes in global form, or any
successor entity thereto.

 

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

 

“Definitive Note”
means a certificated Initial Note, Additional Note or Exchange Note (bearing
the Restricted Notes Legend if the transfer of such Note is restricted by
applicable law) that does not include the Global Notes Legend.

 

“Depositary”
means, with respect to the Notes issuable or issued in whole or in part in
global form, the Person specified in Section 2.03 hereof as the Depositary
with respect to the Notes, and any and all successors thereto appointed as
Depositary hereunder and having become such pursuant to the applicable
provision of this Indenture.

 

“Designated Non-cash
Consideration” means the fair market value of non-cash consideration
received by the Issuer or a Restricted Subsidiary in connection with an Asset
Sale that is so designated as Designated Non-cash Consideration pursuant to an
Officer’s Certificate, setting forth the basis of such valuation, executed by
the principal financial officer of the Issuer, less the amount of cash or Cash
Equivalents received in connection with a subsequent sale of or collection on
such Designated Non-cash Consideration.

 

“Designated Preferred
Stock” means Preferred Stock of the Issuer or any parent entity thereof (in
each case other than Disqualified Stock) that is issued for cash after the
Issue Date (other than to a Restricted Subsidiary, the Issuer or an employee
stock ownership plan or trust established by the Issuer or any of its
Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to
an Officer’s Certificate executed by the principal financial officer of the
Issuer or the applicable parent corporation thereof, as the case may be, on the
issuance date thereof, the cash proceeds of which are excluded from the calculation
set forth in clause (3) of Section 4.07(a) hereof.

 

“Designated Senior
Indebtedness” means:

 

(1)           any Indebtedness outstanding under the Senior Credit
Facility; and

 

9

 

(2)           any other Senior Indebtedness permitted under this
Indenture, the principal amount of which is $50.0 million or more and that has
been designated by the Issuer as “Designated Senior Indebtedness.”

 

“Direct Holdings”
means Direct Holdings U.S. Corp., a Delaware corporation and a Subsidiary of
the Issuer.

 

“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 pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, or is convertible into or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock which is convertible or exchangeable solely at the
option of the Issuer or a Restricted Subsidiary (it being understood that upon
such conversion or exchange it shall be an incurrence of such Indebtedness or
Disqualified Stock)), in each case prior to the date 91 days after the
earlier of the maturity date of the Notes or the date the Notes are no longer
outstanding; provided, however, that (x) if such Capital
Stock is issued to any plan for the benefit of employees of the Issuer or its
Subsidiaries or by any such plan to such employees, such Capital Stock shall
not constitute Disqualified Stock solely because it may be required to be
repurchased by the Issuer or its Subsidiaries in order to satisfy applicable
statutory or regulatory obligations and (y) such Capital Stock shall not
constitute Disqualified Stock if such Capital Stock matures or is mandatorily
redeemable or is redeemed at the option of the holders thereof as a result of a
change of control or asset sale so long as the relevant change of control or
asset sale provisions taken as a whole, are no more favorable in any material
respect to holders of such Capital Stock than the asset sale and change of
control provisions applicable to the Notes and any purchase requirement
triggered thereby may not become operative until compliance with the asset sale
and change of control provisions applicable to the Notes.

 

“Domestic Subsidiary”
means, with respect to any Person, any subsidiary of such Person that is
organized or existing under the laws of the United States, any state thereof,
or the District of Columbia.

 

“EBITDA” means,
with respect to any Person for any period, the Consolidated Net Income of such
Person for such period

 

(1)           increased (without duplication) by:

 

(a)           provision for taxes based on income or profits or
capital, including, without limitation, state, franchise and similar taxes and
foreign withholding taxes of such Person paid or accrued during such period
deducted (and not added back) in computing Consolidated Net Income; plus

 

(b)           Consolidated Interest Expense of such Person for such
period (including (x) net losses or Hedging Obligations or other
derivative instruments entered into for the purpose of hedging interest rate
risk and (y) costs of surety bonds in connection with financing
activities, in each case, to the extent included in Consolidated Interest
Expense) to the extent the same was deducted (and not added back) in
calculating such Consolidated Net Income; plus

 

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

 

10

 

(d)           any expenses or charges (other than depreciation or
amortization expense) related to any Equity Offering, Permitted Investment,
acquisition, disposition, recapitalization or the incurrence of Indebtedness
permitted to be incurred by this Indenture (including a refinancing thereof)
(whether or not successful), including (i) such fees, expenses or charges
related to the offering of the Notes and the Credit Facilities and (ii) any
amendment or other modification of the Notes, and, in each case, deducted (and
not added back) in computing Consolidated Net Income; plus

 

(e)           the amount of any restructuring charge or reserve
deducted (and not added back) in such period in computing Consolidated Net
Income, including any one-time costs incurred in connection with acquisitions
after the Issue Date and costs related to the closure and/or consolidation of
facilities; plus

 

(f)            any other non-cash charges, including any write-offs
or write-downs, reducing Consolidated Net Income for such period (excluding any such non-cash charge that
represents an accrual or reserve for potential cash items in any future
period); plus

 

(g)           the amount of management, monitoring, consulting and
advisory fees and related expenses paid in such period to the Investors to the
extent otherwise permitted under Section 4.11 hereof; plus

 

(h)           any costs or expense incurred by the Issuer or a
Restricted Subsidiary pursuant to any management equity plan or stock option
plan or any other management or employee benefit plan or agreement or any stock
subscription or shareholder agreement, to the extent that such cost or expenses
are funded with cash proceeds contributed to the capital of the Issuer or net
cash proceeds of an issuance of Equity Interest of the Issuer (other than
Disqualified Stock) solely to the extent that such net cash proceeds are excluded
from the calculation set forth in clause (3) of Section 4.07(a) hereof;

 

(2)           decreased by (without duplication) non-cash items
increasing Consolidated Net Income of such Person for such period, excluding
any non-cash items to the extent they represent the reversal of an accrual or
reserve for a potential cash item that reduced EBITDA in any prior period, and

 

(3)           increased or decreased by (without duplication):

 

(a)           any net gain or loss resulting in such period from
Hedging Obligations and the application of Statement of Financial Accounting
Standards No. 133; plus or minus, as applicable,

 

(b)           any net gain or loss resulting in such period from
currency translation gains or losses related to currency remeasurements of
Indebtedness (including any net loss or gain resulting from Hedging Obligations
for currency exchange risk).

 

“EMU” means
economic and monetary union as contemplated in the Treaty on European Union.

 

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

 

11

 

“Equity Offering”
means any public or private sale of common stock or Preferred Stock of the Issuer
or (to the extent the net cash proceeds thereof are contributed to the Issuer)
any of its direct or indirect parent companies (excluding Disqualified Stock),
other than:

 

(1)           public offerings with respect to the Issuer’s or any
direct or indirect parent entity’s common stock registered on Form S-4 or Form S-8;

 

(2)           issuances to any Subsidiary of the Issuer;

 

(3)           any such public or private sale that constitutes an
Excluded Contribution or representing Designated Preferred Stock; and

 

(4)           any offering of common stock or Preferred Stock issued
in connection with a transaction that constitutes a Change of Control.

 

“Euro” means the
single currency of participating member states of the EMU.

 

“Event of Default”
has the meaning set forth under Section 6.01 hereof.

 

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

 

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

 

“Exchange Offer”
has the meaning set forth in the Registration Rights Agreement.

 

“Exchange Offer
Registration Statement” has the meaning set forth in the Registration
Rights Agreement.

 

“Excluded Contribution”
means net cash proceeds, marketable securities or Qualified Proceeds received
by the Issuer after the Issue Date from

 

(1)           contributions to its common equity capital, and

 

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

 

in each case designated
as Excluded Contributions pursuant to an Officer’s Certificate executed by the
principal financial officer of the Issuer on the date such capital
contributions are made or the date such Equity Interests are sold, as the case
may be, which are excluded from the calculation set forth in clause (3) of
Section 4.07(a) hereof.

 

“Existing Issuer
Preferred Stock” means the existing Preferred Stock, Second Preferred Stock
and Third Subordinated Preferred Stock of the Issuer outstanding on the Issue
Date.

 

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

 

12

 

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

 

“Global Notes Legend”
means the legend set forth under that caption in Exhibit A to this
Indenture.

 

“Government Securities”
means securities that are:

 

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

 

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

 

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

 

“guarantee” means
a guarantee (other than by endorsement of negotiable instruments for collection
in the ordinary course of business), direct or indirect, in any manner
(including letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness or other obligations.

 

“Guarantee” means
the guarantee by any Guarantor of the Issuer’s Obligations under this
Indenture.  When used as a verb, “Guarantee”
shall have a corresponding meaning.

 

“Guarantor” means
each Restricted Subsidiary that Guarantees the Notes in accordance with the
terms of this Indenture.

 

“Hedging Obligations”
means, with respect to any Person, the obligations of such Person under any
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, commodity swap agreement, commodity cap agreement, commodity collar
agreement, foreign exchange contract, currency swap agreement or similar
agreement providing for the transfer or mitigation of interest rate or currency
risks either generally or under specific contingencies.

 

“Holder” means the
Person in whose name a Note is registered on the Registrar’s books.

 

“Indebtedness”
means, with respect to any Person, without duplication:

 

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

 

(a)           in respect of borrowed money;

 

(b)           evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers’ acceptances (or, without
duplication, reimbursement agreements in respect thereof);

 

13

 

(c)           representing the balance deferred and unpaid of the
purchase price of any property (including Capitalized Lease Obligations),
except (i) any such balance that constitutes a trade payable or similar
obligation to a trade creditor, in each case accrued in the ordinary course of
business and (ii) any earn-out obligation until the amount of such
obligation becomes a liability on the balance sheet of such Person in
accordance with GAAP; or

 

(d)           representing any Hedging Obligations;

 

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

 

(2)           to the extent not otherwise included, any obligation
by such Person to be liable for, or to pay, as obligor, guarantor or otherwise,
on the obligations of the type referred to in clause (1) of a third Person
(whether or not such items would appear upon the balance sheet of the such
obligor or guarantor), other than by endorsement of negotiable instruments for
collection in the ordinary course of business; and

 

(3)           to the extent not otherwise included, the obligations
of the type referred to in clause (1) of a third Person secured by a Lien
on any asset owned by such first Person, whether or not such Indebtedness is
assumed by such first Person;

 

provided, however, that notwithstanding
the foregoing, Indebtedness shall be deemed not to include Contingent
Obligations incurred in the ordinary course of business.

 

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

 

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

 

“Initial Notes”
has the meaning set forth in the recitals hereto.

 

“Initial Purchasers”
means J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Citigroup Global Markets Inc. and Greenwich Capital Markets, Inc.

 

“Interest Payment Date”
means February 15 and August 15 of each year to stated maturity.

 

“Investment Grade
Rating” means a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s and BBB (or the equivalent) by S&P, or an equivalent rating by any
other Rating Agency.

 

“Investment Grade
Securities” means:

 

(1)           securities issued or directly and fully guaranteed or
insured by the United States government or any agency or instrumentality
thereof (other than Cash Equivalents);

 

(2)           debt securities or debt instruments with an Investment
Grade Rating, but excluding any debt securities or instruments constituting
loans or advances among the Issuer and its Subsidiaries;

 

14

 

(3)           investments in any fund that invests exclusively in
investments of the type described in clauses (1) and (2), which fund may
also hold immaterial amounts of cash pending investment or distribution; and

 

(4)           corresponding instruments in countries other than the
United States customarily utilized for high quality investments.

 

“Investments”
means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including guarantees),
advances or capital contributions (excluding accounts receivable, trade credit,
advances to customers, commissions, travel and similar advances to officers and
employees, in each case made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities issued by any other Person and investments that are required by GAAP
to be classified on the balance sheet (excluding the footnotes) of such Person
in the same manner as the other investments included in this definition to the
extent such transactions involve the transfer of cash or other property.  For purposes of the definition of “Unrestricted
Subsidiary” and Section 4.07 hereof:

 

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

 

(a)           the Issuer’s “Investment” in such Subsidiary at the
time of such redesignation; less

 

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

 

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

 

“Investors” means
Ripplewood Holdings L.L.C., J. Rothschild Group Ltd., GoldenTree Asset
Management, L.P., GSO Capital Partners, Merrill Lynch Capital Corporation,
Magnetar Capital and their respective Affiliates but not including, however,
any portfolio companies thereof.

 

“Issue Date” means
March 2, 2007.

 

“Issuer” means,
from and after the consummation of the Transactions, Reader’s Digest and not
any of its Subsidiaries; provided that when used in the context of
determining the fair market value of an asset or liability under this
Indenture, “Issuer” shall be deemed to mean the board of directors of the
Issuer when the fair market value is equal to or in excess of $10.0 million
(unless otherwise expressly stated).

 

“Issuer Order”
means a written request or order signed on behalf of the Issuer by an Officer
of the Issuer, who must be the principal executive officer, the principal
financial officer, the treasurer or the principal accounting officer of such
Issuer, and delivered to the Trustee.

 

15

 

“Legal Holiday”
means a Saturday, a Sunday or a day on which commercial banking institutions
are not required to be open in the State of New York.

 

“Lien” means, with
respect to any asset, any mortgage, lien (statutory or otherwise), pledge,
hypothecation, charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law, including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction; provided that in no event
shall an operating lease be deemed to constitute a Lien.

 

“Merger Agreement”
means the Agreement and Plan of Merger, dated as of November 16, 2006,
among RDA Holding Co., Acquisition Co. and Reader’s Digest, as the same may be
amended prior to the Issue Date.

 

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

 

“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 Proceeds”
means the aggregate cash proceeds and Cash Equivalents received by the Issuer
or any of its Restricted Subsidiaries in respect of any Asset Sale, including
any cash and Cash Equivalents received in a Permitted Asset Swap or upon the
sale or other disposition or collection of any Designated Non-cash
Consideration or securities received in any Asset Sale, net of the direct costs
relating to such Asset Sale and the sale or disposition of such Designated
Non-cash Consideration, including legal, accounting and investment banking
fees, and brokerage and sales commissions, any relocation expenses incurred as
a result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of principal,
premium, if any, and interest on Senior Indebtedness required (other than
required by clause (1) of Section 4.10(b) hereof) to be paid as
a result of such transaction and any deduction of appropriate amounts to be
provided by the Issuer or any of its Restricted Subsidiaries as a reserve in
accordance with GAAP against any liabilities associated with the asset disposed
of in such transaction and retained by the Issuer or any of its Restricted
Subsidiaries after such sale or other disposition thereof, including pension
and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated
with such transaction.

 

“Notes” means the
Initial Notes and more particularly means any Note authenticated and delivered
under this Indenture.  For all purposes
of this Indenture, the term “Notes” shall also include any Additional Notes
that may be issued under a supplemental indenture.  For purposes of this Indenture, all
references to Notes to be issued or authenticated upon transfer, replacement or
exchange shall be deemed to refer to Notes of the applicable series.

 

“Obligations”
means any principal, interest (including any interest accruing subsequent to
the filing of a petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable state, federal or foreign
law), other monetary obligations, penalties, fees, indemnifications,
reimbursements (including reimbursement obligations with respect to letters of
credit and banker’s acceptances), damages and other liabilities, and guarantees
of payment of such principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities, payable under the documentation
governing any Indebtedness.

 

16

 

“Offering Memorandum”
means the offering memorandum, dated February 27, 2007, relating to the
sale of the Initial Notes.

 

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

 

“Officer’s Certificate”
means a certificate signed on behalf of the Issuer or Guarantor, as the case
may be, who must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of the Issuer or
Guarantor, that meets the requirements set forth in this Indenture.

 

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

 

“Permitted Asset Swap”
means the concurrent purchase and sale or exchange of Related Business Assets
or a combination of Related Business Assets and cash or Cash Equivalents
between the Issuer or any of its Restricted Subsidiaries and another Person; provided,
that any cash or Cash Equivalents received must be applied in accordance with Section 4.10
hereof; provided, further, that, in the good faith determination of
the Issuer, the aggregate fair market value of the property or assets being
transferred by the Issuer or such Restricted Subsidiary is not greater than the
aggregate fair market value of the property or assets received by the Issuer or
such Restricted Subsidiary in such exchange (provided, however, that in the event such
aggregate fair market value of the property or assets being transferred or
received by the Issuer is greater than or equal to $15.0 million, such
determination shall be made in good faith by senior management of the Issuer).

 

“Permitted Holders”
means each of the Investors and members of management of the Issuer (or its
direct parent) who are holders of Equity Interests of the Issuer (or any of its
direct or indirect parent companies) on the Issue Date and any group (within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act or any successor provision) of which any of the foregoing are
members; provided, that, in the case of such group and without giving
effect to the existence of such group or any other group, such Investors and
members of management, collectively, have beneficial ownership of more than 50%
of the total voting power of the Voting Stock of the Issuer.  Any person or group where acquisition of
beneficial ownership constitutes a Change of Control in respect of which a
Change of Control Offer is made in accordance with the requirements of this
Indenture shall thereafter, together with its Affiliates, constitute a
Permitted Holder.

 

“Permitted Investments”
means:

 

(1)           any Investment in the Issuer or any of its Restricted
Subsidiaries;

 

(2)           any Investment in cash and Cash Equivalents or
Investment Grade Securities;

 

(3)           any Investment by the Issuer or any of its Restricted
Subsidiaries in a Person that is engaged in a Similar Business if as a result
of such Investment:

 

(a)           such Person becomes a Restricted Subsidiary; or

 

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

 

17

 

and, in each case, any
Investment held by such Person; provided, that such Investment was not
acquired by such Person in contemplation of such acquisition, merger,
consolidation or transfer;

 

(4)           any Investment in securities or other assets not
constituting cash, Cash Equivalents or Investment Grade Securities and received
in connection with an Asset Sale made pursuant to the provisions of Section 4.10
hereof or any other disposition of assets not constituting an Asset Sale;

 

(5)           any Investment existing on the Issue Date;

 

(6)           any Investment acquired by the Issuer or any of its
Restricted Subsidiaries:

 

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

 

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

 

(7)           Hedging Obligations permitted under clause (9) of
Section 4.09(b) hereof ;

 

(8)           Investments the payment for which consists of Equity
Interests (exclusive of Disqualified Stock) of the Issuer or any of its direct
or indirect parent companies; provided, however,
that such Equity Interests shall not increase the amount available for
Restricted Payments under clause (3) of Section 4.07(a);

 

(9)           guarantees of Indebtedness permitted under Section 4.09
hereof;

 

(10)         any transaction to the extent it constitutes an
Investment that is permitted and made in accordance with the provisions of Section 4.11(b) hereof
(except transactions described in clauses (2), (5) and (9) of Section 4.11(b) hereof);

 

(11)         Investments consisting of purchases and acquisitions
of inventory, supplies, material or equipment;

 

(12)         additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant to this clause
(12) that are at that time outstanding (without giving effect to the sale of an
Unrestricted Subsidiary to the extent the proceeds of such sale do not consist
of cash or marketable securities), not to exceed the greater of (x) $50.0
million and (y) 3% of Total Tangible Assets (with the fair market value of
each Investment being measured at the time made and without giving effect to
subsequent changes in value);

 

(13)         Investments made in connection with the funding of
contributions under any non-qualified employee retirement plan or similar
employee compensation plan in an amount not to exceed the amount of
compensation expense recognized by the Issuer and any Restricted Subsidiary in
connection with such plans;

 

(14)         advances to, or guarantees of Indebtedness of,
employees not in excess of $10.0 million outstanding at any one time, in the
aggregate; provided that amounts that are forgiven shall continue to be
deemed outstanding; and

 

18

 

(15)         loans and advances to officers, directors and
employees for business-related travel expenses, moving expenses and other
similar expenses, in each case incurred in the ordinary course of business or
consistent with past practices or to fund such Person’s purchase of Equity
Interests of the Issuer or any direct or indirect parent entity thereof.

 

“Permitted Junior
Securities” means:

 

(1)           Equity Interests in the Issuer, any Guarantor or any
direct or indirect parent of the Issuer; or

 

(2)           unsecured debt securities that are subordinated to all
Senior Indebtedness (and any debt securities issued in exchange for Senior
Indebtedness) to substantially the same extent as, or to a greater extent than,
the Notes and the related Guarantees are subordinated to Senior Indebtedness
under this Indenture;

 

provided that the term “Permitted Junior
Securities” shall not include any securities distributed pursuant to a plan of
reorganization if the Indebtedness under the Senior Credit Facility is treated
as part of the same class as the Notes for purposes of such plan of
reorganization; provided, further, that to the extent that any
Senior Indebtedness of the Issuer or the Guarantors outstanding on the date of
consummation of any such plan of reorganization is not paid in full in cash on
such date, the holders of any such Senior Indebtedness not so paid in full in
cash have consented to the terms of such plan of reorganization.

 

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

 

(1)           pledges or deposits by such Person under workmen’s
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or deposits
to secure public or statutory obligations of such Person or deposits of cash or
U.S. government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for
the payment of rent, in each case incurred in the ordinary course of business;

 

(2)           Liens imposed by law, such as carriers’, warehousemen’s
and mechanics’ Liens, in each case for sums not yet overdue for a period of
more than 30 days or being contested in good faith by appropriate proceedings
or other Liens arising out of judgments or awards against such Person with
respect to which such Person shall then be proceeding with an appeal or other
proceedings for review if adequate reserves with respect thereto are maintained
on the books of such Person in accordance with GAAP;

 

(3)           Liens for taxes, assessments or other governmental
charges not yet overdue for a period of more than 30 days or payable or subject
to penalties for nonpayment or which are being contested in good faith by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of such Person in accordance with GAAP;

 

(4)           Liens in favor of issuers of performance and surety
bonds or bid bonds or with respect to other regulatory requirements or letters
of credit issued pursuant to the request of and for the account of such Person
in the ordinary course of its business;

 

(5)           minor survey exceptions, minor encumbrances, easements
or reservations of, or rights of others for, licenses, rights-of-way, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real properties or Liens
incidental to the conduct of the business of such Person or to the ownership of
its properties

 

19

 

which were not incurred
in connection with Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person;

 

(6)           Liens securing Indebtedness permitted to be incurred
or issued pursuant to clause (11), (17) or (20) of Section 4.09(b) hereof;
provided that Liens securing Indebtedness permitted to be incurred
pursuant to clause (17) are solely on the assets acquired, and Liens on
Indebtedness incurred pursuant to clause (20) are solely on the assets of
Foreign Subsidiaries;

 

(7)           Liens existing on the Issue Date (excluding Liens
under the Senior Credit Facility);

 

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

 

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

 

(10)         Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary
permitted to be incurred in accordance with Section 4.09 hereof;

 

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

 

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

 

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

 

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

 

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

 

(16)         Liens to secure any refinancing, refunding, extension,
renewal or replacement (or successive refinancing, refunding, extensions,
renewals or replacements) as a whole, or in part, of any Indebtedness secured
by any Lien referred to in the foregoing clauses (6), (7), (8) and (9); provided,
however, that (a) such new Lien shall be limited to all or part of
the same property that

 

20

 

secured the original Lien
(plus improvements on such property), and (b) the Indebtedness secured by
such Lien at such time is not increased to any amount greater than the sum of (i) the
outstanding principal amount or, if greater, committed amount of the Indebtedness
described under clauses (6), (7), (8) and (9) at the time the
original Lien became a Permitted Lien under this Indenture, and (ii) an
amount necessary to pay any fees and expenses, including premiums, related to
such refinancing, refunding, extension, renewal or replacement;

 

(17)         deposits made in the ordinary course of business to
secure liability to insurance carriers;

 

(18)         other Liens securing obligations incurred in the
ordinary course of business which obligations do not exceed $25.0 million at
any one time outstanding;

 

(19)         Liens securing judgments for the payment of money not
constituting an Event of Default under clause (5) under Section 6.01
hereof so long as such Liens are adequately bonded and any appropriate legal
proceedings that may have been duly initiated for the review of such judgment
have not been finally terminated or the period within which such proceedings
may be initiated has not expired;

 

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

 

(21)         Liens (i) of a collection bank arising under Section 4-210
of the Uniform Commercial Code, or any comparable or successor provision, on
items in the course of collection, (ii) attaching to commodity trading
accounts or other commodity brokerage accounts incurred in the ordinary course
of business, and (iii) in favor of banking institutions arising as a
matter of law encumbering deposits (including the right of set-off) and which
are within the general parameters customary in the banking industry;

 

(22)         Liens deemed to exist in connection with Investments
in repurchase agreements permitted under Section 4.09 hereof; provided
that such Liens do not extend to any assets other than those that are the
subject of such repurchase agreements;

 

(23)         Liens encumbering reasonable customary initial
deposits and margin deposits and similar Liens attaching to commodity trading
accounts or other brokerage accounts incurred in the ordinary course of
business and not for speculative purposes;

 

(24)         Liens that are contractual rights of set-off (i) relating
to the establishment of depository relations with banks not given in connection
with the issuance of Indebtedness, (ii) relating to pooled deposit or
sweep accounts of the Issuer or any of its Restricted Subsidiaries to permit
satisfaction of overdraft or similar obligations incurred in the ordinary
course of business of the Issuer and its Restricted Subsidiaries or (iii) relating
to purchase orders and other agreements entered into with customers of the
Issuer or any of its Restricted Subsidiaries in the ordinary course of
business; and

 

(25)         Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale or purchase of
goods entered into by the Issuer or any Restricted Subsidiary in the ordinary
course of business.

 

For purposes of this
definition, the term “Indebtedness” shall be deemed to include interest on such
Indebtedness.

 

21

 

“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.

 

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

 

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

 

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

 

“Reader’s Digest”
has the meaning set forth in the preamble hereto.

 

“Record Date” for
the interest or Additional Interest, if any, payable on any applicable Interest
Payment Date means February 1 or August 1 (whether or not a Business
Day) next preceding such Interest Payment Date.

 

“Registration Rights
Agreement” means the Registration Rights Agreement with respect to the
Notes dated as of the Issue Date, among the Issuer, the Guarantors and the
Initial Purchasers.

 

“Related Business
Assets” means assets (other than cash or Cash Equivalents) used or useful
in a Similar Business; provided that any assets received by the Issuer
or a Restricted Subsidiary in exchange for assets transferred by the Issuer or
a Restricted Subsidiary shall not be deemed to be Related Business Assets if
they consist of securities of a Person, unless upon receipt of the securities
of such Person, such Person would become a Restricted Subsidiary.

 

“Representative”
means any trustee, agent or representative (if any) for an issue of Senior Indebtedness
of the Issuer.

 

“Responsible Officer”
means, when used with respect to the Trustee, any officer within the corporate
trust department of the Trustee having direct responsibility for the
administration of this Indenture, or any other officer to whom any corporate
trust matter is referred because of such officer’s knowledge of and familiarity
with the particular subject.

 

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

 

“Restricted Notes
Legend” means the legend set forth in Section 2.3(e)(i) of Appendix
A to this Indenture.

 

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

 

“S&P” means
Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.,
and any successor to its rating agency business.

 

22

 

“Sale and Lease-Back
Transaction” means any arrangement providing for the leasing by the Issuer
or any of its Restricted Subsidiaries of any real or tangible personal
property, which property has been or is to be sold or transferred by the Issuer
or such Restricted Subsidiary to a third Person in contemplation of such
leasing.

 

“SEC” means the
U.S. Securities and Exchange Commission.

 

“Secured Indebtedness”
means any Indebtedness of the Issuer or any of its Restricted Subsidiaries
secured by a Lien.

 

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

 

“Senior Credit
Facility” means the Credit Facility under the Credit Agreement to be
entered into as of the Issue Date by and among Acquisition Co., RDA Holding
Co., Reader’s Digest, the overseas borrowers party thereto, the lenders party
thereto in their capacities as lenders thereunder, JPMorgan Chase Bank, N.A.,
as administrative agent, Citicorp North America, Inc., as co-syndication
agent, Merrill Lynch, Pierce, Fenner & Smith, as co-syndication agent,
and The Royal Bank of Scotland plc, as documentation agent, including any
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements, refundings or refinancings thereof and any
indentures or credit facilities or commercial paper facilities with banks or
other institutional lenders or investors that replace, refund or refinance any
part of the loans, notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing facility or indenture
that increases the amount borrowable thereunder or alters the maturity thereof
(provided that such increase in borrowings is permitted under Section 4.09
hereof).

 

“Senior Indebtedness”
means:

 

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

 

(2)           all Hedging Obligations (and guarantees thereof) owing
to a Lender (as defined in the Senior Credit Facility) or any Affiliate of such
Lender (or any Person that was a Lender or an Affiliate of such Lender at the
time the applicable agreement giving rise to such Hedging Obligation was
entered into); provided that such Hedging Obligations are permitted to
be incurred under the terms of this Indenture;

 

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

 

(4)           all Obligations with respect to the items listed in
the preceding clauses (1), (2) and (3);

 

23

 

provided, however, that Senior
Indebtedness shall not include:

 

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

 

(b)           any liability for federal, state, local or other taxes
owed or owing by such Person;

 

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

 

(d)           any Indebtedness or other Obligation of such Person
which is subordinate or junior in any respect to any other Indebtedness or
other Obligation of such Person; or

 

(e)           that portion of any Indebtedness which at the time of
incurrence is incurred in violation of this Indenture; provided, however,
that such Indebtedness shall be deemed not to have been incurred in violation
of this Indenture for purposes of this clause if such Indebtedness consists of
Designated Senior Indebtedness and the holder(s) of such Indebtedness of
their agent or representative (a) had no actual knowledge at the time of
incurrence that the incurrence of such Indebtedness violated this Indenture and
(b) shall have receive a certificate from an Officer of the Issuer to the
effect that the incurrence of such Indebtedness does not violate the provisions
of this Indenture.

 

“Senior Subordinated
Indebtedness” means:

 

(1)           with respect to the Issuer, Indebtedness which ranks
equal in right of payment to the Notes issued by the Issuer; and

 

(2)           with respect to any Guarantor, Indebtedness which
ranks equal in right of payment to the Guarantee of such entity of the Notes.

 

“Shelf Registration
Statement” means the Shelf Registration Statement as defined in the
Registration Rights Agreement.

 

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

 

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

 

“Sponsor Management
Agreement” means the management agreement between certain of the management
companies associated with the Investors and Reader’s Digest.

 

“Subordinated
Indebtedness” means,

 

(1)           with respect to the Issuer, any Indebtedness of the
Issuer which is by its terms subordinated in right of payment to the Notes, and

 

(2)           with respect to any Guarantor, any Indebtedness of any
Guarantor which is by its terms subordinated in right of payment to the
Guarantee of such entity of the Notes.

 

“Subsidiary”
means, with respect to any Person:

 

24

 

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

 

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

 

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

 

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

 

“Total Assets”
means the total assets of the Issuer and its Restricted Subsidiaries on a
consolidated basis determined in accordance with GAAP, as shown on the most
recent balance sheet of the Issuer or such other Person as may be expressly
stated.

 

“Total Tangible Assets”
means Total Assets after deducting accumulated depreciation and amortization,
allowances for doubtful accounts, other applicable reserves and other similar
items of the Issuer and its Restricted Subsidiaries and after deducting, to the
extent otherwise included therein, the amounts of (without duplication):

 

(1)           the excess of cost of the fair market value of assets
or business acquired, as determined by the Issuer in good faith (or if such
fair market value exceeds $50.0 million, in writing by an Independent Financial
Advisor);

 

(2)           any revaluation or other write-up in book value of
assets subsequent to the last day of the fiscal quarter of the Issuer
immediately preceding the Issue Date as a result of a change in the method of
valuation in accordance with GAAP;

 

(3)           unamortized debt discount and expenses and other
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental expenses and
other intangible items;

 

(4)           minority interest in consolidated Subsidiaries held by
Persons other than the Company or any Restricted Subsidiary;

 

(5)           treasury stock;

 

(6)           cash or securities set aside and held in a sinking or
other analogous fund established for the purpose of redemption or other
retirement of Capital Stock; and

 

(7)           Investments in and assets of Unrestricted
Subsidiaries.

 

25

 

“Transactions”
means the transactions contemplated by the Merger Agreement and the
Contribution Agreements, the issuance of the Notes and borrowings under the
Senior Credit Facility as in effect on the Issue Date.

 

“Transfer Restricted
Notes” means Definitive Notes and any other Notes that bear or are required
to bear the Restricted Notes Legend.

 

“Treasury Rate”
means, as of any Redemption Date, the yield to maturity as of such Redemption
Date of United States Treasury securities with a constant maturity (as compiled
and published in the most recent Federal Reserve Statistical Release H.15 (519)
that has become publicly available at least two Business Days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to February 15, 2012; provided, however,
that if the period from the Redemption Date to February 15, 2012 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year will be used.

 

“Trust Indenture Act”
means the Trust Indenture Act of 1939, as amended (15 U.S.C.
§§ 77aaa-777bbbb).

 

“Trustee” means
The Bank of New York, as trustee, until a successor replaces it in accordance
with the applicable provisions of this Indenture and thereafter means the
successor serving hereunder.

 

“Unrestricted
Subsidiary” means:

 

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

 

(2)           any Subsidiary of an Unrestricted Subsidiary.

 

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

 

(1)           any Unrestricted Subsidiary must be an entity of which
the Equity Interests entitled to cast at least a majority of the votes that may
be cast by all Equity Interests having ordinary voting power for the election
of directors or Persons performing a similar function are owned, directly or
indirectly, by the Issuer;

 

(2)           such designation complies with Section 4.07
hereof; and

 

(3)           each of:

 

(a)           the Subsidiary to be so designated; and

 

(b)           its Subsidiaries

 

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

 

26

 

The Board of Directors of
the Issuer may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that, immediately after giving effect to such
designation, no Default shall have occurred and be continuing and either:

 

(1)           the Issuer could incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Leverage Ratio test described in Section 4.09(a) hereof;
or

 

(2)           the Consolidated Leverage Ratio for the Issuer its
Restricted Subsidiaries would be lower than such ratio for the Issuer and its
Restricted Subsidiaries immediately prior to such designation,

 

in each case on a pro forma basis taking into account such
designation.

 

Any such designation by
the Issuer shall be notified by the Issuer to the Trustee by promptly filing
with the Trustee a copy of the resolution of the board of directors of the
Issuer or any committee thereof giving effect to such designation and an
Officer’s Certificate certifying that such designation complied with the
foregoing provisions.

 

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

 

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

 

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

 

(2)           the sum of all such payments.

 

“Wholly-Owned
Subsidiary” of any Person means a Subsidiary of such Person, 100% of the
outstanding Equity Interests of which (other than directors’ qualifying shares
and shares issued to foreign nationals under applicable law) shall at the time
be owned by such Person or by one or more Wholly-Owned Subsidiaries of such
Person.

 

“WRC Media” means
WRC Media Inc., a Delaware corporation and a Subsidiary of the Issuer.

 

Section 1.02           Other Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Acceptable Commitment”

  	
   

  	
  4.10

  
	
  “Agent Members”

  	
   

  	
  2.1(c) of

  Appendix A

  
	
  “Affiliate Transaction”

  	
   

  	
  4.11

  
	
  “Applicable Procedures”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Asset Sale Offer”

  	
   

  	
  4.10

  
	
  “Authentication Order”

  	
   

  	
  2.02

  
	
  “Blockage Notice”

  	
   

  	
  10.03

  

 

27

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Change of Control
  Offer”

  	
   

  	
  4.14

  
	
  “Change of Control
  Payment”

  	
   

  	
  4.14

  
	
  “Change of Control
  Payment Date”

  	
   

  	
  4.14

  
	
  “Clearstream”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Covenant Defeasance”

  	
   

  	
  8.03

  
	
  “DTC”

  	
   

  	
  2.03

  
	
  “Event of Default”

  	
   

  	
  6.01

  
	
  “Excess Proceeds”

  	
   

  	
  4.10

  
	
  “Global Note”

  	
   

  	
  2.1(b) of

  Appendix A

  
	
  “Guarantee Blockage
  Notice”

  	
   

  	
  12.03

  
	
  “Guarantee Payment
  Blockage Period”

  	
   

  	
  12.03

  
	
  “Guarantor Non-Payment
  Default”

  	
   

  	
  12.03

  
	
  “Guarantor Payment
  Default”

  	
   

  	
  12.03

  
	
  “incur”

  	
   

  	
  4.09

  
	
  “IAI”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “IAI Global Note”

  	
   

  	
  2.1(b) of

  Appendix A

  
	
  “Legal Defeasance”

  	
   

  	
  8.02

  
	
  “Non-Payment Default”

  	
   

  	
  10.03

  
	
  “Note Register”

  	
   

  	
  2.03

  
	
  “Offer Amount”

  	
   

  	
  3.09

  
	
  “Offer Period”

  	
   

  	
  3.09

  
	
  “Pari Passu
  Indebtedness”

  	
   

  	
  4.10

  
	
  “pay its Guarantee”

  	
   

  	
  12.03

  
	
  “pay the Notes”

  	
   

  	
  10.03

  
	
  “Paying Agent”

  	
   

  	
  2.03

  
	
  “Payment Blockage
  Period”

  	
   

  	
  10.03

  
	
  “Payment Default”

  	
   

  	
  10.03

  
	
  “Purchase Date”

  	
   

  	
  3.09

  
	
  “QIB”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Redemption Date”

  	
   

  	
  3.07

  
	
  “Refinancing Indebtedness”

  	
   

  	
  4.09

  
	
  “Refunding Capital
  Stock”

  	
   

  	
  4.07

  
	
  “Registrar”

  	
   

  	
  2.03

  
	
  “Regulation S”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Regulation S Global
  Note”

  	
   

  	
  2.1(b) of

  Appendix A

  
	
  “Regulation S Notes”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Restricted Payments”

  	
   

  	
  4.07

  
	
  “Restricted Period”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Rule 501”

  	
   

  	
  1.1(a) of

  Appendix A

  

 

28

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Rule 144”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Rule 144A”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Rule 144A Global
  Note”

  	
   

  	
  2.1(b) of

  Appendix A

  
	
  “Rule 144A Notes”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Rule 904”

  	
   

  	
  1.1(a) of

  Appendix A

  
	
  “Second Commitment”

  	
   

  	
  4.10

  
	
  “Successor Company”

  	
   

  	
  5.01

  
	
  “Successor Person”

  	
   

  	
  5.01

  
	
  “Treasury Capital
  Stock”

  	
   

  	
  4.07

  

 

Section 1.03           Incorporation by Reference of Trust Indenture Act.

 

Whenever this Indenture
refers to a provision of the Trust Indenture Act, the provision is incorporated
by reference in and made a part of this Indenture.

 

The following Trust
Indenture Act terms used in this Indenture have the following meanings:

 

“Commission” means the
SEC;

 

“indenture
securities” means the Notes;

 

“indenture
security Holder” means a Holder of a Note;

 

“indenture to be
qualified” means this Indenture;

 

“indenture trustee”
or “institutional trustee” means the Trustee; and

 

“obligor” on the
Notes and the Guarantees means the Issuer and the Guarantors, respectively, and
any successor obligor upon the Notes and the Guarantees, respectively.

 

All other terms used in
this Indenture that are defined by the Trust Indenture Act, defined by Trust
Indenture Act reference to another statute or defined by SEC rule under
the Trust Indenture Act have the meanings so assigned to them.

 

Section 1.04           Rules of Construction.

 

Unless the context
otherwise requires:

 

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

 

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

 

29

 

(c)           “or” is not exclusive;

 

(d)           words in the singular include the plural, and in the
plural include the singular;

 

(e)           “will” shall be interpreted to express a command;

 

(f)            provisions apply to successive events and
transactions;

 

(g)           references to sections of, or rules under, the
Securities Act shall be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time;

 

(h)           unless the context otherwise requires, any reference
to an “Article,” “Section” or “clause” refers to an Article, Section or
clause, as the case may be, of this Indenture; and

 

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

 

Section 1.05           Acts of Holders.

 

(a)           Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing.  Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Issuer.  Proof of execution of any such instrument or
of a writing appointing any such agent, or the holding by any Person of a Note,
shall be sufficient for any purpose of this Indenture and (subject to Section 7.01)
conclusive in favor of the Trustee and the Issuer, if made in the manner provided
in this Section 1.05.

 

(b)           The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof.  Where such execution is by or
on behalf of any legal entity other than an individual, such certificate or
affidavit shall also constitute proof of the authority of the Person executing
the same.  The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner that the Trustee
deems sufficient.

 

(c)           The ownership of Notes shall be proved by the Note
Register.

 

(d)           Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of any action taken, suffered or omitted by the Trustee or the Issuer
in reliance thereon, whether or not notation of such action is made upon such
Note.

 

(e)           The Issuer may, in the circumstances permitted by the
Trust Indenture Act, set a record date for purposes of determining the identity
of Holders entitled to give any request, demand, authorization, direction,
notice, consent, waiver or take any other act, or to vote or consent to any
action by vote or consent authorized or permitted to be given or taken by
Holders.  Unless otherwise specified, if

 

30

 

not set by the Issuer
prior to the first solicitation of a Holder made by any Person in respect of
any such action, or in the case of any such vote, prior to such vote, any such
record date shall be the later of 30 days prior to the first solicitation of
such consent or the date of the most recent list of Holders furnished to the
Trustee prior to such solicitation.

 

(f)            Without limiting the foregoing, a Holder entitled to
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of the principal amount of such Note or by one or
more duly appointed agents, each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.  Any notice given or action taken by a Holder
or its agents with regard to different parts of such principal amount pursuant
to this paragraph shall have the same effect as if given or taken by separate
Holders of each such different part.

 

(g)           Without limiting the generality of the foregoing, a
Holder, including DTC that is the Holder of a Global Note, may make, give or
take, by a proxy or proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
this Indenture to be made, given or taken by Holders, and DTC that is the
Holder of a Global Note may provide its proxy or proxies to the beneficial
owners of interests in any such Global Note through such depositary’s standing
instructions and customary practices.

 

(h)           The Issuer may fix a record date for the purpose of
determining the Persons who are beneficial owners of interests in any Global
Note held by DTC entitled under the procedures of such depositary to make, give
or take, by a proxy or proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
this Indenture to be made, given or taken by Holders.  If such a record date is fixed, the Holders
on such record date or their duly appointed proxy or proxies, and only such
Persons, shall be entitled to make, give or take such request, demand,
authorization, direction, notice, consent, waiver or other action, whether or
not such Holders remain Holders after such record date.  No such request, demand, authorization,
direction, notice, consent, waiver or other action shall be valid or effective
if made, given or taken more than 90 days after such record date.

 

ARTICLE 2

 

THE NOTES

 

Section 2.01           Form and Dating; Terms.

 

(a)           General.  Provisions
relating to the Initial Notes, Additional Notes and Exchange Notes are set
forth in Appendix A, which is hereby incorporated in and expressly made
a part of this Indenture.  The (a) Initial
Notes and the Trustee’s certificate of authentication and (b) any
Additional Notes (if issued as Transfer Restricted Notes) and the Trustee’s
certificate of authentication shall each be substantially in the form of Exhibit A
hereto, which is hereby incorporated in and expressly made a part of this
Indenture.  The Exchange Notes and any
Additional Notes issued other than as Transfer Restricted Notes and the Trustee’s
certificate of authentication shall each be substantially in the form of Exhibit B
hereto, which is hereby incorporated in and expressly made a part of this
Indenture.  The Notes may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Issuer or any Guarantor is subject, if any, or usage (provided that
any such notation, legend or endorsement is in a form acceptable to the
Issuer).  Each Note shall be dated the
date of its authentication.  The Notes
shall be in denominations of $2,000 and integral multiples of $1,000 in excess
thereof.

 

(b)           Terms.  The aggregate
principal amount of Notes that may be authenticated and delivered under this
Indenture is unlimited.

 

31

 

The terms and provisions
contained in the Notes shall constitute, and are hereby expressly made, a part
of this Indenture and the Issuer, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby. 
However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.

 

The Notes shall be
subject to repurchase by the Issuer pursuant to an Asset Sale Offer as provided
in Section 4.10 hereof or a Change of Control Offer as provided in Section 4.14
hereof.  The Notes shall not be
redeemable, other than as provided in Article 3.

 

Additional Notes ranking pari passu with the Initial Notes may be
created and issued from time to time by the Issuer without notice to or consent
of the Holders and shall be consolidated with and form a single class with the
Initial Notes and shall have the same terms as to status, redemption or
otherwise as the Initial Notes; provided that the Issuer’s ability to
issue Additional Notes shall be subject to the Issuer’s compliance with Section 4.09
hereof.

 

Section 2.02           Execution and Authentication.

 

At least one Officer
shall execute the Notes on behalf of each Issuer by manual or facsimile
signature.

 

If an Officer whose
signature is on a Note no longer holds that office at the time a Note is
authenticated, the Note shall nevertheless be valid.

 

A Note shall not be
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose until authenticated substantially in the form of Exhibit A
or Exhibit B attached hereto, as the case may be, by the manual
signature of the Trustee.  The signature
shall be conclusive evidence that the Note has been duly authenticated and
delivered under this Indenture.

 

On the Issue Date, the
Trustee shall, upon receipt of an Issuer Order (an “Authentication Order”),
authenticate and deliver the Initial Notes. 
In addition, at any time, from time to time, the Trustee shall upon an
Authentication Order authenticate and deliver any Additional Notes and Exchange
Notes for an aggregate principal amount specified in such Authentication Order
for such Additional Notes or Exchange Notes issued hereunder.

 

The Trustee shall not be
required to authenticate any Additional Notes, nor will it be liable for its
refusal to authenticate any Additional Notes, if the issue of such Additional
Notes will affect the Trustee’s own rights, duties or immunities under the
Notes and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee or if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or may expose the Trustee
to personal liability to existing Holders or others.

 

The Trustee may appoint
an authenticating agent acceptable to the Issuer to authenticate Notes.  An authenticating agent may authenticate
Notes whenever the Trustee may do so.  Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent.  An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Issuer.

 

Section 2.03           Registrar and Paying Agent.

 

The Issuer shall maintain
an office or agency where Notes may be presented for registration of transfer
or for exchange (“Registrar”) and an office or agency where Notes may be
presented for payment (“Paying Agent”), each in the Borough of Manhattan
in the City of New York.

 

32

 

The Registrar shall keep
a register of the Notes (“Note Register”) and of their transfer and
exchange.  The Issuer may appoint one or
more co-registrars and one or more additional paying agents.  The term “Registrar” includes any
co-registrar, and the term “Paying Agent” includes any additional paying
agent.  The Issuer may change any Paying
Agent or Registrar without prior notice to any Holder.  The Issuer shall notify the Trustee in
writing of the name and address of any Agent not a party to this
Indenture.  If the Issuer fails to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such.  The Issuer or any of
its Subsidiaries may act as Paying Agent or Registrar.

 

The Issuer initially
appoints The Depository Trust Company (“DTC”) to act as Depositary with
respect to the Global Notes.

 

The Issuer initially
appoints the Trustee to act as the Paying Agent and Registrar for the Notes and
to act as Custodian with respect to the Global Notes.

 

Section 2.04           Paying Agent to Hold Money in Trust.

 

The Issuer shall require
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal, premium, if any, or
Additional Interest, if any, or interest on the Notes, and will notify the
Trustee of any default by the Issuer in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee.  The Issuer at any
time may require a Paying Agent to pay all money held by it to the
Trustee.  Upon payment over to the
Trustee, the Paying Agent (if other than the Issuer or a Subsidiary) shall have
no further liability for the money.  If
the Issuer or a Subsidiary acts as Paying Agent, it shall segregate and hold in
a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent.  Upon any bankruptcy or
reorganization proceedings relating to the Issuer, the Trustee shall serve as
Paying Agent for the Notes.

 

Section 2.05           Holder Lists.

 

The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of all Holders and shall otherwise
comply with Trust Indenture Act Section 312(a).  If the Trustee is not the Registrar, the
Issuer shall furnish to the Trustee at least two Business Days before each
Interest Payment Date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes, and the Issuer
shall otherwise comply with Trust Indenture Act Section 312(a).

 

Section 2.06           Transfer and Exchange.

 

(a)           The Notes shall be issued in registered form and shall
be transferable only upon the surrender of a Note for registration of transfer
and in compliance with Appendix A.

 

(b)           To permit registrations of transfers and exchanges,
the Issuer shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02
hereof or at the Registrar’s request.

 

(c)           No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note for
any registration of transfer or exchange, but the Holders shall be required to
pay any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.09,
4.10, 4.14 and 9.05 hereof).

 

33

 

(d)           Neither the Registrar nor the Issuer shall be required
to register the transfer of or exchange any Note selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.

 

(e)           All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid obligations of the Issuer, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Global Notes or Definitive
Notes surrendered upon such registration of transfer or exchange.

 

(f)            The Issuer shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period beginning at
the opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (C) to register the transfer
of or to exchange a Note between a Record Date and the next succeeding Interest
Payment Date.

 

(g)           Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Issuer may deem and treat
the Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of (and premium, if any)
and interest (including Additional Interest, if any) on such Notes and for all
other purposes, and none of the Trustee, any Agent or the Issuer shall be
affected by notice to the contrary.

 

(h)           Upon surrender for registration of transfer of any
Note at the office or agency of the Issuer designated pursuant to Section 4.02
hereof, the Issuer shall execute, and the Trustee shall authenticate and mail,
in the name of the designated transferee or transferees, one or more
replacement Notes of any authorized denomination or denominations of a like
aggregate principal amount.

 

(i)            At the option of the Holder, Notes may be exchanged
for other Notes of any authorized denomination or denominations of a like
aggregate principal amount upon surrender of the Notes to be exchanged at such
office or agency.  Whenever any Global
Notes or Definitive Notes are so surrendered for exchange, the Issuer shall
execute, and the Trustee shall authenticate and mail, the replacement Global
Notes and Definitive Notes which the Holder making the exchange is entitled to
in accordance with the provisions of Section 2.02 hereof.

 

(j)            All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this Section 2.06
to effect a registration of transfer or exchange may be submitted by facsimile.

 

Section 2.07           Replacement Notes.

 

If any mutilated Note is
surrendered to the Trustee, the Registrar or the Issuer and the Trustee
receives evidence to its satisfaction of the ownership and destruction, loss or
theft of any Note, the Issuer shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee’s
requirements are met.  If required by the
Trustee or the Issuer, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Issuer to protect the Issuer,
the Trustee, any Agent and any authenticating agent from any loss that any of
them may suffer if a Note is replaced. 
The Issuer and the Trustee may charge for their expenses in replacing a
Note.

 

Every replacement Note is
a contractual obligation of the Issuer and shall be entitled to all of the
benefits of this Indenture equally and proportionately with all other Notes
duly issued hereunder.

 

34

 

Section 2.08           Outstanding Notes.

 

The Notes outstanding at
any time are all the Notes authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation, those reductions in the
interest in a Global Note effected by the Trustee in accordance with the
provisions hereof, and those described in this Section 2.08 as not
outstanding.  Except as set forth in Section 2.09
hereof, a Note does not cease to be outstanding because the Issuer or an
Affiliate of the Issuer holds the Note.

 

If a Note is replaced
pursuant to Section 2.07 hereof, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
protected purchaser.

 

If the principal amount
of any Note is considered paid under Section 4.01 hereof, it ceases to be
outstanding and interest on it ceases to accrue.

 

If the Paying Agent
(other than the Issuer, a Subsidiary or an Affiliate of any thereof) holds, on
a redemption date or maturity date, money sufficient to pay Notes payable on
that date, then on and after that date such Notes shall be deemed to be no
longer outstanding and shall cease to accrue interest.

 

Section 2.09           Treasury Notes.

 

In determining whether
the Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Issuer, or by any Affiliate of
the Issuer, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes that a Responsible Officer of
the Trustee knows are so owned shall be so disregarded.  Notes so owned which have been pledged in
good faith shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right to deliver any such direction,
waiver or consent with respect to the Notes and that the pledgee is not the
Issuer or any obligor upon the Notes or any Affiliate of the Issuer or of such
other obligor.

 

Section 2.10           Temporary Notes.

 

Until certificates
representing Notes are ready for delivery, the Issuer may prepare and the
Trustee, upon receipt of an Authentication Order, shall authenticate temporary
Notes.  Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that
the Issuer considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee.  Without
unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate
definitive Notes in exchange for temporary Notes.

 

Holders and beneficial
holders, as the case may be, of temporary Notes shall be entitled to all of the
benefits accorded to Holders, or beneficial holders, respectively, of Notes
under this Indenture.

 

Section 2.11           Cancellation.

 

The Issuer at any time
may deliver Notes to the Trustee for cancellation. The Registrar and Paying
Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. 
The Trustee or, at the direction of the Trustee, the Registrar or the
Paying Agent and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes in accordance with its customary procedures
(subject to the record retention requirement of the Exchange Act).  Certification of the

 

35

 

destruction of all
cancelled Notes shall upon the written request of the Issuer be delivered to
the Issuer.  The Issuer may not issue new
Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.

 

Section 2.12           Defaulted Interest.

 

If the Issuer defaults in
a payment of interest on the Notes, it shall pay the defaulted interest in any
lawful manner plus, to the extent lawful, interest payable on the defaulted
interest to the Persons who are Holders on a subsequent special record date, in
each case at the rate provided in the Notes and in Section 4.01
hereof.  The Issuer shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Note and the date of the proposed payment, and at the same time the Issuer
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such defaulted interest as provided in this Section 2.12.  The Trustee shall fix or cause to be fixed
each such special record date and payment date; provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest.  The
Trustee shall promptly notify the Issuer of such special record date.  At least 15 days before the special record
date, the Issuer (or, upon the written request of the Issuer, the Trustee in
the name and at the expense of the Issuer) shall mail or cause to be mailed,
first-class postage prepaid, to each Holder a notice at his or her address as
it appears in the Note Register that states the special record date, the
related payment date and the amount of such interest to be paid.

 

Subject to the foregoing
provisions of this Section 2.12 and for greater certainty, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.

 

Section 2.13           CUSIP Numbers

 

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

 

ARTICLE 3

 

REDEMPTION

 

Section 3.01           Notices to Trustee.

 

If the Issuer elects to
redeem Notes pursuant to Section 3.07 hereof, it shall furnish to the
Trustee, at least 5 Business Days before notice of redemption is required to be
mailed or caused to be mailed to Holders pursuant to Section 3.03 hereof
but not more than 60 days before a redemption date, an Officer’s Certificate
setting forth (i) the paragraph or subparagraph of such Note and/or Section of
this Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of the Notes to be redeemed
and (iv) the redemption price.

 

36

 

Section 3.02           Selection of Notes to Be Redeemed or Purchased.

 

If less than all of the
Notes are to be redeemed or purchased in an offer to purchase at any time, the
Trustee shall select the Notes to be redeemed or purchased (a) if the
Notes are listed on any national securities exchange, in compliance with the
requirements of the principal national securities exchange on which the Notes
are listed or (b) on a pro rata
basis or, to the extent that selection on a pro
rata basis is not practicable, by lot or by such other method the
Trustee shall deem fair and appropriate in accordance with the procedures of
DTC.  In the event of partial redemption or
purchase by lot, the particular Notes to be redeemed or purchased shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption or purchase.

 

The Trustee shall
promptly notify the Issuer in writing of the Notes selected for redemption or
purchase and, in the case of any Note selected for partial redemption or
purchase, the principal amount thereof to be redeemed or purchased.  Notes and portions of Notes selected shall be
in amounts of $2,000 or whole multiples of $1,000 on excess thereof; no Notes
of $2,000 or less can be redeemed in part, except that if all of the Notes of a
Holder are to be redeemed or purchased, the entire outstanding amount of Notes
held by such Holder, even if not $2,000 or a multiple of $1,000 in excess
thereof, shall be redeemed or purchased. 
Except as provided in the preceding sentence, provisions of this
Indenture that apply to Notes called for redemption or purchase also apply to
portions of Notes called for redemption or purchase.

 

Section 3.03           Notice of Redemption.

 

Subject to Section 3.09
hereof, the Issuer shall mail or cause to be mailed by first-class mail,
postage prepaid, notices of redemption at least 30 days but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at such
Holder’s registered address or otherwise in accordance with the procedures of
DTC, except that redemption notices may be mailed more than 60 days prior to a
redemption date if the notice is issued in connection with Article 8 or Article 13
hereof.  Except as set forth in Section 3.07(c) hereof,
notices of redemption may not be conditional.

 

The notice shall identify
the Notes to be redeemed and shall state:

 

(a)           the redemption date;

 

(b)           the redemption price;

 

(c)           if any Note is to be redeemed in part only, the
portion of the principal amount of that Note that is to be redeemed and that,
after the redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion of the original Note
representing the same indebtedness to the extent not redeemed will be issued in
the name of the Holder of the Notes upon cancellation of the original Note;

 

(d)           the name and address of the Paying Agent;

 

(e)           that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;

 

(f)            that, unless the Issuer defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;

 

37

 

(g)           the paragraph or subparagraph of the Notes and/or Section of
this Indenture pursuant to which the Notes called for redemption are being
redeemed;

 

(h)           that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or printed on
the Notes; and

 

(i)            if in connection with a redemption pursuant to Section 3.07(c) hereof,
any condition to such redemption.

 

At the Issuer’s request,
the Trustee shall give the notice of redemption in the Issuer’s name and at the
Issuer’s expense; provided that the Issuer shall have delivered to the
Trustee, at least 5 Business Days before notice of redemption is required to be
mailed or caused to be mailed to Holders pursuant to this Section 3.03
(unless a shorter notice shall be agreed to by the Trustee), an Officer’s
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.

 

Section 3.04           Effect of Notice of Redemption.

 

Once notice of redemption
is mailed in accordance with Section 3.03 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the
redemption price (except as provided for in Section 3.07(c) hereof).  The notice, if mailed in a manner herein
provided, shall be conclusively presumed to have been given, whether or not the
Holder receives such notice.  In any case,
failure to give such notice by mail or any defect in the notice to the Holder
of any Note designated for redemption in whole or in part shall not affect the
validity of the proceedings for the redemption of any other Note.  Subject to Section 3.05 hereof, on and
after the redemption date, interest ceases to accrue on Notes or portions of
Notes called for redemption.

 

Section 3.05           Deposit of Redemption or Purchase Price.

 

Prior to 10:00 a.m.
(New York City time) on the redemption or purchase date, the Issuer shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption or purchase price of and accrued and unpaid interest (including
Additional Interest, if any) on all Notes to be redeemed or purchased on that
date.  The Trustee or the Paying Agent
shall promptly return to the Issuer any money deposited with the Trustee or the
Paying Agent by the Issuer in excess of the amounts necessary to pay the
redemption price of, and accrued and unpaid interest on, all Notes to be redeemed
or purchased.

 

If the Issuer complies
with the provisions of the preceding paragraph, on and after the redemption or
purchase date, interest shall cease to accrue on the Notes or the portions of
Notes called for redemption or purchase. 
If a Note is redeemed or purchased on or after a Record Date but on or
prior to the related Interest Payment Date, then any accrued and unpaid
interest to the redemption or purchase date shall be paid to the Person in
whose name such Note was registered at the close of business on such Record
Date.  If any Note called for redemption
or purchase shall not be so paid upon surrender for redemption or purchase
because of the failure of the Issuer to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption or purchase
date until such principal is paid, and to the extent lawful on any interest
accrued to the redemption or purchase date not paid on such unpaid principal,
in each case at the rate provided in the Notes and in Section 4.01 hereof.

 

Section 3.06           Notes Redeemed or Purchased in Part.

 

Upon surrender of a Note
that is redeemed or purchased in part, the Issuer shall issue and the Trustee
shall authenticate for the Holder at the expense of the Issuer a new Note equal
in principal

 

38

 

amount to the unredeemed
or unpurchased portion of the Note surrendered representing the same
indebtedness to the extent not redeemed or purchased; provided that each
new Note will be in a principal amount of $2,000 or an integral multiple of
$1,000 in excess thereof.  It is
understood that, notwithstanding anything in this Indenture to the contrary,
only an Authentication Order and not an Opinion of Counsel or Officer’s
Certificate is required for the Trustee to authenticate such new Note.

 

Section 3.07           Optional Redemption.

 

(a)           At any time prior to February 15, 2012, the
Issuer may redeem all or a part of the Notes, upon not less than 30 nor more
than 60 days’ prior notice mailed by first class mail to the registered address
of each Holder or otherwise in accordance with the procedures of DTC, at a
redemption price equal to 100% of the principal amount of the Notes redeemed
plus the Applicable Premium as of, and accrued and unpaid interest and Additional
Interest, if any, to the date of redemption (the “Redemption Date”),
subject to the rights of Holders on the relevant Record Date to receive
interest due on the relevant Interest Payment Date.

 

(b)           Until February 15, 2010, the Issuer may, at its
option, redeem up to 35% of the aggregate principal amount of Notes issued by
it at a redemption price equal to 109% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable Redemption Date, subject to the right of Holders of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date, with the net cash proceeds of one or more Equity
Offerings; provided that at least 65% of the sum of the original aggregate
principal amount of Notes issued under the Indenture and the original aggregate
principal amount any Additional Notes that are Notes issued under Indenture
after the Issue Date remains outstanding immediately after the occurrence of
each such redemption; provided  further
that each such redemption occurs within 90 days of the date of closing of
each such Equity Offering. Any notice of redemption upon any Equity Offering
may be given prior to the completion of such Equity Offering, and any such redemption
or notice may, at the Issuer’s discretion, be subject to one or more conditions
precedent, including, but not limited to, completion of the related Equity
Offering.

 

(c)           Except pursuant to clause (a) or (b) of this
Section 3.07, the Notes will not be redeemable at the Issuers’ option
prior to February 15, 2012.

 

(d)           On and after February 15, 2012, the Issuer may
redeem the Notes, in whole or in part, upon notice pursuant to Section 3.02
hereof at the redemption prices (expressed as percentages of principal amount
of the Notes to be redeemed) set forth below, plus accrued and unpaid interest
thereon and Additional Interest, if any, to the applicable Redemption Date,
subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date, if redeemed during
the twelve-month period beginning on February 15 of each of the years
indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2012

  	
   

  	
  104.500

  	
  %

  
	
  2013

  	
   

  	
  103.000

  	
  %

  
	
  2014

  	
   

  	
  101.500

  	
  %

  
	
  2015 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(e)           Any redemption pursuant to this Section 3.07
shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

 

39

 

Section 3.08           Mandatory Redemption.

 

The Issuer shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.

 

Section 3.09           Offers to Repurchase by Application of Excess
Proceeds.

 

(a)           In the event that, pursuant to Section 4.10
hereof, the Issuer shall be required to commence an Asset Sale Offer, they
shall follow the procedures specified below.

 

(b)           The Asset Sale Offer shall remain open for a period of
20 Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the “Offer Period”).  No later than five Business Days after the
termination of the Offer Period (the “Purchase Date”), the Issuer shall
apply all Excess Proceeds (the “Offer Amount”) to the purchase of Notes
and, if required, Pari Passu Indebtedness (on a pro rata basis, if applicable), or, if less than the Offer
Amount has been tendered, all Notes and Pari Passu Indebtedness tendered in
response to the Asset Sale Offer. 
Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.

 

(c)           If the Purchase Date is on or after a Record Date and
on or before the related Interest Payment Date, any accrued and unpaid interest
and Additional Interest, if any, up to but excluding the Purchase Date, shall
be paid to the Person in whose name a Note is registered at the close of
business on such Record Date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.

 

(d)           Upon the commencement of an Asset Sale Offer, the
Issuer shall send, by first-class mail, a notice to each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer.  The Asset Sale Offer shall be
made to all Holders and holders of Pari Passu Indebtedness.  The notice, which shall govern the terms of
the Asset Sale Offer, shall state:

 

(i)            that the Asset Sale Offer is being made pursuant to
this Section 3.09 and Section 4.10 hereof and the length of time the
Asset Sale Offer shall remain open;

 

(ii)           the Offer Amount, the purchase price and the Purchase
Date;

 

(iii)          that any Note not tendered or accepted for payment
shall continue to accrue interest;

 

(iv)          that, unless the Issuer defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Purchase Date;

 

(v)           that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer may elect to have Notes purchased in amounts of
$2,000 or in integral multiples of $1,000 in excess thereof only;

 

(vi)          that Holders electing to have a Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the Note, with
the form entitled “Option of Holder to Elect Purchase” attached to the Note
completed, or transfer by book-entry transfer, to the Issuer, the Depositary,
if appointed by the Issuer, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;

 

40

 

(vii)         that Holders shall be entitled to withdraw their
election if the Issuer, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Note purchased;

 

(viii)        that, if the aggregate principal amount of Notes and
Pari Passu Indebtedness surrendered by the holders thereof exceeds the Offer
Amount, the Trustee shall select the Notes and such Pari Passu Indebtedness to
be purchased on a pro rata basis
based on the accreted value or principal amount of the Notes or such Pari Passu
Indebtedness tendered (with such adjustments as may be deemed appropriate by
the Trustee so that only Notes in denominations of $2,000 or in integral
multiples of $1,000 in excess thereof, shall be purchased); and

 

(ix)           that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered (or transferred by book-entry transfer) representing
the same indebtedness to the extent not repurchased.

 

(e)           On or before the Purchase Date, the Issuer shall, to
the extent lawful, (1) accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of
Notes or portions thereof validly tendered pursuant to the Asset Sale Offer, or
if less than the Offer Amount has been tendered, all Notes tendered and (2) deliver
or cause to be delivered to the Trustee the Notes properly accepted together
with an Officer’s Certificate stating the aggregate principal amount of Notes
or portions thereof so tendered.

 

(f)            The Issuer, the Depositary or the Paying Agent, as the
case may be, shall promptly mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes properly tendered by such Holder and
accepted by the Issuer for purchase, and the Issuer shall promptly issue a new
Note, and the Trustee, upon receipt of an Authentication Order, shall
authenticate and mail or deliver (or cause to be transferred by book-entry)
such new Note to such Holder (it being understood that, notwithstanding
anything in this Indenture to the contrary, no Opinion of Counsel or Officer’s
Certificate is required for the Trustee to authenticate and mail or deliver
such new Note) in a principal amount equal to any unpurchased portion of the
Note surrendered representing the same indebtedness to the extent not
repurchased; provided, that each such new Note shall be in a principal
amount of $2,000 or an integral multiple of $1,000 in excess thereof.  Any Note not so accepted shall be promptly
mailed or delivered by the Issuer to the Holder thereof.  The Issuer shall publicly announce the
results of the Asset Sale Offer on or as soon as practicable after the Purchase
Date.

 

Other than as
specifically provided in this Section 3.09 or Section 4.10 hereof,
any purchase pursuant to this Section 3.09 shall be made pursuant to the
applicable provisions of Sections 3.01 through 3.06 hereof.

 

ARTICLE 4

 

COVENANTS

 

Section 4.01                                Payment of Notes.

 

The Issuer shall pay or
cause to be paid the principal of, premium, if any, Additional Interest, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes.  Principal, premium, if any,
Additional Interest, if any, and interest shall be considered paid on the date
due if the Paying Agent, if other than one of the Issuer or a Subsidiary, holds
as of noon Eastern Time on the due

 

41

 

date money deposited by
the Issuer in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due.

 

The Issuer shall pay all
Additional Interest, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.

 

The Issuer shall pay
interest (including post-petition interest in any proceeding under any Bankruptcy
Law) on overdue principal at the rate equal to the then applicable interest
rate on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Additional Interest (without regard to any
applicable grace period) at the same rate to the extent lawful.

 

Section 4.02                                Maintenance of Office or Agency.

 

The Issuer shall maintain
in the Borough of Manhattan in the City of New York an office or agency (which
may be an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer or
for exchange and where notices and demands to or upon the Issuer in respect of
the Notes and this Indenture may be served. 
The Issuer shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency.  If at any time the Issuer shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.

 

The Issuer may also from
time to time designate one or more other offices or agencies where the Notes
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; provided that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
an office or agency in the Borough of Manhattan in the City of New York for
such purposes.  The Issuer shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.

 

The Issuer hereby
designates the Corporate Trust Office of the Trustee as one such office or
agency of the Issuer in accordance with Section 2.03 hereof.

 

Section 4.03                                Reports and Other Information.

 

(a)           Notwithstanding that the Issuer may not be subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act
or otherwise report on an annual and quarterly basis on forms provided for such
annual and quarterly reporting pursuant to rules and regulations
promulgated by the SEC, the Issuer shall file with the SEC (and make available
to the Trustee and Holders of the Notes (without exhibits), without cost to any
Holder, within 15 days after the Issuer files them with the SEC) from and after
the Issue Date,

 

(1)           within 90 days (or any other time period then in
effect under the rules and regulations of the Exchange Act with respect to
the filing of a Form 10-K by a non-accelerated filer) after the end of
each fiscal year, annual reports on Form 10-K, or any successor or
comparable form, containing the information required to be contained therein
for a non-accelerated filer, or required in such successor or comparable form;

 

(2)           within 45 days after the end of each of the first
three fiscal quarters of each fiscal year, reports on Form 10-Q, or any
successor or comparable form, containing the information required to be
contained therein, or required in such successor or comparable form; and

 

42

 

(3)           promptly from time to time after the occurrence of an
event required to be therein reported, current reports on Form 8-K, or any
successor or comparable form; and

 

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

 

in each case in a manner
that complies in all material respects with the requirements specified in such
form; provided that (1) the Issuer shall not be so obligated to
file such reports with the SEC if the SEC does not permit such filing, in which
event the Issuer shall make available such information to prospective
purchasers of Notes, in addition to providing such information to the Trustee
and the Holders of the Notes, in each case within 15 days after the time the Issuer
would be required to file such information with the SEC if it were subject to Section 13
or 15(d) of the Exchange Act, which obligation to provide such information
may be satisfied by posting such information on its website within the time
periods specified by this Section 4.03, and (2) that with respect to
the periods ended March 31, 2007 and June 30, 2007, such reports (A) need
only be filed within 90 days (in the case of the quarterly report for the
period ended March 31, 2007) or 120 days (in the case of the annual report
for the fiscal year ended June 30, 2007), (B) for any period prior to
the Issue Date for which financial information is being disclosed need only
contain financial information of Reader’s Digest, WRC Media and Direct Holdings
that is substantially consistent, as determined in good faith by the Issuer,
with the financial information contained in the Offering Memorandum and (C) need
only be posted by the Issuer on its website within the time periods specified
by this Section 4.03 and not filed with the SEC. In addition, to the
extent not satisfied by the foregoing, the Issuer shall furnish, for so long as
any Notes are outstanding, to Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.  Delivery of such reports, information and
documents to the Trustee is for informational purposes only, and the Trustee’s
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Issuer’s or the Guarantor’s, as the case may be, compliance with any of
their covenants hereunder (as to which the Trustee is entitled to conclusively
rely exclusively on the Officer’s Certificate).

 

(b)           In the event that any direct or indirect parent entity
of the Issuer becomes a Guarantor of the Notes, the Issuer may satisfy its
obligations under this Section 4.03 with respect to financial information
relating to the Issuer by furnishing financial information relating to such
parent; provided that the same is accompanied by consolidating
information that explains in reasonable detail, as determined in good faith by
the Issuer, the differences between the information relating to such parent, on
the one hand, and the information relating to the Issuer and its Restricted
Subsidiaries on a standalone basis, on the other hand.

 

(c)           If the Issuer has designated any of its Subsidiaries
as Unrestricted Subsidiaries and such Unrestricted Subsidiaries, either
individually or collectively, would otherwise have been a Significant
Subsidiary, then the quarterly and annual financial information required by
clauses (a) and (b) of this Section 4.03 shall include a
reasonably detailed, as determined in good faith by senior management of the
Issuer, unaudited presentation, either on the face of the financial statements
or in the footnotes to the financial statements or in “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” of the
financial condition and results of operations of the Issuer and the Restricted
Subsidiaries of the Issuer separate from the financial condition and results of
operations of the Unrestricted Subsidiaries.

 

(d)           Prior to the commencement of the Exchange Offer or the
effectiveness of the Shelf Registration Statement, the requirements of this Section 4.03
may be satisfied by (1) the filing with the SEC of the Exchange Offer
Registration Statement or Shelf Registration Statement (or any other

 

43

 

similar registration
statement), and any amendments thereto, with such financial information that
satisfies Regulation S-X under the Securities Act or (2) posting
reports that would be required to be filed substantially in the form required
by the SEC on the Issuer’s website (or that of any of its parent entities),
subject to exceptions consistent with the presentation of financial information
in the Offering Memorandum.

 

Section 4.04                                Compliance Certificate.

 

(a)           The Issuer and each Guarantor (to the extent that such
Guarantor is so required under the Trust Indenture Act) shall deliver to the
Trustee, within 90 days after the end of each fiscal year ending after the
Issue Date, a certificate from the principal executive officer, principal
financial officer or principal accounting officer stating that a review of the
activities of the Issuer and its Restricted Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officer with a
view to determining whether the Issuer has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as to such
Officer signing such certificate, that to the best of his or her knowledge, the
Issuer has kept, observed, performed and fulfilled each and every condition and
covenant contained in this Indenture and is not in default in the performance
or observance of any of the terms, provisions, covenants and conditions of this
Indenture (or, if a Default shall have occurred, describing all such Defaults
of which he or she may have knowledge and what action the Issuer is taking or
proposes to take with respect thereto).

 

(b)           When any Default has occurred and is continuing under
this Indenture, or if the Trustee or the holder of any other evidence of
Indebtedness of the Issuer or any Subsidiary gives any notice or takes any
other action with respect to a claimed Default, the Issuer shall promptly
(which shall be no more than five (5) Business Days upon becoming aware of
such Default) deliver to the Trustee by registered or certified mail or by
facsimile transmission an Officer’s Certificate specifying such event and what
action the Issuer proposes to take with respect thereto.

 

Section 4.05                                Taxes.

 

The Issuer shall pay, and
shall cause each of its Restricted Subsidiaries to pay, prior to delinquency,
all material taxes, assessments and governmental levies except such as are
contested in good faith and by appropriate negotiations or proceedings or where
the failure to effect such payment is not adverse in any material respect to
the Holders of the Notes.

 

Section 4.06                                Stay, Extension and Usury Laws.

 

The Issuer and each of
the Guarantors covenant (to the extent that they may lawfully do so) that they
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Issuer and each of the Guarantors
(to the extent that they may lawfully do so) hereby expressly waive all benefit
or advantage of any such law, and covenant that they shall not, by resort to
any such law, hinder, delay or impede the execution of any power herein granted
to the Trustee, but shall suffer and permit the execution of every such power
as though no such law has been enacted.

 

44

 

Section 4.07                                Limitation on Restricted Payments.

 

(a)           The Issuer shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:

 

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

 

(A)          dividends or distributions by the Issuer payable
solely in Equity Interests (other than Disqualified Stock) of the Issuer; or

 

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

 

(II)           purchase, redeem, defease or otherwise acquire or
retire for value any Equity Interests of the Issuer or any direct or indirect
parent of the Issuer, including in connection with any merger or consolidation;

 

(III)         make any principal payment on, or redeem, repurchase,
defease or otherwise acquire or retire for value in each case, prior to any
scheduled repayment, sinking fund payment or maturity, any Subordinated
Indebtedness, other than:

 

(A)          Indebtedness permitted under clauses (6) and (7) of
Section 4.09(b) hereof; or

 

(B)           the purchase, repurchase or other acquisition of Subordinated
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; or

 

(IV)         make any Restricted Investment

 

(all such payments and
other actions set forth in clauses (I) through (IV) above (other than
any exception thereto) being collectively referred to as “Restricted
Payments”), unless, at the time of and after giving effect to such
Restricted Payment:

 

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

 

(2)           immediately after giving effect to such transaction on
a pro forma basis, the Issuer
could incur $1.00 of additional Indebtedness under Section 4.09(a) hereof;
and

 

(3)           such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and its Restricted
Subsidiaries after the Issue Date (including Restricted Payments permitted by
clauses (1), (2) (with respect to the payment of dividends on Refunding
Capital Stock pursuant to clause (b) thereof only), (5), (6)(c), (9) and
(13) of Section 4.07(b) hereof, but excluding all other Restricted
Payments permitted by Section 4.07(b) hereof), is less than the sum
of (without duplication):

 

45

 

(a)           the sum of (1) 100% of EBITDA of the Issuer (with
Reader’s Digest prior to the Transactions treated as the predecessor to the
Issuer for all periods prior to the Issue Date) for the period (taken as one
accounting period) from January 1, 2007 to the end of the Issuer’s most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment, or, in the case such EBITDA
for such period is a deficit, minus 100% of such deficit, minus (2) 140% of Consolidated
Interest Expense of the Issuer for such period; plus

 

(b)           100% of the aggregate net cash proceeds and the fair
market value, as determined in good faith by the Issuer, of marketable securities
or other property received by the Issuer since immediately after the Issue Date
(other than net cash proceeds to the extent such net cash proceeds have been
used to incur Indebtedness, Disqualified Stock or Preferred Stock pursuant to
clause (11)(a) of Section 4.09(b) hereof and other than
cash proceeds and marketable securities received from Equity Offerings to the
extent used to redeem Notes in compliance with the provisions set forth under Section 3.07(b) hereof,
from the issue and sale of:

 

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

 

(x)            Equity Interests to members of management, directors
or consultants of the Issuer, any direct or indirect parent company of the
Issuer and the Issuer’s Subsidiaries after the Issue Date to the extent such
amounts have been applied to Restricted Payments made in accordance with clause
(4) of Section 4.07(b) hereof; and

 

(y)           Designated Preferred Stock; and

 

(B) to the extent
such net cash proceeds are actually contributed to the Issuer, Equity Interests
of the Issuer’s direct or indirect parent entities (excluding contributions of
the proceeds from the sale of Designated Preferred Stock of such entities or
contributions to the extent such amounts have been applied to Restricted
Payments made in accordance with clause (4) of Section 4.07(b) hereof);
or

 

(ii)           debt securities of the Issuer that have been converted
into or exchanged for such Equity Interests of the Issuer (other than debt
securities that have been converted or exchanged for Disqualified Stock or
Designated Preferred Stock);

 

provided, however, that this clause (b) shall
not include the proceeds from (W) Refunding Capital Stock, (X) Equity
Interests or convertible debt securities of the Issuer sold to a Restricted
Subsidiary or to an employee stock ownership plan or any trust established by
the Issuer or any of its Subsidiaries, as the case may be, (Y) Disqualified
Stock or debt securities that have been converted into or exchanged for
Disqualified Stock or (Z) Excluded Contributions; plus

 

(c)           100% of the aggregate amount of cash and the fair
market value, as determined in good faith by the Issuer, of marketable
securities or other property contributed to the capital of the Issuer following
the Issue Date (other than (i) net cash

 

46

 

proceeds to the extent
such net cash proceeds have been used to incur Indebtedness, Disqualified Stock
or Preferred Stock pursuant to clause (11)(a) of Section 4.09(b) hereof,
(ii) cash proceeds and marketable securities received from Equity
Offerings to the extent used to redeem Notes in compliance with the provisions
set forth under Section 3.07(b) hereof, (iii) cash and the fair
market value of marketable securities or property contributed in exchange for
Disqualified Stock or Designated Preferred Stock, (iv) by a Restricted
Subsidiary and (v) from any Excluded Contributions); plus

 

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

 

(i)            the sale or other disposition (other than to the
Issuer or a Restricted Subsidiary or to an employee stock ownership plan or any
trust established by the Issuer or any of its Subsidiaries) of Restricted
Investments made by the Issuer or its Restricted Subsidiaries and repurchases
and redemptions of such Restricted Investments from the Issuer or its
Restricted Subsidiaries and repayments of loans or advances and releases of
guarantees that constitute Restricted Investments by the Issuer or its
Restricted Subsidiaries, in each case after the Issue Date; or

 

(ii)           the sale (other than to the Issuer or a Restricted
Subsidiary) of the stock of an Unrestricted Subsidiary or a distribution from
an Unrestricted Subsidiary (other than in each case to the extent the
Investment in such Unrestricted Subsidiary was made by the Issuer or a
Restricted Subsidiary pursuant to clause (7) of Section 4.07(b) hereof
or to the extent such Investment constituted a Permitted Investment) or a
dividend from an Unrestricted Subsidiary after the Issue Date; plus

 

(e)           in the case of the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary after the Issue Date, the fair market
value of the Investment in such Unrestricted Subsidiary, as determined by the
Issuer in good faith (or if such fair market value exceeds $50.0 million, in
writing by an Independent Financial Advisor), at the time of the redesignation
of such Unrestricted Subsidiary as a Restricted Subsidiary other than to the
extent the Investment in such Unrestricted Subsidiary was made by the Issuer or
a Restricted Subsidiary pursuant to clause (7) of Section 4.07(b) hereof
or to the extent such Investment constituted a Permitted Investment.

 

(b)           The foregoing provisions of Section 4.07(a) hereof
shall not prohibit:

 

(1)           the payment of any dividend 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 Indenture;

 

(2)           (a) the redemption, repurchase, retirement or
other acquisition of any Equity Interests (“Treasury Capital Stock”) or
Subordinated Indebtedness of the Issuer or any Equity Interests of any direct
or indirect parent entity of the Issuer, in exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary or the Issuer or to an employee stock ownership plan or any trust
established by the Issuer or any of its Subsidiaries) of, Equity Interests of
the Issuer or any direct or indirect parent entity of the Issuer to the extent
contributed to the Issuer (in each case, other than any Disqualified Stock) (“Refunding
Capital Stock”) and (b) if immediately prior to the retirement of
Treasury Capital

 

47

 

Stock, the declaration
and payment of dividends thereon was permitted under clause (6)(a) or (b) of
this Section 4.07(b), the declaration and payment of dividends on the
Refunding Capital Stock (other than Refunding Capital Stock the proceeds of
which were used to redeem, repurchase, retire or otherwise acquire any Equity
Interests of any direct or indirect parent entity of the Issuer) in an
aggregate amount per year no greater than the aggregate amount of dividends per
annum that were declarable and payable on such Treasury Capital Stock
immediately prior to such retirement;

 

(3)           the redemption, repurchase or other acquisition or
retirement of Subordinated Indebtedness of the Issuer or a Guarantor made in
exchange for, or out of the proceeds of the substantially concurrent sale of,
new Indebtedness of the Issuer or a Guarantor, as the case may be, which is
incurred in compliance with Section 4.09 hereof so long as:

 

(a)           the principal amount (or accreted value) of such new
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus any accrued and unpaid interest on, the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired for value,
plus the amount of any reasonable, as determined in good faith by the Issuer,
premium (including reasonable, as determined in good faith by the Issuer,
tender premiums), defeasance costs and any reasonable, as determined in good
faith by the Issuer, fees and expenses incurred in connection with the issuance
of such new Indebtedness;

 

(b)           such new Indebtedness is subordinated to the Notes or
the applicable Guarantee at least to the same extent as such Subordinated
Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or
retired for value;

 

(c)           such new Indebtedness has a final scheduled maturity
date equal to or later than the final scheduled maturity date of the
Subordinated Indebtedness being so purchased, exchanged, redeemed, repurchased,
acquired or retired for value; and

 

(d)           such new Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the remaining Weighted Average Life to
Maturity of the Subordinated Indebtedness being so purchased, exchanged,
redeemed, repurchased, acquired or retired for value;

 

(4)           a Restricted Payment to pay for the repurchase,
retirement or other acquisition or retirement for value of Equity Interests
(other than Disqualified Stock) of the Issuer or any of its direct or indirect
parent entities held by any future, present or former employee, director or
consultant of the Issuer, any of its Subsidiaries or any of its direct or
indirect parent entities pursuant to any management equity plan or stock option
plan or any other management or employee benefit plan or agreement; provided,
however, that the aggregate Restricted Payments made under this
clause (4) do not exceed $15.0 million in any fiscal year; provided, further, that such amount in any calendar year may be increased by
an amount not to exceed:

 

(a)           the cash proceeds from the sale of Equity Interests
(other than Disqualified Stock) of the Issuer and, to the extent contributed to
the Issuer, Equity Interests of any of the Issuer’s direct or indirect parent
entities, in each case to members of management, directors or consultants of
the Issuer, any of its Subsidiaries or any of its direct or indirect parent
entities that occurs after the Issue Date, to the extent the cash proceeds from
the sale of such Equity Interests have not otherwise been applied to the
payment of Restricted Payments by virtue of clause (3) of Section 4.07(a) hereof
and to the extent such contribution is not an Excluded Contribution; plus

 

48

 

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

 

(c)           the amount of any Restricted Payments previously made
with the cash proceeds described in clauses (a) and (b) of this
clause (4);

 

and provided, further, that cancellation of Indebtedness owing to the Issuer or
any Restricted Subsidiary from members of management of the Issuer, any of the
Issuer’s direct or indirect parent entities or any of the Issuer’s Restricted
Subsidiaries in connection with a repurchase of Equity Interests of the Issuer
or any of its direct or indirect parent entities shall not be deemed to
constitute a Restricted Payment for purposes of this Section 4.07 or any
other provision of this Indenture, provided, further, that the aggregate amount of Restricted
Payments made pursuant to this clause (4) shall not exceed $50.0 million
in the aggregate;

 

(5)           the declaration and payment of dividends to holders of
any class or series of Disqualified Stock of the Issuer or any of its
Restricted Subsidiaries issued in accordance with Section 4.09 hereof;

 

(6)           (a) the declaration and payment of dividends to
holders of any class or series of Designated Preferred Stock (other than
Disqualified Stock) issued by the Issuer after the Issue Date; provided
that the amount of dividends paid pursuant to this clause (a) shall not
exceed the aggregate amount of cash actually received by the Issuer from the
sale of such Designated Preferred Stock;

 

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

 

(c)           the declaration and payment of dividends on Refunding
Capital Stock that is Preferred Stock in excess of the dividends declarable and
payable thereon pursuant to clause (2) of this Section 4.07(b);

 

provided, however, that in the case of each of (a), (b) and (c) of
this clause (6), that for the most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date of issuance of such Designated Preferred Stock or the
declaration of such dividends on Refunding Capital Stock that is Preferred
Stock, after giving effect to such issuance or declaration on a pro forma
basis, the Issuer would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Leverage Ratio test in Section 4.09(a) hereof;

 

(7)           Investments in Unrestricted Subsidiaries having an
aggregate fair market value, taken together with all other Investments made pursuant
to this clause (7) that are at the time outstanding, without giving effect
to the sale of an Unrestricted Subsidiary to the extent the proceeds of such
sale do not consist of cash or marketable securities, not to exceed $25.0
million (with the fair market value of each outstanding Investment being
measured at the time made and without giving effect to subsequent changes in
value);

 

49

 

(8)           repurchases of Equity Interests deemed to occur upon
exercise of stock options, warrants or other rights to purchase Equity
Interests if such Equity Interests represent a portion of the exercise price of
such options, warrants or other rights to purchase Equity Interests;

 

(9)           (a)  the declaration and payment of regular
quarterly dividends on the Existing Issuer Preferred Stock and (b) the
declaration and payment of dividends on the Issuer’s common stock (or the
payment of dividends to any direct or indirect parent entity to fund a payment
of dividends on such entity’s common stock), following consummation of the
first public offering of the Issuer’s common stock or the common stock of any
of its direct or indirect parent entities after the Issue Date, of up to 6% per
annum of the net cash proceeds received by or contributed to the Issuer in or
from any such public offering, other than public offerings with respect to the
Issuer’s or any of its direct or indirect parent entities’ common stock
registered on Form S-4 or Form S-8 and other than any public sale
constituting an Excluded Contribution;

 

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

 

(11)         other Restricted Payments in an aggregate amount
which, when taken together with all other Restricted Payments made pursuant to
this clause (11) (as reduced by the amount of capital returned from any
such Restricted Payments that constituted Restricted Investments in the form of
cash and Cash Equivalents (exclusive of items reflected in Consolidated Net
Income)), not to exceed $50.0 million;

 

(12)         any Restricted Payment (i) used to fund the
Transactions and the fees and expenses related thereto or (ii) owed to
Affiliates but, in the case of clause (ii), only to the extent permitted
by Section 4.11 hereof;

 

(13)         the repurchase, redemption or other acquisition or
retirement for value of any Subordinated Indebtedness pursuant to provisions
similar to those described under Sections 4.10 and 4.14;  provided that a Change of Control
Offer or Asset Sale Offer, as applicable, has been made and all Notes tendered
by Holders in connection with such Change of Control Offer or Asset Sale Offer,
as applicable, have been repurchased, redeemed or acquired for value;

 

(14)         the declaration and payment of dividends by the Issuer
to, or the making of loans to, any direct or indirect parent in amounts
required for any direct or indirect parent companies to pay, in each case
without duplication,

 

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

 

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

 

(c)           customary salary, bonus and other benefits payable to
officers and employees of any direct or indirect parent entity of the Issuer to
the extent such salaries,

 

50

 

bonuses and other
benefits are attributable to the ownership or operation of the Issuer and its
Restricted Subsidiaries;

 

(d)           general corporate operating and overhead costs and
expenses of any direct or indirect parent entity of the Issuer to the extent
such costs and expenses are attributable to the ownership or operation of the
Issuer and its Restricted Subsidiaries, including, without limitation, in
respect of director fees and expenses, insurance, administrative, legal and
accounting services provided by third parties and other costs and expenses,
including all costs and expenses with respect to filings with the SEC and any
indemnification claims made by directors or officers of any direct or indirect
parent attributable to the ownership or operation of the Issuer and its
Restricted Subsidiaries; and

 

(e)           fees and expenses other than to Affiliates of the
Issuer related to any unsuccessful equity or debt offering or other financing
transaction of such parent entity;

 

(15)         the distribution, by dividend or otherwise, of shares
of Capital Stock of, or Indebtedness owed to the Issuer or a Restricted
Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries,
the primary assets of which are cash and/or Cash Equivalents); and

 

(16)         the payment by the Company or its Restricted
Subsidiaries of any amounts required to be paid in connection with the exercise
of appraisal rights by holders of the Existing Issuer Preferred Stock arising
as a result of the Transactions;

 

provided, however, that at the time of,
and after giving effect to, any Restricted Payment permitted under clauses (7),
(11) and (15) of this Section 4.07(b), no Default shall have occurred and
be continuing or would occur as a consequence thereof.

 

(c)           The amount of all Restricted Payments (other than
cash) shall be the fair market value on the date of the Restricted Payment of
the assets or securities proposed to be transferred or issued by the Issuer or
such Subsidiary, as the case may be, pursuant to the Restricted Payment. The
fair market value of any assets or securities that are required to be valued by
this Section 4.07 shall be determined in good faith by the Issuer. The
Issuer’s determination must be based upon an opinion or appraisal issued by an
Independent Financial Advisor if the fair market value exceeds $50.0 million.

 

(d)           The Issuer shall not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the last
sentence of the definition of “Unrestricted Subsidiary.” For purposes of
designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding
Investments by the Issuer and its Restricted Subsidiaries (except to the extent
repaid) in the Subsidiary so designated shall be deemed to be Restricted
Payments in an amount determined as set forth in the last sentence of the
definition of “Investment.” Such designation shall be permitted only if a
Restricted Payment in such amount would be permitted at such time, whether
pursuant to Section 4.07(a) hereof or under clause (7), (10) or
(11) of Section 4.07(b) hereof, or pursuant to the definition of “Permitted
Investments,” and if such Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. Unrestricted Subsidiaries shall not be subject to any
of the restrictive covenants set forth in this Indenture.

 

Section 4.08                                Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.

 

(a)           The Issuer shall not, and shall not permit any of its
Restricted Subsidiaries 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:

 

51

 

(1)           (A)  pay dividends or make any other
distributions to the Issuer or any of its Restricted Subsidiaries on its Capital
Stock or with respect to any other interest or participation in, or measured
by, its profits, or

 

(B)           pay any Indebtedness owed to the Issuer or any of its
Restricted Subsidiaries;

 

(2)           make loans or advances to the Issuer or any of its
Restricted Subsidiaries; or

 

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

 

(b)           The restrictions in Section 4.08(a) hereof
shall not apply to encumbrances or restrictions existing under or by reason of:

 

(1)           contractual encumbrances or restrictions in effect on
the Issue Date, including pursuant to the Senior Credit Facility and the
related documentation;

 

(2)           this Indenture and the Notes;

 

(3)           purchase money obligations for property acquired in
the ordinary course of business permitted by Section 4.09 hereof that
impose restrictions of the nature referred to in clause (3) of Section 4.08(a) hereof
on the property so acquired;

 

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

 

(5)           any agreement or other instrument of a Person acquired
by the Issuer or any of its Restricted Subsidiaries 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 and its Subsidiaries, or the property or
assets of the Person and its Subsidiaries, so acquired;

 

(6)           contracts for the sale of assets, including customary
restrictions with respect to a Subsidiary of the Issuer pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary;

 

(7)           Secured Indebtedness otherwise permitted to be
incurred pursuant to Sections 4.09 and 4.12 hereof that limit the right of the
debtor to dispose of the assets securing such Indebtedness;

 

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

 

(9)           other Indebtedness, Disqualified Stock or Preferred
Stock of any Restricted Subsidiary that is a Guarantor, Foreign Subsidiaries,
or provided that such encumbrances or restrictions shall not materially affect
the Issuer’s ability to make anticipated principal and interest payments on the
Notes (as determined in good faith by the Board of Directors of the Issuer),
other domestic Restricted Subsidiaries of the Issuer that are not Guarantors,
in each case permitted to be incurred subsequent to the Issue Date pursuant to
the provisions of Section 4.09 hereof;

 

(10)         customary provisions in joint venture agreements and
other similar agreements relating solely to such joint venture;

 

52

 

(11)         customary provisions contained in leases or licenses
of intellectual property and other agreements, in each case entered into in the
ordinary course of business; and

 

(12)         any encumbrances or restrictions of the type referred
to in clauses (1), (2) and (3) of Section 4.08(a) hereof
imposed by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (1) through (11) of
this Section 4.08(b); provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Issuer, no more restrictive
with respect to such encumbrance and other restrictions taken as a whole than
those prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing.

 

Section 4.09                                Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock.

 

(a)           The Issuer shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise (collectively, “incur” and collectively, an “incurrence”)
with respect to any Indebtedness (including Acquired Indebtedness), and the
Issuer shall not issue any shares of Disqualified Stock and shall not permit
any Restricted Subsidiary to issue any shares of Disqualified Stock or Preferred
Stock; provided, however, that the Issuer may incur Indebtedness
(including Acquired Indebtedness) or issue shares of Disqualified Stock, and
any of its Restricted Subsidiaries may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred
Stock, if the Consolidated Leverage Ratio on a consolidated basis for the
Issuer and its Restricted Subsidiaries’ most recently ended four fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or Preferred Stock is issued shall not be greater than 7.5
to 1.00, determined on a pro forma
basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock or Preferred Stock had been
issued, as the case may be, and the application of proceeds therefrom had
occurred at the beginning of such four-quarter period; provided, further, that Restricted Subsidiaries that are not Guarantors may
not incur Indebtedness or issue Disqualified Stock or Preferred Stock if, after
giving pro forma effect to such
incurrence or issuance (including a pro
forma application of the net proceeds therefrom), more than an
aggregate of the greater of (x) $50.0 million and (y) 3.0% of
Total Tangible Assets of Indebtedness or Disqualified Stock or Preferred Stock
of Restricted Subsidiaries that are not Guarantors would be outstanding
pursuant to this Section 4.09(a) and clauses (11) and (17) of Section 4.09(b) hereof
at such time.

 

(b)           The provisions of Section 4.09(a) hereof
shall not apply to:

 

(1)           the incurrence of (A) Indebtedness under Credit
Facilities by the Issuer or any of the Guarantors and the issuance and creation
of letters of credit and bankers’ acceptances thereunder (with letters of
credit and bankers’ acceptances being deemed to have a principal amount equal
to the face amount thereof) and (B) Indebtedness under Credit Facilities
of Foreign Subsidiaries in an aggregate principal amount not to exceed $400.0
million; provided that the aggregate principal amount of Indebtedness
Incurred under clauses (A) and (B) outstanding at any one time shall
not exceed $1,710.0 million less the sum of all principal payments with respect
to such Indebtedness made pursuant to Section 4.10(b)(1)(A) in
satisfaction of the requirements of Section 4.10;

 

53

 

(2)           the incurrence by the Issuer and any Guarantor of
Indebtedness represented by the Notes (including any Guarantee) (other than any
Additional Notes) and any Exchange Notes (including any Guarantee thereof);

 

(3)           Indebtedness of the Issuer and its Restricted
Subsidiaries in existence on the Issue Date (other than Indebtedness described
in clauses (1) and (2) of this Section 4.09(b));

 

(4)           Indebtedness incurred by the Issuer or any of its
Restricted Subsidiaries in respect of letters of credit, bank guarantees,
bankers’ acceptances or similar instruments issued or created in the ordinary
course of business, including in respect of workers’ compensation claims,
health, disability or other employee benefits or property, casualty or
liability insurance or self-insurance or other Indebtedness with respect to
reimbursement-type obligations regarding workers’ compensation claims; provided,
however, that any reimbursement obligations in respect thereof are
reimbursed within 30 days following the incurrence thereof;

 

(5)           Indebtedness arising from agreements of the Issuer or
its Restricted Subsidiaries providing for indemnification, adjustment of
purchase price or similar obligations, in each case incurred or assumed in
connection with the disposition 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, however, that

 

(A)          such Indebtedness is not reflected on the balance
sheet of the Issuer, or any of its Restricted Subsidiaries (contingent
obligations referred to in a footnote to financial statements and not otherwise
reflected on the balance sheet shall not be deemed to be reflected on such
balance sheet for purposes of this clause (5)(A)); and

 

(B)           the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including non-cash
proceeds (the fair market value of such non-cash proceeds being measured at the
time received and without giving effect to any subsequent changes in value)
actually received by the Issuer and its Restricted Subsidiaries in connection
with such disposition;

 

(6)           Indebtedness of the Issuer to a Restricted Subsidiary;
provided that any such Indebtedness owing to a Restricted Subsidiary
that is not a Guarantor is expressly subordinated in right of payment to the
Notes; provided, further, that any subsequent issuance or
transfer of any Capital Stock or any other event which results in any
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other
subsequent transfer of any such Indebtedness (except to the Issuer or another
Restricted Subsidiary) shall be deemed, in each case, to be an incurrence of
such Indebtedness not permitted by this clause (6);

 

(7)           Indebtedness of a Restricted Subsidiary to the Issuer
or another Restricted Subsidiary; provided that if a Guarantor incurs
such Indebtedness to a Restricted Subsidiary that is not a Guarantor, such
Indebtedness is expressly subordinated in right of payment to the Guarantee of
the Notes of such Guarantor; provided,
further, that
any subsequent transfer of any such Indebtedness (except to the Issuer or
another Restricted Subsidiary), directly or through the disposition of the
Restricted Subsidiary holding such Indebtedness, shall be deemed, in each case,
to be an incurrence of such Indebtedness not permitted by this clause (7);

 

(8)           shares of Preferred Stock of a Restricted Subsidiary
issued to the Issuer or another Restricted Subsidiary; provided that any
subsequent issuance or transfer of any Capital Stock or any other event which
results in any such Restricted Subsidiary ceasing to be a

 

54

 

Restricted Subsidiary or
any other subsequent transfer of any such shares of Preferred Stock (except to
the Issuer or another of its Restricted Subsidiaries) shall be deemed in each
case to be an issuance of such shares of Preferred Stock not permitted by this
clause (8);

 

(9)           Hedging Obligations (excluding Hedging Obligations
entered into for speculative purposes) for the purpose of hedging interest rate
risk with respect to any Indebtedness permitted to be incurred pursuant to this
Section 4.09, exchange rate risk or commodity pricing risk;

 

(10)         obligations in respect of performance, bid, appeal and
surety bonds and completion guarantees provided by the Issuer or any of its
Restricted Subsidiaries in the ordinary course of business;

 

(11)         (a) Indebtedness or Disqualified Stock of the
Issuer and Indebtedness, Disqualified Stock or Preferred Stock of any
Restricted Subsidiary equal to 100% of the net cash proceeds received by the
Issuer since immediately after the Issue Date from the issue or sale of Equity
Interests of the Issuer or cash contributed to the capital of the Issuer (in each
case, other than Excluded Contributions or proceeds of Disqualified Stock or
Designated Preferred Stock or sales of Equity Interests to the Issuer or any of
its Subsidiaries or to an employee stock ownership plan or any trust
established by the Issuer or any of its Subsidiaries) as determined in
accordance with clauses (3)(b) and (3)(c) of Section 4.07(a) hereof
to the extent such net cash proceeds or cash have not been applied pursuant to
such clauses to make Restricted Payments or to make other Investments, payments
or exchanges pursuant to Section 4.07(b) hereof or to make Permitted
Investments (other than Permitted Investments specified in clauses (1) and
(3) of the definition thereof) and (b) Indebtedness or Disqualified
Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of
any Restricted Subsidiary 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 (11)(b), does not at any one time outstanding exceed
$100.0 million (it being understood that any Indebtedness, Disqualified
Stock or Preferred Stock incurred pursuant to this clause (11)(b) shall
cease to be deemed incurred or outstanding for purposes of this
clause (11)(b) but shall be deemed incurred for the purposes of Section 4.09(a) hereof
from and after the first date on which the Issuer or such Restricted Subsidiary
could have incurred such Indebtedness, Disqualified Stock or Preferred Stock
under Section 4.09(a) hereof without reliance on this
clause (11)(b));

 

(12)         the incurrence or issuance by the Issuer or any
Restricted Subsidiary of Indebtedness, Disqualified Stock or Preferred Stock
which serves to refund or refinance any Indebtedness, Disqualified Stock or
Preferred Stock incurred as permitted under Section 4.09(a) and
clauses (2), (3) and (11)(a) of this Section 4.09(b), this
clause (12) and clause (13) of this Section 4.09(b) or any
Indebtedness, Disqualified Stock or Preferred Stock issued to so refund or
refinance such Indebtedness, Disqualified Stock or Preferred Stock, including
additional Indebtedness, Disqualified Stock or Preferred Stock incurred to pay
premiums (including reasonable, as determined in good faith by the Issuer,
tender premiums), defeasance costs, accrued interest and fees and expenses in
connection therewith (the “Refinancing Indebtedness”) prior to its
respective maturity; provided, however, that such Refinancing
Indebtedness:

 

(A)          has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred which is not less than the remaining
Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or
Preferred Stock being refunded or refinanced,

 

55

 

(B)           to the extent such Refinancing Indebtedness refinances
(i) Indebtedness subordinated or pari
passu to the Notes or any Guarantee thereof, such Refinancing
Indebtedness is subordinated or pari passu
to the Notes or the Guarantee at least to the same extent as the Indebtedness
being refinanced or refunded or (ii) Disqualified Stock or Preferred
Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred
Stock, respectively, and

 

(C)           shall not include:

 

(i)            Indebtedness, Disqualified Stock or Preferred Stock of
a Subsidiary of the Issuer that is not a Guarantor that refinances
Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a
Guarantor; or

 

(ii)           Indebtedness, Disqualified Stock or Preferred Stock of
the Issuer or a Restricted Subsidiary that refinances Indebtedness,
Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary,

 

(D)          shall not be in a principal amount in excess of the
principal amount of, premium (including reasonable, as determined in good faith
by the Issuer, tender premium and defeasance costs), if any, accrued interest
on, and related fees and expenses of the Indebtedness being refunded or
refinanced; and

 

(E)           shall not have a stated maturity date prior to the
stated maturity of the Indebtedness being refunded or refinanced;

 

and provided, further,
that subclause (A) of this clause (12) shall not apply to any refunding or
refinancing of any Indebtedness outstanding under any Senior Indebtedness;

 

(13)         Indebtedness, Disqualified Stock or Preferred Stock of
Persons (other than Indebtedness, Disqualified Stock or Preferred Stock
incurred in anticipation of such acquisition or merger) that are acquired by
the Issuer or any Restricted Subsidiary or merged into the Issuer or a
Restricted Subsidiary in accordance with the terms of this Indenture; provided
that after giving effect to such acquisition or merger, either

 

(a)           the Issuer would be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Consolidated Leverage Ratio test set
forth in Section 4.09(a), or

 

(b)           the Consolidated Leverage Ratio of the Issuer and the
Restricted Subsidiaries is lower than immediately prior to such acquisition or
merger;

 

(14)         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 two Business Days of its
incurrence;

 

(15)         Indebtedness of the Issuer or any of its Restricted
Subsidiaries supported by a letter of credit issued pursuant to any Credit
Facility, in a principal amount not in excess of the stated amount of such
letter of credit;

 

56

 

(16)         (a) any guarantee by the Issuer or a Restricted
Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so
long as the incurrence of such Indebtedness incurred by such Restricted
Subsidiary is permitted under the terms of this Indenture, or

 

(b)           any guarantee by a Restricted Subsidiary of
Indebtedness of the Issuer; provided that such guarantee is incurred in
accordance with Section 4.15 hereof;

 

(17)         Indebtedness (including Capitalized Lease
Obligations), Disqualified Stock or Preferred Stock of the Issuer or a
Restricted Subsidiary incurred to finance the purchase, lease or improvement of
any property or equipment, whether through the direct purchase of such property
or equipment or the purchase of Capital Stock of any Person owning such
property or equipment (but no other material assets), and any Indebtedness,
Disqualified Stock or Preferred Stock of a Restricted Subsidiary which serves
to refund or refinance any Indebtedness, Disqualified Stock or Preferred Stock
incurred pursuant to this clause (17), in a principal amount not to exceed
the greater of (x) $25.0 million and (y) 1.5% of Total Tangible
Assets in the aggregate at any one time outstanding together with all other
Indebtedness, Disqualified Stock and/or Preferred Stock issued under this
clause (17) (it being understood that any Indebtedness, Disqualified Stock or
Preferred Stock incurred pursuant to this clause (17) shall cease to be deemed
incurred or outstanding for purposes of this clause (17) but shall be deemed
incurred for the purpose of Section 4.09(a) hereof from and after the
first date on which such Restricted Subsidiary could have incurred such
Indebtedness, Disqualified Stock or Preferred Stock under  Section 4.09(a) without reliance on
this clause (17));

 

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

 

(19)         Indebtedness consisting of Indebtedness issued by the
Issuer or any of its Restricted Subsidiaries to current or former officers,
directors and employees thereof, their respective estates, spouses or former
spouses, in each case to finance the purchase or redemption of Equity Interests
of the Issuer or any direct or indirect parent company of the Issuer to the
extent described in clause (4) of Section 4.07(b) hereof; and

 

(20)         Indebtedness of Foreign Subsidiaries of the Issuer in
an aggregate principal amount not to exceed at any one time outstanding (and
together with any other Indebtedness incurred under this clause (20)) of $50.0
million (it being understood that any Indebtedness incurred pursuant to this
clause (20) shall cease to be deemed incurred or outstanding for purposes of
this clause (20) but shall be deemed incurred for the purposes of Section 4.09(a) hereof
from and after the first date on which the Issuer or such Foreign Subsidiary
could have incurred such indebtedness under Section 4.09(a) without
reliance on this clause (20)).

 

(c)           For purposes of determining compliance with this Section 4.09:

 

(1)           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 (1) through
(20) of Section 4.09(b) hereof or is entitled to be incurred
pursuant to Section 4.09(a) hereof, the Issuer, in its sole
discretion, may classify or reclassify such item of Indebtedness, Disqualified
Stock or Preferred Stock (or any portion thereof) and shall only be required to
include the amount and type of such Indebtedness, Disqualified Stock or
Preferred Stock in one of the above clauses; provided that all
Indebtedness outstanding under the Credit Facilities on the Issue Date shall be
treated as

 

57

 

incurred on the Issue
Date under clause (1) of Section 4.09(b) and such amounts
outstanding under clause (1) on the Issue Date may not be later
reclassified; and

 

(2)           at the time of incurrence, the Issuer shall be
entitled to divide and classify an item of Indebtedness in more than one of the
types of Indebtedness described in Sections 4.09(a) and 4.09(b) hereof.

 

Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness, Disqualified Stock or Preferred Stock of the same
class shall not be deemed to be an incurrence of Indebtedness, Disqualified
Stock or Preferred Stock for purposes of this Section 4.09. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted
value thereof in the case of any Indebtedness issued with original issue
discount and (ii) the principal amount or liquidation preference thereof,
in the case of any other Indebtedness. The principal amount of any Disqualified
Stock of the Issuer or a Restricted Subsidiary, or Preferred Stock of a
Restricted Subsidiary, shall be equal to the greater of the maximum mandatory
redemption or repurchase price (not including, in either case, any redemption
or repurchase premium) or the liquidation preference thereof.

 

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

 

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

 

Section 4.10                                Asset Sales.

 

(a)           The Issuer shall not, and shall not permit any of its
Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale,
unless:

 

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

 

(2)           except in the case of a Permitted Asset Swap, at least
75% of the consideration therefor received by the Issuer or such Restricted
Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided
that the amount of:

 

(A)          any liabilities (as shown on the Issuer’s or a
Restricted Subsidiary’s most recent balance sheet) of the Issuer or such
Restricted Subsidiary, other than liabilities that are by their terms
subordinated to the Notes or the Guarantees, that are assumed by the transferee
of any such assets and for which the Issuer and all of its Restricted Subsidiaries
have been validly released by all creditors in writing,

 

58

 

(B)           any notes, securities or other obligations received by
the Issuer or a Restricted Subsidiary from such transferee that are converted
by the Issuer or such Restricted Subsidiary into cash (to the extent of the
cash received) within 180 days following the closing of such Asset Sale, and

 

(C)           any Designated Non-cash Consideration received by the
Issuer or a Restricted Subsidiary in such Asset Sale having an aggregate fair
market value (as determined in good faith by the Issuer), taken together with
all other Designated Non-cash Consideration received pursuant to this
clause (C) that is at that time outstanding, not to exceed the
greater of (x) $75.0 million and (y) 4.5% of Total Tangible Assets at
the time of the receipt of such Designated Non-cash Consideration, with the
fair market value of each item of Designated Non-cash Consideration being
measured at the time received and without giving effect to subsequent changes
in value,

 

shall be deemed to be
cash for purposes of this provision and for no other purpose.

 

(b)           Within 360 days after the receipt of any Net Proceeds
of any Asset Sale, the Issuer or such Restricted Subsidiary, at its option, may
apply the Net Proceeds from such Asset Sale,

 

(1)           to permanently reduce:

 

(A)          Obligations under Senior Indebtedness and, in the cash
of revolving Obligations, to correspondingly reduce commitments with respect
thereto,

 

(B)           Obligations under Senior Subordinated Indebtedness
(and, in the case of revolving Obligations, to correspondingly reduce
commitments with respect thereto), including Obligations under the Notes; provided
that if the Issuer or a Restricted Subsidiary shall reduce Obligations under
Senior Subordinated Indebtedness other than the Notes, the Issuer shall equally
and ratably reduce Obligations under the Notes as provided under Section 3.07
hereof, through open-market purchases (to the extent such purchases are at or
above 100% of the principal amount thereof) or by making an offer (in
accordance with the procedures set forth under Section 4.10(c) hereof)
to all Holders of Notes to purchase their Notes at 100% of the principal amount
thereof, plus the amount of accrued but unpaid interest, if any, on the amount
of Notes that would otherwise be prepaid, or

 

(C)           Indebtedness of a Restricted Subsidiary that is not a
Guarantor, other than Indebtedness owed to the Issuer or another Restricted
Subsidiary,

 

(2)           to make (A) an Investment in any one or more
businesses that is a Similar Business; provided that if such Investment
is in the form of the acquisition of Capital Stock, such acquisition results in
the Issuer or another of its Restricted Subsidiaries, as the case may be,
owning an amount of the Capital Stock of such business such that it constitutes
a Restricted Subsidiary, (B) capital expenditures used or useful in a
Similar Business or (C) acquisitions of other assets used or useful in a
Similar Business, or

 

(3)           to make an Investment in (A) any one or more
businesses; provided that if such Investment is in the form of the
acquisition of Capital Stock, such acquisition results in the Issuer or another
of its Restricted Subsidiaries, as the case may be, owning an amount of the
Capital Stock of such business such that it constitutes a Restricted
Subsidiary, (B) properties or (C) acquisitions of other assets that,
in each of (A), (B) and (C), replace the businesses, properties and/or
assets that are the subject of such Asset Sale;

 

59

 

provided that, in the case of clauses (2) and
(3) above, a binding commitment shall be treated as a permitted
application of the Net Proceeds from the date of such commitment so long as the
Issuer, or such other Restricted Subsidiary enters into such commitment with
the good faith expectation that such Net Proceeds shall be applied to satisfy
such commitment within 360 days of such commitment (an “Acceptable
Commitment”) and, in the event any Acceptable Commitment is later cancelled
or terminated for any reason before the Net Proceeds are applied in connection
therewith, the Issuer or such Restricted Subsidiary enters into another
Acceptable Commitment (a “Second Commitment”) within 180 days of such
cancellation or termination; provided, further, that if any
Second Commitment is later cancelled or terminated for any reason before such
Net Proceeds are applied, then such Net Proceeds shall constitute Excess
Proceeds.

 

(c)           Any Net Proceeds from the Asset Sale that are not
invested or applied as provided and within the time period set forth in Section 4.10(b) shall
be deemed to constitute “Excess Proceeds.” When the aggregate amount of
Excess Proceeds exceeds $20.0 million, the Issuer shall make an offer to
all Holders of the Notes and, if required by the terms of any Indebtedness that
is pari passu with the Notes (“Pari
Passu Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset
Sale Offer”), to purchase the maximum aggregate principal amount of the
Notes and such Pari Passu Indebtedness that is a minimum of $2,000 or an
integral multiple of $1,000 in excess thereof 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 and Additional
Interest, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in this Indenture. The Issuer shall
commence an Asset Sale Offer with respect to Excess Proceeds within ten Business
Days after the date that Excess Proceeds exceed $20.0 million by mailing
(or otherwise communicating in accordance with the procedures of DTC) the
notice required pursuant to the terms of this Indenture, with a copy to the
Trustee.

 

To the extent that the
aggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any
remaining Excess Proceeds for any purpose, subject to other covenants contained
in this Indenture. If the aggregate principal amount of Notes or the Pari Passu
Indebtedness surrendered by such holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such Pari Passu Indebtedness
to be purchased on a pro rata basis based on the accreted value or principal
amount of the Notes or such Pari Passu Indebtedness tendered. Upon completion
of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at
zero. Additionally, the Issuer may, at its option, make an Asset Sale Offer
using proceeds from any Asset Sale at any time after consummation of such Asset
Sale; provided that such Asset Sale Offer shall be in an aggregate
amount of not less than $10.0 million. Upon consummation of such Asset Sale
Offer, any Net Proceeds not required to be used to purchase Notes shall not be
deemed Excess Proceeds.

 

(d)           Pending the final application of any Net Proceeds
pursuant to this Section 4.10, the holder of such Net Proceeds may apply
such Net Proceeds temporarily to reduce Indebtedness outstanding under a
revolving credit facility or otherwise invest such Net Proceeds in any manner
not prohibited by this Indenture.

 

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

 

60

 

Section 4.11                             Transactions with Affiliates.

 

(a)                                  The Issuer shall not, and shall not permit
any of its Restricted Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of the Issuer (each of the
foregoing, an “Affiliate Transaction”) involving aggregate payments or
consideration in excess of $10.0 million, unless:

 

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

 

(2)                                  the Issuer delivers to the Trustee with
respect to any Affiliate Transaction or series of related Affiliate
Transactions (a) involving aggregate payments or consideration in excess
of $15.0 million, a resolution adopted by the majority of the board of
directors of the Issuer approving such Affiliate Transaction and set forth in
an Officer’s Certificate certifying that such Affiliate Transaction complies
with clause (1) of this Section 4.11(a) and (b) involving
aggregate payments or consideration in excess of $50.0 million, an opinion as
to the fairness to the holders of such Affiliate Transaction from a financial
point of view issued by an Independent Financial Advisor.

 

(b)                                 The provisions of Section 4.11(a) hereof
shall not apply to the following:

 

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

 

(2)                                  Restricted Payments permitted by Section 4.07
hereof (other than clause (7) of Section 4.07(b) hereof) and the
definition of “Permitted Investments” (other than pursuant to clause (3) thereof)
;

 

(3)                                  the payment of management, consulting,
monitoring and advisory fees and related expenses and termination fees pursuant
to the Sponsor Management Agreement not to exceed the amount set forth in the
Sponsor Management Agreement as in effect on the Issue Date or any amendment
thereto (so long as any such amendment is not disadvantageous to the Holders in
the good faith judgment of the board of directors of the Issuer when taken as a
whole as compared to the Sponsor Management Agreement as in effect on the Issue
Date);

 

(4)                                  the payment of customary compensation,
benefits and reimbursement of reasonable out-of-pocket costs to, and
indemnities provided for the benefit of, officers, directors, employees or
consultants of the Issuer, any of its direct or indirect parent companies or
any of its Restricted Subsidiaries;

 

(5)                                  transactions in which the Issuer or any of
its Restricted Subsidiaries, as the case may be, delivers to the Trustee a
letter from an Independent Financial Advisor stating that such transaction is
fair to the Issuer or such Restricted Subsidiary from a financial point of view
or stating that the terms are not materially less favorable to the Issuer or
its relevant Restricted Subsidiary than those that would have been obtained in
a comparable transaction by the Issuer or such Restricted Subsidiary with an
unrelated Person on an arm’s-length basis;

 

(6)                                  any agreement as in effect as of the Issue
Date, or any amendment thereto (so long as any such amendment is not
disadvantageous to the Holders in any material respect in the

 

61

 

good
faith judgment of the board of directors of the Issuer when taken as a whole as
compared to the applicable agreement as in effect on the Issue Date);

 

(7)                                  the existence of, or the performance by the
Issuer or any of its Restricted Subsidiaries of its obligations under the terms
of, any stockholders agreement (including any registration rights agreement or
purchase agreement related thereto) to which it is a party as of the Issue Date
and any similar agreements which it may enter into thereafter; provided,
however, that the existence of, or the performance by the Issuer or any
of its Restricted Subsidiaries of obligations under any future amendment to any
such existing agreement or under any similar agreement entered into after the
Issue Date shall only be permitted by this clause (7) to the extent
that the terms of any such amendment or new agreement are not otherwise
disadvantageous to the Holders in the good faith judgment of the board of
directors of the Issuer when taken as a whole;

 

(8)                                  the Transactions and the payment of all fees
and expenses related to the Transactions, in each case as disclosed in the
Offering Memorandum;

 

(9)                                  any agreement between any Person and an
Affiliate of such Person existing at the time such Person is acquired by or
merged into the Issuer or a Restricted Subsidiary; provided, that such
agreement was not entered into contemplation of such acquisition or merger, or
any amendment thereto (so long as any such amendment is not disadvantageous to
the Holders in the good faith judgment of the board of directors of the Issuer
when taken as a whole as compared to the applicable agreement as in effect on
the date of such acquisition or merger);

 

(10)                            transactions with customers, clients,
suppliers, joint venture partners, authors or purchasers or sellers of goods or
services, in each case in the ordinary course of business and otherwise in
compliance with the terms of this Indenture which are fair to the Issuer and
its Restricted Subsidiaries, in the reasonable determination of the board of
directors of the Issuer or the senior management thereof, or are on terms at
least as favorable as would reasonably have been obtained at such time from an
unaffiliated party;

 

(11)                            the issuance of Equity Interests (other than
Disqualified Stock) of the Issuer to any Affiliate;

 

(12)                            payments by the Issuer or any of its
Restricted Subsidiaries to any of the Investors made for any financial
advisory, financing, underwriting or placement services or in respect of other
investment banking activities, including, without limitation, in connection
with acquisitions or divestitures which payments are approved by a majority of
the board of directors of the Issuer in good faith;

 

(13)                            payments or loans (or cancellation of loans)
to employees or consultants of the Issuer, any of its direct or indirect parent
companies or any of its Restricted Subsidiaries and employment agreements,
stock option plans and other similar arrangements with such employees or
consultants which, in each case, are approved by the Issuer in good faith; and

 

(14)                            investments by the Investors in securities of
the Issuer so long as (i) the investment is being offered generally to
other investors on the same or more favorable terms and (ii) the
investment constitutes less than 5% of the proposed or outstanding issue amount
of such class of securities.

 

62

 

Section 4.12                             Liens.

 

The
Issuer shall not, and shall not permit any Guarantor to, directly or
indirectly, create, incur, assume or suffer to exist any Lien (except Permitted
Liens) that secures obligations under any Indebtedness ranking pari passu with or subordinated to the
Notes or any related Guarantee, on any asset or property of the Issuer or any
Guarantor, or any income or profits therefrom, or assign or convey any right to
receive income therefrom, unless:

 

(1)                                  in the case of Liens securing Subordinated
Indebtedness, the Notes and related Guarantees are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Liens; or

 

(2)                                  in all other cases, the Notes and the
Guarantees are equally and ratably secured or are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Liens.

 

Any
Lien created for the benefit of holders of the Notes pursuant to this Section 4.12
shall be deemed automatically and unconditionally released and discharged upon
the release and discharge of each of the Liens described in clauses (1) and
(2) above.

 

Section 4.13                             Corporate Existence.

 

Subject
to Article 5 hereof, the Issuer shall do or cause to be done all things
necessary to preserve and keep in full force and effect (i) its corporate
existence and the corporate, partnership, limited liability company or other
existence of each of its Restricted Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Issuer or any such Restricted Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Issuer and its Restricted
Subsidiaries; provided that the Issuer shall not be required to preserve
any such right, license or franchise, or the corporate, partnership, limited
liability company or other existence of any of its Restricted Subsidiaries, if
the Issuer in good faith shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Issuer and its
Restricted Subsidiaries, taken as a whole.

 

Section 4.14                             Offer to Repurchase Upon Change of Control.

 

(a)                                  If a Change of Control occurs, unless the
Issuer has previously or concurrently mailed a redemption notice with respect
to all the outstanding Notes pursuant to Section 3.07 hereof, the Issuer
shall make an offer to purchase all of the Notes pursuant to the offer
described below (the “Change of Control Offer”) at a price in cash (the “Change
of Control Payment”) equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Additional Interest, if any, to
the date of purchase, subject to the right of Holders of the Notes of record on
the relevant Record Date to receive interest due on the relevant Interest
Payment Date.  Within 30 days following
any Change of Control, the Issuer shall send notice of such Change of Control
Offer by first-class mail, with a copy to the Trustee, to each Holder of Notes
to the address of such Holder appearing in the security register with a copy to
the Trustee, or otherwise in accordance with the procedures of DTC, with the
following information:

 

(1)                                  that a Change of Control Offer is being made
pursuant to this Section 4.14 and that all Notes properly tendered
pursuant to such Change of Control Offer will be accepted for payment by the
Issuer;

 

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

 

63

 

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

 

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

 

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

 

(6)                                  that Holders shall be entitled to withdraw
their tendered Notes and their election to require the Issuer to purchase such
Notes; provided that the Paying Agent receives, not later than the close
of business on the 30th day following the date of the Change of Control notice,
a telegram, telex, facsimile transmission or letter setting forth the name of
the Holder of the Notes, the principal amount of Notes tendered for purchase,
and a statement that such Holder is withdrawing its tendered Notes and its
election to have such Notes purchased;

 

(7)                                  that if the Issuer is redeeming less than all
of the Notes, the Holders of the remaining Notes will be issued new Notes and
such new Notes will be equal in principal amount to the unpurchased portion of
the Notes surrendered; the unpurchased portion of the Notes must be equal to
$2,000 or an integral multiple of $1,000 in excess thereof; and

 

(8)                                  the other instructions, as determined by the
Issuer, consistent with this Section 4.14, that a Holder must follow.

 

The
notice, if mailed in a manner herein provided, shall be conclusively presumed
to have been given, whether or not the Holder receives such notice.  If (a) the notice is mailed in a manner
herein provided and (b) any Holder fails to receive such notice or a
Holder receives such notice but it is defective, such Holder’s failure to
receive such notice or such defect shall not affect the validity of the
proceedings for the purchase of the Notes as to all other Holders that properly
received such notice without defect.  The
Issuer shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws or regulations are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. 
To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this Indenture, the Issuer shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Indenture by virtue thereof.

 

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

 

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

 

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

 

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

 

64

 

(c)                                  The Issuer shall not be required to make a
Change of Control Offer following a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Section 4.14 applicable
to a Change of Control Offer made by the Issuer and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer. Notwithstanding
anything to the contrary herein, a Change of Control Offer may be made in
advance of a Change of Control, conditional upon such Change of Control, if a
definitive agreement is in place for the Change of Control at the time of
making of the Change of Control Offer.

 

(d)                                 Other than as specifically provided in this Section 4.14,
any purchase pursuant to this Section 4.14 shall be made pursuant to the
provisions of Sections 3.02, 3.05 and 3.06 hereof.

 

Section 4.15                             Additional Subsidiary Guarantees.

 

The
Issuer shall not permit any of its Wholly-Owned Subsidiaries that are
Restricted Subsidiaries (and non-Wholly-Owned Subsidiaries if such
non-Wholly-Owned Subsidiaries guarantee other capital markets debt securities),
other than a Guarantor, to guarantee the payment of any Indebtedness of the
Issuer or any other Guarantor unless:

 

(1)                                  such Restricted Subsidiary within
30 days executes and delivers a supplemental indenture to this Indenture,
the form of which is attached as Exhibit D hereto, providing for a
Guarantee by such Restricted Subsidiary, except that with respect to a
guarantee of Indebtedness of the Issuer or any Guarantor:

 

(a)                                  if the Notes or such Guarantor’s Guarantee of
the Notes is subordinated in right of payment to such Indebtedness, the
Guarantee under the supplemental indenture shall be subordinated to such
Restricted Subsidiary’s guarantee with respect to such Indebtedness
substantially to the same extent as the Notes or the Guarantee of the Notes are
subordinated to such Indebtedness; and

 

(b)                                 if such Indebtedness is by its express terms
subordinated in right of payment to the Notes or such Guarantor’s Guarantee of
the Notes, any such guarantee by such Restricted Subsidiary with respect to
such Indebtedness shall be subordinated in right of payment to the Guarantee of
the Notes pursuant to the supplemental indenture substantially to the same
extent as such Indebtedness is subordinated to the Notes or the Guarantor’s
Guarantee of the Notes;

 

(2)                                  such Restricted Subsidiary waives, and shall
not in any manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other rights against
the Issuer or any other Restricted Subsidiary as a result of any payment by
such Restricted Subsidiary under its Guarantee; and

 

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

 

(a)                                  such Guarantee has been duly executed and
authorized; and

 

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

 

65

 

provided  that this Section 4.15 shall not be
applicable to (x) any guarantee of any Restricted Subsidiary that existed
at the time such Person became a Restricted Subsidiary and was not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary (y) a Guarantee by a Foreign Subsidiary of Indebtedness of a
Foreign Subsidiary.

 

Section 4.16                             Limitation on Layering.

 

Notwithstanding
anything to the contrary, the Issuer shall not, and shall not permit any
Guarantor to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) that is subordinate in right of payment to any Senior
Indebtedness of the Issuer or such Guarantor, as the case may be, unless such
Indebtedness is either:

 

(a)                                  equal in right of payment with the Notes or
such Guarantor’s Guarantee of the Notes, as the case may be; or

 

(b)                                 expressly subordinated in right of payment to
the Notes or such Guarantor’s Guarantee of the Notes, as the case may be.

 

For
the purposes of this Indenture, (1) Indebtedness that is unsecured is not
deemed to be subordinated or junior to Secured Indebtedness merely because it
is unsecured, and (2) Senior Indebtedness is not deemed to be subordinated
or junior to any other Senior Indebtedness merely because it has a junior
priority with respect to the same collateral.

 

ARTICLE
5

 

SUCCESSORS

 

Section 5.01                             Merger, Consolidation or Sale of All or Substantially All Assets.

 

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

 

(1)                                  the Issuer is the surviving corporation or
the Person formed by or surviving any such consolidation or merger (if other
than the Issuer) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is a corporation organized or
existing under the laws of the jurisdiction of organization of the Issuer or
the laws of the United States, any state thereof, the District of Columbia, or
any territory thereof (such Person, as the case may be, being herein called the
“Successor Company”);

 

(2)                                  the Successor Company, if other than the
Issuer, expressly assumes all the obligations of the Issuer under the Notes and
this Indenture pursuant to a supplemental indenture or other documents or instruments
in form reasonably satisfactory to the Trustee;

 

(3)                                  immediately after such transaction, no
Default exists;

 

(4)                                  immediately after giving pro forma effect to such transaction and
any related financing transactions, as if such transactions had occurred at the
beginning of the applicable four-quarter period,

 

66

 

(A)                              the Successor Company would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Leverage Ratio test set
forth in Section 4.09(a) hereof, or

 

(B)                                the Consolidated Leverage Ratio for the Successor Company, the Issuer
and its Restricted Subsidiaries would be less than such ratio for the Issuer
and its Restricted Subsidiaries immediately prior to such transaction;

 

(5)                                  each Guarantor, unless it is the other party
to the transactions described above, shall have by supplemental indenture
confirmed that its Guarantee shall apply to such Person’s obligations under
this Indenture, the Notes and the Registration Rights Agreement; and

 

(6)                                  the Issuer shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indentures, if
any, comply with this Indenture.

 

(b)                                 The Successor Company shall succeed to, and
be substituted for the Issuer under this Indenture, the Guarantees and the
Notes, as applicable, except that in the case of a lease of all or
substantially all of its assets, the predecessor shall not be released from the
obligation to pay principal of and interest on the Notes. Notwithstanding
clauses (3) and (4) of Section 5.01(a) hereof,

 

(x)                                   any Restricted Subsidiary may consolidate
with or merge into or transfer all or part of its properties and assets to the
Issuer, and

 

(y)                                 the Issuer may merge with an Affiliate of the
Issuer solely for the purpose of reincorporating the Issuer in a State of the
United States, the District of Columbia or any territory of the United States,
so long as the amount of Indebtedness, Disqualified Stock and Preferred Stock
of the Issuer and its Restricted Subsidiaries is not increased thereby.

 

(c)                                  Subject to certain limitations described in
this Indenture governing release of a Guarantee upon the sale, disposition or
transfer of a Guarantor, no Guarantor shall, and the Issuer shall not permit
any Guarantor to, consolidate or merge with or into or wind up into (whether or
not the Issuer or Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to any Person
unless:

 

(1)                                   (A) such Guarantor is the surviving
corporation or the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made is a
corporation, partnership, limited partnership, limited liability company or
trust organized or existing under the laws of the jurisdiction of organization
of such Guarantor, as the case may be, or the laws of the United States, any
state thereof, the District of Columbia, or any territory thereof (such
Guarantor or such Person, as the case may be, being herein called the “Successor
Person”);

 

(B)                                the Successor Person, if other than such
Guarantor, expressly assumes all the obligations of such Guarantor under this
Indenture and such Guarantor’s related Guarantee pursuant to a supplemental
indenture or other documents or instruments in form reasonably satisfactory to
the Trustee;

 

(C)                                immediately after such transaction, no
Default exists; and

 

67

 

(D)                               the Issuer shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture, if any,
comply with this Indenture; or

 

(2)                                  if the transaction constitutes an Asset Sale,
such transaction is made in compliance with Section 4.10 hereof.

 

(d)                                 Subject to certain limitations described in
this Indenture, the Successor Person shall succeed to, and be substituted for,
such Guarantor under this Indenture and such Guarantor’s Guarantee.  Notwithstanding the foregoing, any Guarantor
may merge into or transfer all or part of its properties and assets to another
Guarantor or the Issuer or merge with a Restricted Subsidiary of the Issuer
solely for the purpose of reincorporating the Guarantor in a State of the
United States, the District of Columbia or any territory of the United States,
as long as the amount of Indebtedness, Preferred Stock and Disqualified Stock
of such Guarantor is not increased thereby.

 

(e)                                  Notwithstanding anything to the contrary, the
mergers contemplated by the Transaction Agreement shall be permitted without
compliance with this Section 5.01.

 

(f)                                    For purposes of this Section 5.01, the
sale, lease, conveyance, assignment, transfer or other disposition of all or
substantially all of the properties and assets of one or more Subsidiaries of
the Issuer, which properties and assets, if held by the Issuer instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of the Issuer on a consolidated basis, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Issuer.

 

Section 5.02                             Successor Entity Substituted.

 

Upon
any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of
the Issuer in accordance with Section 5.01 hereof, the successor
corporation, limited liability company or limited partnership, as the case may
be, formed by such consolidation or into or with which the Issuer is merged or
to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the Issuer shall
refer instead to the successor entity and not to the Issuer), and may exercise
every right and power of the Issuer under this Indenture with the same effect
as if such successor Person had been named as the Issuer herein; provided
that the predecessor Issuer shall not be relieved from the obligation to pay
the principal of and interest and Additional Interest, if any, on the Notes
except in the case of a sale, assignment, transfer, conveyance or other
disposition of all of the Issuer’s assets that meets the requirements of Section 5.01
hereof.

 

ARTICLE
6

 

DEFAULTS
AND REMEDIES

 

Section 6.01                             Events of Default.

 

(a)                                  An “Event of Default” wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):

 

68

 

(1)                                  default in payment when due and payable, upon
redemption, acceleration or otherwise, of principal of, or premium, if any, on
the Notes (whether or not prohibited by the subordination provisions of this
Indenture);

 

(2)                                  default for 30 days or more in the payment
when due of interest or Additional Interest on or with respect to the Notes
(whether or not prohibited by the subordination provisions of this Indenture);

 

(3)                                  failure by the Issuer or any Guarantor for
60 days after receipt of written notice given by the Trustee or the
Holders of not less 25% in principal amount of the Notes to comply with any of
its obligations, covenants or agreements (other than a default referred to in
clauses (1) and (2) above) contained in this Indenture or the Notes
(except that in the case of a default with respect to Section 5.01 hereof,
such default shall constitute an Event of Default with such notice requirement
but without such passage of time requirement);

 

(4)                                  default under any mortgage, indenture or
instrument under which there is issued or by which there is secured or
evidenced any Indebtedness for money borrowed by the Issuer or any of its
Restricted Subsidiaries or the payment of which is guaranteed by the Issuer or
any of its Restricted Subsidiaries, other than Indebtedness owed to the Issuer
or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists
or is created after the issuance of the Notes, if both:

 

(a)                                  such default either results from the failure
to pay any principal of such Indebtedness at its stated final maturity (after
giving effect to any applicable grace periods) or relates to an obligation
other than the obligation to pay principal of any such Indebtedness at its
stated final maturity and results in the holder or holders of such Indebtedness
causing such Indebtedness to become due prior to its stated maturity; and

 

(b)                                 the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in default
for failure to pay principal at stated final maturity (after giving effect to
any applicable grace periods), or the maturity of which has been so
accelerated, aggregate $25.0 million (or its foreign currency equivalent)
or more at any one time outstanding;

 

(5)                                  failure by the Issuer or any Significant
Subsidiary or any group of Subsidiaries that, taken together as of the date of
the most recent audited financial statements of the Issuer, would constitute a
Significant Subsidiary to pay final judgments aggregating in excess of $25.0 million
(or its foreign currency equivalent), which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60 days after such
judgment becomes final, and in the event such judgment is covered by insurance,
an enforcement proceeding has been commenced by any creditor upon such judgment
or decree which is not promptly stayed;

 

(6)                                  the Issuer, any Restricted Subsidiary that is
a Significant Subsidiary or any group of Subsidiaries that, taken together as
of the date of the most recent audited financial statements of the Issuer,
would constitute a Significant Subsidiary, pursuant to or within the meaning of
any Bankruptcy Law:

 

(i)                                     commences proceedings to be adjudicated
bankrupt or insolvent;

 

(ii)                                  consents to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under applicable Bankruptcy law;

 

69

 

(iii)                               consents to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of it or for all or
substantially all of its property;

 

(iv)                              makes a general assignment for the benefit of its creditors; or

 

(v)                                 generally is not paying its debts as they
become due;

 

(7)                                  a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:

 

(i)                                     is for relief against the Issuer, any
Restricted Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, in a proceeding in which the Issuer, any such Restricted Subsidiary
that is a Significant Subsidiary or any group of Subsidiaries that, taken
together as of the date of the most recent audited financial statements of the
Issuer, would constitute a Significant Subsidiary, is to be adjudicated
bankrupt or insolvent;

 

(ii)                                  appoints a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Issuer, any Restricted
Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that,
taken together as of the date of the most recent audited financial statements
of the Issuer, would constitute a Significant Subsidiary, or for all or
substantially all of the property of the Issuer, any Restricted Subsidiary that
is a Significant Subsidiary or any group of Subsidiaries that, taken together
as of the date of the most recent audited financial statements of the Issuer,
would constitute a Significant Subsidiary; or

 

(iii)                               orders the liquidation of the Issuer, or any Restricted Subsidiary that
is a Significant Subsidiary or any group of Subsidiaries that, taken together
as of the date of the most recent audited financial statements of the Issuer,
would constitute a Significant Subsidiary;

 

and
the order or decree remains unstayed and in effect for 60 consecutive days; or

 

(8)                                  the Guarantee of any Significant Subsidiary
or any group of Subsidiaries that, taken together as of the date of the most
recent audited financial statements of the Issuer, would constitute a
Significant Subsidiary shall for any reason cease to be in full force and
effect or be declared null and void or any responsible officer of any Guarantor
that is a Significant Subsidiary, as the case may be, denies that it has any
further liability under its Guarantee or gives notice to such effect, other
than by reason of the termination of this Indenture or the release of any such
Guarantee in accordance with this Indenture.

 

(b)                                 In the event of any Event of Default specified
in clause (4) of Section 6.01(a) hereof, such Event of
Default and all consequences thereof (excluding any resulting payment default,
other than as a result of acceleration of the Notes) shall be annulled, waived
and rescinded, automatically and without any action by the Trustee or the
Holders, if within 20 days after such Event of Default arose:

 

(1)                                  the Indebtedness or guarantee that is the
basis for such Event of Default has been discharged; or

 

(2)                                  holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise to such Event
of Default; or

 

70

 

(3)                                  the default that is the basis for such Event
of Default has been cured.

 

Section 6.02                             Acceleration.

 

(a)                                  If any Event of Default (other than of a type
specified in clause (6) or (7) of Section 6.01(a) hereof)
occurs and is continuing under this Indenture, the Trustee or the Holders of at
least 25% in principal amount of the then total outstanding Notes may declare the
principal, premium, if any, interest and any other monetary obligations on all
the then outstanding Notes to be due and payable immediately; provided,
however, that so long as any Indebtedness permitted to be incurred under this
Indenture as part of the Senior Credit Facility shall be outstanding, no such
acceleration shall be effective until the earlier of:

 

(1) acceleration of any such Indebtedness under the Senior Credit
Facility; or

 

(2) five Business Days after the giving of written notice of such acceleration
to the Issuer and the administrative agent under the Senior Credit Facility.

 

Upon
the effectiveness of such declaration, such principal and interest shall be due
and payable immediately. Notwithstanding the foregoing, in the case of an Event
of Default arising under clause (6) or (7) of Section 6.01(a) hereof,
all outstanding Notes will become due and payable without further action or
notice. The Trustee may withhold from the Holders notice of any continuing
Default, except a Default relating to the payment of principal, premium, if
any, or interest, if it determines that withholding notice is in their
interest. In addition, the Trustee shall have no obligation to accelerate the
Notes if in the best judgment of the Trustee acceleration is not in the best
interest of the Holders of the Notes.

 

(b)                                 At any time after a declaration of
acceleration with respect to the Notes, the Holders of a majority in principal
amount of the Notes may rescind and cancel such declaration and its
consequences:

 

(1)                                  if the rescission would not conflict with any
judgment or decree;

 

(2)                                  if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration;

 

(3)                                  to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue principal,
which has become due otherwise than by such declaration of acceleration, has
been paid;

 

(4)                                  if the Issuer has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances; and

 

(5)                                  in the event of the cure or waiver of an
Event of Default of the type described in clause (4) of Section 6.01(a) hereof,
the Trustee shall have received an Officer’s Certificate and an Opinion of
Counsel that such Event of Default has been cured or waived.

 

No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.

 

Section 6.03                             Other Remedies.

 

If
an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.

 

71

 

The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any
Holder of a Note in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. 
All remedies are cumulative to the extent permitted by law.

 

Section 6.04                             Waiver of Past Defaults.

 

Subject
to Section 6.02 hereof, Holders of not less than a majority in aggregate
principal amount of the then outstanding Notes by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default and its
consequences hereunder, except a continuing Default in the payment of the
principal of, premium, if any, Additional Interest, if any, or interest on, any
Note held by a non-consenting Holder (including in connection with an Asset
Sale Offer or a Change of Control Offer); provided, subject to Section 6.02
hereof, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such
acceleration.  Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

 

Section 6.05                             Control by Majority.

 

Subject
to Sections 7.01(e), 7.02(f), 7.02(k) and 7.07, Holders of a majority in
principal amount of the then total outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee.  The Trustee, however, may refuse to follow
any direction that conflicts with law or this Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder of a Note or
that would involve the Trustee in personal liability.

 

Section 6.06                             Limitation on Suits.

 

Subject
to Section 6.07 hereof, no Holder of a Note may pursue any remedy with
respect to this Indenture or the Notes unless:

 

(1)                                  such Holder has previously given the Trustee
notice that an Event of Default is continuing;

 

(2)                                  Holders of at least 25% in principal amount
of the total outstanding Notes have requested the Trustee to pursue the remedy;

 

(3)                                  Holders of the Notes have offered the Trustee
reasonable security or indemnity against any loss, liability or expense;

 

(4)                                  the Trustee has not complied with such
request within 60 days after the receipt thereof and the offer of security or
indemnity; and

 

(5)                                  Holders of a majority in principal amount of
the total outstanding Notes have not given the Trustee a direction inconsistent
with such request within such 60-day period.

 

A
Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.

 

72

 

Section 6.07                             Rights of Holders of Notes to Receive Payment.

 

Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal, premium, if any, and Additional Interest, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an Asset Sale Offer or a Change of Control
Offer), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.

 

Section 6.08                             Collection Suit by Trustee.

 

If
an Event of Default specified in Section 6.01(a)(1) or (2) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Issuer for the whole
amount of principal of, premium, if any, and Additional Interest, if any, and
interest remaining unpaid on the Notes and interest on overdue principal and,
to the extent lawful, interest and such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

 

Section 6.09                             Restoration of Rights and Remedies.

 

If
the Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceedings, the Issuer, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding has been instituted.

 

Section 6.10                             Rights and Remedies Cumulative.

 

Except
as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.  The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

 

Section 6.11                             Delay or Omission Not Waiver.

 

No
delay or omission of the Trustee or of any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein.  Every right and
remedy given by this Article or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders, as the case may be.

 

Section 6.12                             Trustee May File Proofs of Claim.

 

The
Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Issuer
(or any other obligor upon the Notes including the Guarantors), their creditors
or their property and shall be entitled

 

73

 

and
empowered to participate as a member in any official committee of creditors
appointed in such matter and to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. 
To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate
in any such proceeding, shall be denied for any reason, payment of the same
shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

 

Section 6.13                             Priorities.

 

If
the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:

 

(i)                                     to the Trustee, its agents and attorneys for
amounts due under Section 7.07 hereof, including payment of all
compensation, expenses and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;

 

(ii)                                  to holders of Senior Indebtedness of the
Issuer known to the Trustee and, if such money or property has been collected
from a Guarantor, to holders of Senior Indebtedness of such Guarantor, in each
case to the extent required by Article 10 and/or Article 12 hereof,
as applicable;

 

(iii)                               to Holders of Notes for amounts due and
unpaid on the Notes for principal, premium, if any, and Additional Interest, if
any, and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal, premium,
if any, and Additional Interest, if any, and interest, respectively; and

 

(iv)                              to the Issuer or to such party as a court of
competent jurisdiction shall direct including a Guarantor, if applicable.

 

The
Trustee may fix a record date and payment date for any payment to Holders of
Notes pursuant to this Section 6.13.

 

Section 6.14                             Undertaking for Costs.

 

In
any suit for the enforcement of any right or remedy under this Indenture or in
any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in
its discretion may assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party litigant.  This Section 6.14 does not apply to a
suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.

 

74

 

ARTICLE
7

 

TRUSTEE

 

Section 7.01                             Duties of Trustee.

 

(a)                                  If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person’s own affairs.

 

(b)                                 Except during the continuance of an Event of
Default:

 

(i)                                     the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and

 

(ii)                                  in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture.  However, in the case of any
such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).

 

(c)                                  The Trustee may not be relieved from
liabilities for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:

 

(i)                                     this paragraph does not limit the effect of
paragraph (b) of this Section 7.01;

 

(ii)                                  the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it is proved in
a court of competent jurisdiction that the Trustee was negligent in
ascertaining the pertinent facts; and

 

(iii)                               the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.

 

(d)                                 Whether or not therein expressly so provided,
every provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b) and (c) of this Section 7.01.

 

(e)                                  The Trustee shall be under no obligation to
exercise any of its rights or powers under this Indenture at the request or
direction of any of the Holders of the Notes unless the Holders have offered to
the Trustee reasonable indemnity or security against any loss, liability or
expense.

 

(f)                                    The Trustee shall not be liable for interest
on any money received by it except as the Trustee may agree in writing with the
Issuer.  Money held in trust by the
Trustee need not be segregated from other funds except to the extent required
by law.

 

Section 7.02                             Rights of Trustee.

 

(a)                                  The Trustee may conclusively rely upon any
document believed by it to be genuine and to have been signed or presented by
the proper Person.  The Trustee need not
investigate any

 

75

 

fact
or matter stated in the document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer, personally or by agent or attorney at the sole cost of the
Issuer and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation. 
Any permissive right or authority granted to the Trustee shall not be
construed as a mandatory duty.

 

(b)                                 Before the Trustee acts or refrains from
acting, it may require an Officer’s Certificate or an Opinion of Counsel or
both subject to the other provisions of this Indenture.  The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officer’s
Certificate or Opinion of Counsel.  The
Trustee may consult with counsel of its selection and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.

 

(c)                                  The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or negligence of any
agent or attorney appointed with due care.

 

(d)                                 The Trustee shall not be liable for any
action it takes or omits to take in good faith that it believes to be
authorized or within the rights or powers conferred upon it by this Indenture.

 

(e)                                  Unless otherwise specifically provided in
this Indenture, any demand, request, direction or notice from the Issuer shall
be sufficient if signed by an Officer of the Issuer.  The Trustee shall have no duty to inquire as
to the performance of the Issuer’s or any Guarantor’s covenants herein.

 

(f)                                    None of the provisions of this Indenture
shall require the Trustee to expend or risk its own funds or otherwise to incur
any liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not assured to it.

 

(g)                                 The Trustee shall not be deemed to have
notice of any Default or Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any event
which is in fact such a Default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the existence of a
Default or Event of Default, the Notes and this Indenture.

 

(h)                                 In no event shall the Trustee be responsible
or liable for special, indirect, or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit) irrespective of
whether the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.

 

(i)                                     The rights, privileges, protections,
immunities and benefits given to the Trustee, including, without limitation,
its right to be indemnified, are extended to, and shall be enforceable by, the
Trustee in each of its capacities hereunder, and each agent, custodian and
other Person employed to act hereunder.

 

(j)                                     In the event the Issuer is required to pay
Additional Interest, the Issuer will provide written notice to the Trustee of
the Issuer’s obligation to pay Additional Interest no later than 15 days prior
to the next Interest Payment Date, which notice shall set forth the amount of
the Additional Interest to be paid by the Issuer.  The Trustee shall not at any time be under any
duty or responsibility to any Holders to determine whether the Additional
Interest is payable and the amount thereof.

 

76

 

(k)                                  The Trustee shall not be required to give any
bond or surety in respect of the performance of its powers or duties.

 

(l)                                     The Trustee may request that the Issuer
deliver an Officer’s Certificate setting forth the names of individuals and/or
titles of officers authorized at such time to take specified actions pursuant
to this Indenture, which Officer’s Certificate may be signed by any person
authorized to sign an Officer’s Certificate, including any Person specified as
so authorized in any such certificate previously delivered and not superseded.

 

(m)                               The permissive rights of the Trustee
enumerated herein shall not be construed as duties.

 

Section 7.03                             Individual Rights of Trustee.

 

The
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer
with the same rights it would have if it were not Trustee.  However, in the event that the Trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign.  Any Agent may do the same with like rights
and duties.  The Trustee is also subject
to Sections 7.10 and 7.11 hereof.

 

Section 7.04                             Trustee’s Disclaimer.

 

The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuer’s use of the proceeds from the Notes or any money
paid to the Issuer or upon the Issuer’s direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.

 

Section 7.05                             Notice of Defaults.

 

If
a Default occurs and is continuing and if it is known to the Trustee, the
Trustee shall mail to Holders of Notes a notice of the Default within 90 days
after it occurs.  Except in the case of a
Default relating to the payment of principal, premium, if any, or interest on
any Note, the Trustee may withhold from the Holders notice of any continuing
Default if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of
the Notes.  The Trustee shall not be
deemed to know of any Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a Default is received by the Trustee at the Corporate Trust Office of the
Trustee and references a Default or Event of Default.

 

Section 7.06                             Reports by Trustee to Holders of the Notes.

 

Within
60 days after each May 15, beginning with the May 15 following the date
of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with Trust Indenture Act Section 313(a) (but
if no event described in Trust Indenture Act Section 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted).  The Trustee also shall
comply with Trust Indenture Act Section 313(b)(2).  The Trustee shall also transmit by mail all
reports as required by Trust Indenture Act Section 313(c).

 

77

 

A
copy of each report at the time of its mailing to the Holders of Notes shall be
mailed to the Issuer and filed with the SEC and each stock exchange on which
the Notes are listed in accordance with Trust Indenture Act Section 313(d).  The Issuer shall promptly notify the Trustee
when the Notes are listed on any stock exchange.

 

Section 7.07                             Compensation and Indemnity.

 

The
Issuer and the Guarantors, jointly and severally, shall pay to the Trustee from
time to time such compensation for its acceptance of this Indenture and
services hereunder as the parties shall agree in writing from time to
time.  The Trustee’s compensation shall
not be limited by any law on compensation of a trustee of an express
trust.  The Issuer shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services.  Such expenses shall include
the reasonable compensation, disbursements and expenses of the Trustee’s agents
and counsel.

 

The
Issuer and the Guarantors, jointly and severally, shall indemnify the Trustee
for, and hold the Trustee harmless against, any and all loss, damage, claims,
liability or expense (including attorneys’ fees) incurred by it in connection
with the acceptance or administration of this trust and the performance of its
duties hereunder (including the costs and expenses of enforcing this Indenture
against the Issuer or any of the Guarantors (including this Section 7.07)
or defending itself against any claim whether asserted by any Holder, the
Issuer or any Guarantor, or liability in connective with the acceptance,
exercise or performance of any of its powers or duties hereunder).  The Trustee shall notify the Issuer promptly
of any claim for which it may seek indemnity. 
Failure by the Trustee to so notify the Issuer shall not relieve the
Issuer of its obligations hereunder.  The
Issuer shall defend the claim and the Trustee may have separate counsel and the
Issuer shall pay the fees and expenses of such counsel.  The Issuer needs not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee’s own willful misconduct, negligence or bad faith.

 

The
obligations of the Issuer under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture or the earlier resignation or
removal of the Trustee.

 

To
secure the payment obligations of the Issuer and the Guarantors in this Section 7.07,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes.  Such Lien
shall survive the satisfaction and discharge of this Indenture.

 

When
the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.01(a)(6) or (7) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

 

The
Trustee shall comply with the provisions of Trust Indenture Act Section 313(b)(2) to
the extent applicable.

 

Section 7.08                             Replacement of Trustee.

 

A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section 7.08.  The Trustee may resign in writing at any time
and be discharged from the trust hereby created by so notifying the
Issuer.  The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Issuer in writing.  The Issuer may remove the Trustee if:

 

78

 

(a)                                  the Trustee fails to comply with Section 7.10
hereof;

 

(b)                                 the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;

 

(c)                                  a custodian or public officer takes charge of
the Trustee or its property; or

 

(d)                                 the Trustee becomes incapable of acting.

 

If
the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Issuer shall promptly appoint a successor
Trustee.  Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount
of the then outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Issuer.

 

If
a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee (at the Issuer’s expense),
the Issuer or the Holders of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

 

If
the Trustee, after written request by any Holder who has been a Holder for at
least six months, fails to comply with Section 7.10 hereof, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.

 

A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Issuer. 
Thereupon, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. 
The successor Trustee shall mail a notice of its succession to Holders.  The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee; provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. 
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Issuer’s obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

 

Section 7.09                             Successor Trustee by Merger, etc.

 

If
the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.

 

Section 7.10                             Eligibility; Disqualification.

 

There
shall at all times be a Trustee hereunder that is a corporation organized and
doing business under the laws of the United States of America or of any state
thereof that is authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state authorities
and that has a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition.

 

This
Indenture shall always have a Trustee who satisfies the requirements of Trust
Indenture Act Sections 310(a)(1), (2) and (5).  The Trustee is subject to Trust Indenture Act
Section 310(b).

 

79

 

Section 7.11                             Preferential Collection of Claims Against the Issuer.

 

The
Trustee is subject to Trust Indenture Act Section 311(a), excluding any
creditor relationship listed in Trust Indenture Act Section 311(b).  A Trustee who has resigned or been removed
shall be subject to Trust Indenture Act Section 311(a) to the extent
indicated therein.

 

ARTICLE
8

 

LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01                             Option to Effect Legal Defeasance or Covenant Defeasance.

 

The
Issuer may, at its option and at any time, elect to have either Section 8.02
or 8.03 hereof applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article 8.

 

Section 8.02                             Legal Defeasance and Discharge.

 

Upon
the Issuer’s exercise under Section 8.01 hereof of the option applicable
to this Section 8.02, the Issuer and the Guarantors shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed
to have been discharged from their obligations with respect to all outstanding
Notes and Guarantees on the date the conditions set forth below are satisfied (“Legal
Defeasance”).  For this purpose,
Legal Defeasance means that the Issuer shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05
hereof and the other Sections of this Indenture referred to in (a) and (b) below,
and to have satisfied all of its other obligations under such Notes and this
Indenture including that of the Guarantors (and the Trustee, on demand of and
at the expense of the Issuer, shall execute proper instruments acknowledging
the same), except for the following provisions which shall survive until
otherwise terminated or discharged hereunder:

 

(a)                                  the rights of Holders of Notes to receive
payments in respect of the principal of, premium, if any, and interest on the
Notes when such payments are due, solely out of the trust created pursuant to
this Indenture referred to in Section 8.04 hereof;

 

(b)                                 the Issuer’s obligations with respect to
Notes concerning issuing temporary Notes, registration of such Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust;

 

(c)                                  the rights, powers, trusts, duties and
immunities of the Trustee, and the Issuer’s obligations in connection
therewith; and

 

(d)                                 this Section 8.02.

 

Subject
to compliance with this Article 8, the Issuer may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.

 

Section 8.03                             Covenant Defeasance.

 

Upon
the Issuer’s exercise under Section 8.01 hereof of the option applicable
to this Section 8.03, the Issuer and the Guarantors shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections 4.03,
4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.16
hereof and clauses (4) and (5) of

 

80

 

Section 5.01(a), Sections 5.01(c), 5.01(d) and 5.01(f) hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 hereof are satisfied (“Covenant Defeasance”),
and the Notes shall thereafter be deemed not “outstanding” for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed “outstanding” for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes).  For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Issuer may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01 hereof, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby.  In addition, upon
the Issuer’s exercise under Section 8.01 hereof of the option applicable
to this Section 8.03 hereof, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6) (solely
with respect to Restricted Subsidiaries that are Significant Subsidiaries or a
group of Restricted Subsidiaries that, taken together as of the date of the
most recent audited financial statements of the Issuer, would constitute a
Restricted Subsidiary), 6.01(7) (solely with respect to Restricted
Subsidiaries that are Significant Subsidiaries or a group of Restricted
Subsidiaries that, taken together as of the date of the most recent audited
financial statements of the Issuer, would constitute a Restricted Subsidiary)
and 6.01(8) hereof shall not constitute Events of Default.

 

Section 8.04                             Conditions to Legal or Covenant Defeasance.

 

The
following shall be the conditions to the application of either Section 8.02
or 8.03 hereof to the outstanding Notes:

 

In
order to exercise either Legal Defeasance or Covenant Defeasance with respect
to the Notes:

 

(1)                                  the Issuer must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S.
dollars, Government Securities, or a combination thereof, in such amounts as
shall be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest due on the Notes on the stated maturity date or on the redemption
date, as the case may be, of such principal, premium, if any, or interest on
such Notes, and the Issuer must specify whether such Notes are being defeased
to maturity or to a particular redemption date;

 

(2)                                  in the case of Legal Defeasance, the Issuer
shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that, subject to customary assumptions and
exclusions,

 

(a)                                  the Issuer has received from, or there has
been published by, the United States Internal Revenue Service a ruling, or

 

(b)                                 since the issuance of the Notes, there has
been a change in the applicable U.S. federal income tax law,

 

in
either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, subject to customary assumptions and exclusions, the Holders of
the Notes will not recognize income, gain or loss for U.S. federal income tax
purposes, as applicable, as a result of such Legal Defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same

 

81

 

manner
and at the same times as would have been the case if such Legal Defeasance had
not occurred;

 

(3)                                  in the case of Covenant Defeasance, the
Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary assumptions and
exclusions, the Holders of the Notes will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such Covenant Defeasance
and will be subject to such tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had not
occurred;

 

(4)                                  no Default (other than that resulting from
borrowing funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each case, the
granting of Liens in connection therewith) shall have occurred and be
continuing on the date of such deposit;

 

(5)                                  such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under the
Senior Credit Facility or any other material agreement or instrument (other
than this Indenture) to which the Issuer or any Restricted Subsidiary is a
party or by which the Issuer or any Restricted Subsidiary is bound (other than
that resulting from borrowing funds to be applied to make such deposit and any
similar and simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith);

 

(6)                                  the Issuer shall have delivered to the
Trustee an Opinion of Counsel to the effect that, as of the date of such
opinion and subject to customary assumptions and exclusions following the
deposit, the trust funds will not be subject to the effect of Section 547
of Title 11 of the United States Code;

 

(7)                                  the Issuer shall have delivered to the
Trustee an Officer’s Certificate stating that the deposit was not made by the
Issuer with the intent of defeating, hindering, delaying or defrauding any
creditors of the Issuer or any Guarantor or others; and

 

(8)                                  the Issuer shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of
Counsel may be subject to customary assumptions and exclusions), each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, as the case may be, have been complied with.

 

Section 8.05                             Deposited Money and Government Securities to Be Held in Trust; Other
Miscellaneous Provisions.

 

Subject
to Section 8.06 hereof, all money and Government Securities (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 8.05, the “Trustee”)
pursuant to Section 8.04 hereof in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through
any Paying Agent (including the Issuer or a Guarantor acting as Paying Agent)
as the Trustee may determine, to the Holders of such Notes of all sums due and
to become due thereon in respect of principal, premium and Additional Interest,
if any, and interest, but such money need not be segregated from other funds
except to the extent required by law. 
Money and Government Securities so held in trust are not subject to Article 10
or Article 12 hereof.

 

The
Issuer shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or Government Securities deposited
pursuant to Section 8.04

 

82

 

hereof
or the principal and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of the
outstanding Notes.

 

Anything
in this Article 8 to the contrary notwithstanding, the Trustee shall
deliver or pay to the Issuer from time to time upon the request of the Issuer
any money or Government Securities held by it as provided in Section 8.04
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee (which may be the opinion delivered under Section 8.04(1) hereof),
are in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.06                             Repayment to the Issuer.

 

Any
money deposited with the Trustee or any Paying Agent, or then held by the Issuer,
in trust for the payment of the principal of, premium and Additional Interest,
if any, or interest on any Note and remaining unclaimed for two years after
such principal, and premium and Additional Interest, if any, or interest has
become due and payable shall be paid to the Issuer on its request or (if then
held by the Issuer) shall be discharged from such trust; and the Holder of such
Note shall thereafter look only to the Issuer for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Issuer as trustee thereof, shall thereupon cease.

 

Section 8.07                             Reinstatement.

 

If
the Trustee or Paying Agent is unable to apply any United States dollars or
Government Securities in accordance with Section 8.02 or 8.03 hereof, as
the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuer’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02
or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 8.02 or 8.03 hereof, as
the case may be; provided that, if the Issuer makes any payment of
principal of, premium and Additional Interest, if any, or interest on any Note
following the reinstatement of its obligations, the Issuer shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.

 

ARTICLE
9

 

AMENDMENT,
SUPPLEMENT AND WAIVER

 

Section 9.01                             Without Consent of Holders of Notes.

 

Notwithstanding
Section 9.02 hereof, the Issuer, any Guarantor (with respect to its
Guarantee or this Indenture) and the Trustee may amend or supplement this
Indenture and any Guarantee or Notes without the consent of any Holder:

 

(1)                                  to cure any ambiguity, omission, mistake,
defect or inconsistency;

 

(2)                                  to provide for uncertificated Notes of such
series in addition to or in place of certificated Notes;

 

(3)                                  to comply with Section 5.01 hereof;

 

(4)                                  to provide the assumption of the Issuer’s or
any Guarantor’s obligations to the Holders;

 

83

 

(5)                                  to make any change that would provide any
additional rights or benefits to the Holders or that does not adversely affect
the legal rights under this Indenture of any such Holder;

 

(6)                                  to add covenants for the benefit of the
Holders or to surrender any right or power conferred upon the Issuer or any
Guarantor;

 

(7)                                  to comply with requirements of the SEC in
order to effect or maintain the qualification of this Indenture under the Trust
Indenture Act;

 

(8)                                  to evidence and provide for the acceptance
and appointment under this Indenture of a successor Trustee thereunder pursuant
to the requirements thereof;

 

(9)                                  to provide for the issuance of Exchange Notes
or private exchange notes, which are identical to Exchange Notes except that
they are not freely transferable;

 

(10)                            to add a Guarantor under this Indenture;

 

(11)                            to secure the Notes;

 

(12)                            to conform the text of this Indenture,
Guarantees or the Notes to any provision of the “Description of notes” section
of the Offering Memorandum to the extent that such provision in such “Description
of notes” section was intended to be a verbatim recitation of a provision of
this Indenture, Guarantee or Notes;

 

(13)                            to make any amendment to the provisions of
this Indenture relating to the transfer and legending of Notes as permitted by
this Indenture, including, without limitation to facilitate the issuance and
administration of the Notes; provided, however, that (i) compliance
with this Indenture as so amended would not result in Notes being transferred
in violation of the Securities Act or any applicable securities law and (ii) such
amendment does not materially and adversely affect the rights of Holders to
transfer Notes; or

 

(14)                            to make any change that does not adversely
affect the Holders in any material respect.

 

Upon
the request of the Issuer accompanied by a resolution of its board of directors
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Issuer and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.  Notwithstanding the foregoing, no Opinion of
Counsel shall be required in connection with the addition of a Guarantor under
this Indenture upon execution and delivery by such Guarantor and the Trustee of
a supplemental indenture to this Indenture, the form of which is attached as Exhibit D
hereto, and delivery of an Officer’s Certificate, except as provided in Section 5.01(c).

 

Section 9.02                             With Consent of Holders of Notes.

 

Except
as provided below in this Section 9.02, the Issuer and the Trustee may
amend or supplement this Indenture, any Guarantee and the Notes with the
consent of the Holders of at least a majority in principal amount of the Notes
(including Additional Notes, if any) then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, or tender

 

84

 

offer
or exchange offer for, Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium and Additional Interest, if
any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Guarantees or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including Additional Notes, if any) voting as a single class (including
consents obtained in connection with the purchase of, or tender offer or
exchange offer for, Notes).  Section 2.08
hereof and Section 2.09 hereof shall determine which Notes are considered
to be “outstanding” for the purposes of this Section 9.02.

 

Upon
the request of the Issuer accompanied by a resolution of its board of directors
authorizing the execution of any such amended or supplemental indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee
of the documents described in Section 7.02 hereof, the Trustee shall join
with the Issuer in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental indenture.

 

It
shall not be necessary for the consent of the Holders of Notes under this Section 9.02
to approve the particular form of any proposed amendment or waiver, but it
shall be sufficient if such consent approves the substance thereof.

 

After
an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Issuer shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver.  Any failure of the Issuer to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such amended or supplemental indenture or waiver.

 

Without
the consent of each affected Holder of Notes, an amendment or waiver under this
Section 9.02 may not (with respect to any Notes held by a non-consenting
Holder):

 

(1)                                  reduce the principal amount of such Notes
whose Holders must consent to an amendment, supplement or waiver;

 

(2)                                  reduce the principal of or change the fixed
final maturity of any such Note, reduce the premium payable upon redemption or
repurchase of any Note or change the time at which any Note may be redeemed
under Section 3.07 hereof (other than the notice periods relating to an
optional redemption of the Notes, so long as such notice periods comply with
DTC’s procedures);

 

(3)                                  reduce the rate of or change the time for
payment of interest on any Note;

 

(4)                                  waive a Default in the payment of principal
of or premium, if any, or interest on the Notes, except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes with respect to a non payment default and a
waiver of the payment default that resulted from such acceleration, or in
respect of a covenant or provision contained in this Indenture or any Guarantee
that cannot be amended or modified without the consent of all Holders;

 

(5)                                  make any Note payable in money other than
that stated therein;

 

85

 

(6)                                  make any change in the provisions of this
Indenture relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or premium, if any, or interest on the Notes;

 

(7)                                  make any change in these amendment and waiver
provisions;

 

(8)                                  impair the right of any Holder to receive
payment of principal of, or interest on such Holder’s Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment on or
with respect to such Holder’s Notes;

 

(9)                                  make any change in the subordination
provisions hereof that would adversely affect the Holders; or

 

(10)                            except as expressly permitted by this
Indenture, modify the Guarantees of any Significant Subsidiary or any group of
Subsidiaries that, taken together as of the date of the most recent audited
financial statements of the Issuer, would constitute a Significant Subsidiary
in any manner adverse to the Holders of the Notes.

 

Section 9.03                             Compliance with Trust Indenture Act.

 

Every
amendment or supplement to this Indenture or the Notes shall be set forth in an
amended or supplemental indenture that complies with the Trust Indenture Act as
then in effect.

 

Section 9.04                             Revocation and Effect of Consents.

 

Until
an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting Holder’s Note, even if notation of the consent is not made on
any Note.  However, any such Holder of a
Note or subsequent Holder of a Note may revoke the consent as to its Note if
the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. 
An amendment, supplement or waiver becomes effective in accordance with
its terms and thereafter binds every Holder.

 

The
Issuer may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement, or
waiver.  If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date.  No such consent
shall be valid or effective for more than 120 days after such record date
unless the consent of the requisite number of Holders has been obtained.

 

Section 9.05                             Notation on or Exchange of Notes.

 

The
Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated. 
The Issuer in exchange for all Notes may issue and the Trustee shall,
upon receipt of an Authentication Order, authenticate new Notes that reflect
the amendment, supplement or waiver.

 

Failure
to make the appropriate notation or issue a new Note shall not affect the
validity and effect of such amendment, supplement or waiver.

 

86

 

Section 9.06                             Trustee to Sign Amendments, etc.

 

The
Trustee shall sign any amendment, supplement or waiver authorized pursuant to
this Article 9 if the amendment or supplement does not adversely affect
the rights, duties, liabilities or immunities of the Trustee.  The Issuer may not sign an amendment,
supplement or waiver until its board of directors approves it.  In executing any amendment, supplement or
waiver, the Trustee shall be entitled to receive and (subject to Section 7.01
hereof) shall be fully protected in relying upon, in addition to the documents
required by Section 14.04 hereof, an Officer’s Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental indenture
is authorized or permitted by this Indenture and that such amendment,
supplement or waiver is the legal, valid and binding obligation of the Issuer
and any Guarantors party thereto, enforceable against them in accordance with
its terms, subject to customary exceptions, and complies with the provisions
hereof (including Section 9.03). 
Notwithstanding the foregoing, no Opinion of Counsel will be required
for the Trustee to execute any amendment or supplement adding a new Guarantor
under this Indenture.

 

Section 9.07                             Payment for Consent.

 

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

 

ARTICLE
10

 

SUBORDINATION

 

Section 10.01                       Agreement To Subordinate.

 

The
Issuer agrees, and each Holder by accepting a Note agrees, that the payment of
all Obligations owing in respect of the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article 10, to
the prior payment in full of all existing and future Senior Indebtedness of the
Issuer and that the subordination is for the benefit of and enforceable by the
holders of such Senior Indebtedness.  The
Notes shall in all respects rank pari passu
in right of payment with all existing and future Senior Subordinated
Indebtedness of the Issuer, and will be senior in right of payment to all
existing and future Subordinated Indebtedness of the Issuer; and only
Indebtedness of the Issuer that is Senior Indebtedness shall rank senior to the
Notes in accordance with the provisions set forth herein.  All provisions of this Article 10 shall
be subject to Section 10.12.

 

Section 10.02                       Liquidation, Dissolution, Bankruptcy.

 

Upon
any payment or distribution of the assets of the Issuer to creditors upon a
total or partial liquidation or a total or partial dissolution of the Issuer or
in a reorganization of or similar proceeding relating to the Issuer or its
property:

 

(i)                                     the holders of Senior Indebtedness of the
Issuer shall be entitled to receive payment in full in cash of such Senior
Indebtedness before Holders shall be entitled to receive any payment; and

 

(ii)                                  until the Senior Indebtedness of the Issuer
is paid in full in cash, any payment or distribution to which Holders of the
Notes would be entitled but for the subordination provisions

 

87

 

of
this Indenture shall be made to holders of such Senior Indebtedness as their
interests may appear, except that Holders of Notes may receive Permitted Junior
Securities; and

 

(iii)                               if a distribution is made to Holders of the
Notes that, due to the subordination provisions, should not have been made to
them, such Holders of the Notes are required to hold it in trust for the
holders of Senior Indebtedness of the Issuer and pay it over to them as their
interests may appear.

 

Section 10.03                       Default on Senior Indebtedness of the Issuer.

 

The
Issuer shall not pay principal of, premium, if any, or interest on the Notes
(or pay any other Obligations relating to the Notes, including Additional
Interest, fees, costs, expenses, indemnities and rescission or damage claims)
or make any deposit pursuant to Article 8 or Article 13 hereof and
may not purchase, redeem or otherwise retire any Notes (collectively, “pay
the Notes”) (except in the form of Permitted Junior Securities), if either
of the following occurs (a “Payment Default”):

 

(i)                                     any Obligation on any Designated Senior
Indebtedness of the Issuer is not paid in full in cash when due (after giving
effect to any applicable grace period); or

 

(ii)                                  any other default on Designated Senior
Indebtedness of the Issuer occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms;

 

unless,
in either case, the Payment Default has been cured or waived and any such
acceleration has been rescinded or such Designated Senior Indebtedness has been
paid in full in cash; provided, however, that the Issuer shall be
entitled to pay the Notes without regard to the foregoing if the Issuer and the
Trustee receive written notice approving such payment from the Representatives
of all Designated Senior Indebtedness with respect to which the Payment Default
has occurred and is continuing.

 

During
the continuance of any default (other than a Payment Default) (a “Non-Payment
Default”) with respect to any Designated Senior Indebtedness of the Issuer
pursuant to which the maturity thereof may be accelerated without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, the Issuer shall not pay the
Notes (except in the form of Permitted Junior Securities) for a period (a “Payment
Blockage Period”) commencing upon the receipt by the Trustee (with a copy
to the Issuer) of written notice (a “Blockage Notice”) of such
Non-Payment Default from the Representative of such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter.  So long as
there shall remain outstanding any Senior Indebtedness under the Senior Credit
Facility, a Blockage Notice may be given only by the administrative agent
thereunder unless otherwise agreed to in writing by the requisite lenders named
therein.  The Payment Blockage Period
shall end earlier if such Payment Blockage Period is terminated (i) by written
notice to the Trustee and the Issuer from the Person or Persons who gave such
Blockage Notice; (ii) because the default giving rise to such Blockage
Notice is cured, waived or otherwise no longer continuing; or (iii) because
such Designated Senior Indebtedness has been discharged or repaid in full in
cash.

 

Notwithstanding
the provisions described in the immediately preceding paragraph (but subject to
the provisions contained in the first sentence of this Section 10.03 and Section 10.02
hereof), unless the holders of such Designated Senior Indebtedness or the
Representative of such Designated Senior Indebtedness shall have accelerated
the maturity of such Designated Senior Indebtedness or a Payment Default has
occurred and is continuing, the Issuer shall be permitted to resume paying the
Notes after the end of such Payment Blockage Period (including any missed
payments). The Notes shall not be subject to more than one Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of
defaults with respect to Designated Senior Indebtedness during such period; provided
that if

 

88

 

any
Blockage Notice is delivered to the Trustee by or on behalf of the holders of
Designated Senior Indebtedness of the Issuer (other than the holders of
Indebtedness under the Senior Credit Facility), a Representative of holders of
Indebtedness under the Senior Credit Facility may give another Blockage Notice
within such period. However, in no event shall the total number of days during
which any Payment Blockage Period or Periods on the Notes is in effect exceed
179 days in the aggregate during any consecutive 360-day period, and there
must be at least 181 days during any consecutive 360-day period during
which no Payment Blockage Period is in effect. Notwithstanding the foregoing,
however, no default that existed or was continuing on the date of delivery of
any Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Blockage Notice unless such default shall have been cured or waived
for a period of not less than 90 consecutive days (it being acknowledged
that any subsequent action, or any breach of any financial covenants during the
period after the date of delivery of a Blockage Notice, that, in either case,
would give rise to a Non-Payment Default pursuant to any provisions under which
a Non-Payment Default previously existed or was continuing shall constitute a
new Non-Payment Default for this purpose).

 

Section 10.04                       Acceleration of Payment of Notes.

 

If
payment of the Notes is accelerated because of an Event of Default, the Issuer
shall promptly notify the holders of the Designated Senior Indebtedness of the
Issuer or the Representative of such Designated Senior Indebtedness of the acceleration;
provided that any failure to give such notice shall have no effect
whatsoever on the provisions of this Article 10.  If any Designated Senior Indebtedness of the
Issuer is outstanding, the Issuer may not pay the Notes until five Business
Days after the Representatives of all the issuers of such Designated Senior
Indebtedness receive notice of such acceleration and, thereafter, may pay the
Notes only if this Indenture otherwise permits payment at that time.

 

Section 10.05                       When Distribution Must Be Paid Over.

 

If
a distribution is made to Holders that, due to the subordination provisions,
should not have been made to them, such Holders are required to hold it in
trust for the holders of Senior Indebtedness of the Issuer, and pay it over to
them as their interests may appear.

 

Section 10.06                       Subrogation.

 

After
all Senior Indebtedness of the Issuer is paid in full and until the Notes are
paid in full, Holders shall be subrogated to the rights of holders of such
Senior Indebtedness to receive distributions applicable to such Senior
Indebtedness.  A distribution made under
this Article 10 to holders of such Senior Indebtedness which otherwise
would have been made to Holders is not, as between the Issuer and Holders, a
payment by the Issuer on such Senior Indebtedness.

 

Section 10.07                       Relative Rights.

 

This
Article 10 defines the relative rights of Holders and holders of Senior
Indebtedness of the Issuer.  Nothing in
this Indenture shall:

 

(i)                                     impair, as between the Issuer and Holders,
the obligation of the Issuer, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;

 

(ii)                                  prevent the Trustee or any Holder from
exercising its available remedies upon a Default, subject to the rights of
holders of Senior Indebtedness of the Issuer to receive payments

 

89

 

or
distributions otherwise payable to Holders and such other rights of such
holders of Senior Indebtedness as set forth herein; or

 

(iii)                               affect the relative rights of Holders and
creditors of the Issuer other than their rights in relation to holders of
Senior Indebtedness.

 

Section 10.08                       Subordination May Not Be Impaired by the Issuer.

 

No
right of any holder of Senior Indebtedness of the Issuer to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Issuer or by their failure to comply with this
Indenture.

 

Section 10.09                       Rights of Trustee and Paying Agent.

 

Notwithstanding
Section 10.03 hereof, the Trustee or any Paying Agent may continue to make
payments on the Notes and shall not be charged with knowledge of the existence
of facts that would prohibit the making of any payments unless, not less than
three Business Days prior to the date of such payment, a Responsible Officer at
the Corporate Trust Office of the Trustee receives notice satisfactory to him
that payments may not be made under this Article 10.  The Issuer, the Registrar, the Paying Agent,
a Representative or a holder of Senior Indebtedness of the Issuer shall be
entitled to give the notice; provided, however, that, if an issue
of Senior Indebtedness of the Issuer has a Representative, only the
Representative shall be entitled to give the notice.

 

The
Trustee in its individual or any other capacity shall be entitled to hold
Senior Indebtedness of the Issuer with the same rights it would have if it were
not Trustee.  The Registrar and the
Paying Agent shall be entitled to do the same with like rights.  The Trustee shall be entitled to all the
rights set forth in this Article 10 with respect to any Senior
Indebtedness of the Issuer which may at any time be held by it, to the same
extent as any other holder of such Senior Indebtedness; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder.  Nothing in this Article 10 shall apply
to claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof or any other Section of this Indenture.

 

Section 10.10                       Distribution or Notice to Representative.

 

Whenever
a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Issuer, the distribution may be made and the notice given
to their Representative (if any).

 

Section 10.11                       Article 10 Not To Prevent Events of Default or Limit Right To
Accelerate.

 

The
failure to make a payment pursuant to the Notes by reason of any provision in
this Article 10 shall not be construed as preventing the occurrence of a
Default.  Nothing in this Article 10
shall have any effect on the right of the Holders or the Trustee to accelerate
the maturity of the Notes.

 

Section 10.12                       Trust Moneys Not Subordinated.

 

Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of Government Securities held in trust by the Trustee for the payment of
principal of and interest on the Notes pursuant to Article 8 or Article 13
hereof shall not be subordinated to the prior payment of any Senior
Indebtedness of the Issuer or subject to the restrictions set forth in this Article 10,
and none of the Holders shall be obligated to pay over any such amount to the
Issuer or any holder of Senior Indebtedness of the Issuer or any other creditor
of the Issuer; provided that the subordination provisions

 

90

 

of
this Article 10 were not violated at the time the applicable amounts were
deposited in trust pursuant to Article 8 or Article 13 hereof, as the
case may be.

 

Section 10.13                       Trustee Entitled To Rely.

 

Upon
any payment or distribution pursuant to this Article 10, the Trustee and
the Holders shall be entitled to rely (a) upon any order or decree of a
court of competent jurisdiction in which any proceedings of the nature referred
to in Section 10.02 hereof are pending, (b) upon a certificate of the
liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or to the Holders or (c) upon the
Representatives of Senior Indebtedness of the Issuer for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of such Senior Indebtedness and other Indebtedness of
the Issuer, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article 10.  In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness of the Issuer to participate in any payment
or distribution pursuant to this Article 10, the Trustee shall be entitled
to request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of such Senior Indebtedness held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this Article 10,
and, if such evidence is not furnished, the Trustee shall be entitled to defer
any payment to such Person pending judicial determination as to the right of
such Person to receive such payment.  The
provisions of Sections 7.01 and 7.02 hereof shall be applicable to all actions
or omissions of actions by the Trustee pursuant to this Article 10.

 

Section 10.14                       Trustee To Effectuate Subordination.

 

A
Holder by its acceptance of a Note agrees to be bound by this Article 10
and authorizes and expressly directs the Trustee, on his behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
between the Holders and the holders of Senior Indebtedness of the Issuer as
provided in this Article 10 and appoints the Trustee as attorney-in-fact
for any and all such purposes.

 

Section 10.15                       Trustee Not Fiduciary for Holders of Senior Indebtedness of the Issuer.

 

The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of the Issuer and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or the Issuer or any other
Person, money or assets to which any holders of Senior Indebtedness of the
Issuer shall be entitled by virtue of this Article 10 or otherwise.

 

Section 10.16                       Reliance by Holders of Senior Indebtedness of the Issuer on
Subordination Provisions.

 

Each
Holder by accepting a Note acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness of the Issuer, whether
such Senior Indebtedness was created or acquired before or after the issuance
of the Notes, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.

 

Without
in any way limiting the generality of the foregoing paragraph, the holders of
Senior Indebtedness of the Issuer may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Trustee or the Holders and without impairing or
releasing the subordination provided in this Article 10 or the obligations
hereunder of the Holders to the holders of the Senior Indebtedness of the
Issuer, do any one or more of the following: 
(i)

 

91

 

change
the manner, place or terms of payment or extend the time of payment of, or
renew or alter, Senior Indebtedness of the Issuer, or otherwise amend or
supplement in any manner Senior Indebtedness of the Issuer, or any instrument
evidencing the same or any agreement under which Senior Indebtedness of the
Issuer is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness of
the Issuer; (iii) release any Person liable in any manner for the payment
or collection of Senior Indebtedness of the Issuer; and (iv) exercise or
refrain from exercising any rights against the Issuer and any other Person.

 

ARTICLE
11

 

GUARANTEES

 

Section 11.01                       Guarantee.

 

Subject
to this Article 11, each of the Guarantors hereby, jointly and severally
irrevocably and unconditionally guarantee, on an unsecured senior subordinated
basis, to each Holder of a Note authenticated and delivered by the Trustee and
to the Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Issuer
hereunder or thereunder, that: (a) the principal of, premium, if any, or
interest on or Additional Interest, if any, on the Notes shall be promptly paid
in full when due, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest on the Notes,
if any, if lawful, and all other Obligations of the Issuer to the Holders or
the Trustee hereunder or thereunder shall be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. 
Failing payment when due of any amount so guaranteed or any performance
so guaranteed for whatever reason, the Guarantors shall be jointly and
severally obligated to pay the same immediately.  Each Guarantor agrees that this is a guarantee
of payment and not a guarantee of collection.

 

The
Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Issuer, any action
to enforce the same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor.  Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest, notice and all demands whatsoever and covenants
that this Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and this Indenture.

 

Each
Guarantor also agrees to pay any and all costs and expenses (including reasonable
attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights
under this Section 11.01.

 

If
any Holder or the Trustee is required by any court or otherwise to return to
the Issuer, the Guarantors or any custodian, trustee, liquidator or other
similar official acting in relation to the Issuer or the Guarantors, any amount
paid either to the Trustee or such Holder, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.

 

Each
Guarantor agrees that it shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.  Each Guarantor further agrees that, as
between the Guarantors, on the one hand, and

 

92

 

the
Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration
of such obligations as provided in Article 6 hereof, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Guarantee. 
The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantees.

 

Each
Guarantee shall remain in full force and effect and continue to be effective
should any petition be filed by or against the Issuer for liquidation,
reorganization, should the Issuer become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all
or any significant part of the Issuer’s assets, and shall, to the fullest
extent permitted by law, continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of the Notes are, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by any obligee on the Notes or Guarantees, whether as a “voidable
preference,” “fraudulent transfer” or otherwise, all as though such payment or
performance had not been made.  In the
event that any payment or any part thereof, is rescinded, reduced, restored or
returned, the Notes shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

 

In
case any provision of any Guarantee shall be invalid, illegal or unenforceable,
the validity, legality, and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.

 

The
Guarantee issued by any Guarantor shall be a general unsecured senior
subordinated obligation of such Guarantor and shall be subordinated in right of
payment to all existing and future Senior Indebtedness of such Guarantor, if
any.

 

Each
payment to be made by a Guarantor in respect of its Guarantee shall be made
without set-off, counterclaim, reduction or diminution of any kind or nature.

 

Section 11.02                       Limitation on Guarantor Liability.

 

Each
Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it
is the intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any
Guarantee.  To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of each Guarantor shall be limited to the maximum amount
as will, after giving effect to such maximum amount and all other contingent
and fixed liabilities of such Guarantor that are relevant under such laws and
after giving effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 11, result in the
obligations of such Guarantor under its Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under applicable law.  Each Guarantor that makes a payment under its
Guarantee shall be entitled upon payment in full of all guaranteed obligations
under this Indenture to a contribution from each other Guarantor in an amount
equal to such other Guarantor’s pro rata
portion of such payment based on the respective net assets of all the
Guarantors at the time of such payment determined in accordance with GAAP.

 

93

 

Section 11.03                       Execution and Delivery.

 

To
evidence its Guarantee set forth in Section 11.01 hereof, each Guarantor
hereby agrees that this Indenture shall be executed on behalf of such Guarantor
by its President, its Chief Financial Officer, its Treasurer, one of its Vice
Presidents or one of its Assistant Vice Presidents.

 

Each
Guarantor hereby agrees that its Guarantee set forth in Section 11.01
hereof shall remain in full force and effect notwithstanding the absence of the
endorsement of any notation of such Guarantee on the Notes.

 

If
an Officer whose signature is on this Indenture no longer holds that office at
the time the Trustee authenticates the Note, the Guarantee shall be valid
nevertheless.

 

The
delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Guarantors.

 

If
required by Section 4.15 hereof, the Issuer shall cause any newly created
or acquired Restricted Subsidiary to comply with the provisions of Section 4.15
hereof and this Article 11, to the extent applicable.

 

Section 11.04                       Subrogation.

 

Each
Guarantor shall be subrogated to all rights of Holders of Notes against the
Issuer in respect of any amounts paid by any Guarantor pursuant to the
provisions of Section 11.01 hereof; provided that, if an Event of
Default has occurred and is continuing, no Guarantor shall be entitled to
enforce or receive any payments arising out of, or based upon, such right of
subrogation until all amounts then due and payable by the Issuer under this
Indenture or the Notes shall have been paid in full.

 

Section 11.05                       Benefits Acknowledged.

 

Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by this Indenture and that the
guarantee and waivers made by it pursuant to its Guarantee are knowingly made
in contemplation of such benefits.

 

Section 11.06                       Release of Guarantees.

 

A
Guarantee by a Guarantor shall be automatically and unconditionally released
and discharged, and no further action by such Guarantor, the Issuer or the
Trustee is required for the release of such Guarantor’s Guarantee, upon:

 

(1)                                  (A)  any sale, exchange or transfer (by
merger or otherwise) of the Capital Stock of such Guarantor (including any
sale, exchange or transfer), after which the applicable Guarantor is no longer
a Restricted Subsidiary, or all or substantially all the assets of such
Guarantor, which sale, exchange or transfer is made in compliance with the
applicable provisions of this Indenture;

 

(B)                                the release or discharge of such Guarantor from its guarantee of
Indebtedness of the Issuer and the Guarantors under the Senior Credit Facility
(including by reason of the termination of the Senior Credit Facility) or the
guarantee that resulted in the obligation of such Guarantor to guarantee the
Notes, if such Guarantor would not then otherwise be required to guarantee the
Notes pursuant to this Indenture (and treating any guarantees of such Guarantor
that remain outstanding as incurred at least 30 days prior to such release or
discharge), except a discharge or release by or as a result of payment under
such guarantee;  provided, that if such

 

94

 

Person
has incurred any Indebtedness or issued any Preferred Stock or Disqualified
Stock in reliance on its status as a Guarantor under Section 4.09 hereof,
such Guarantor’s obligations under such Indebtedness, Disqualified Stock or
Preferred Stock, as the case may be, so incurred are satisfied in full and
discharged or are otherwise permitted to be incurred under Section 4.09
hereof.

 

(C)                                the proper designation of any Restricted Subsidiary that is a Guarantor
as an Unrestricted Subsidiary; or

 

(D)                               the Issuer exercising its Legal Defeasance option or Covenant
Defeasance option in accordance with Article 8 hereof or the Issuer’s
obligations under this Indenture being discharged in accordance with the terms
of this Indenture; and

 

(2)                                  such Guarantor delivering to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for in this Indenture relating to such
transaction have been complied with.

 

ARTICLE
12

 

SUBORDINATION
OF GUARANTEES

 

Section 12.01                       Agreement To Subordinate.

 

Each
Guarantor agrees, and each Holder by accepting a Note agrees, that the
obligations of such Guarantor under its Guarantee are subordinated in right of
payment, to the extent and in the manner provided in this Article 12, to
the prior payment in full of all existing and future Senior Indebtedness of
such Guarantor and that the subordination is for the benefit of and enforceable
by the holders of such Senior Indebtedness. 
A Guarantor’s obligations under its Guarantee shall in all respects rank
pari passu in right of payment
with all existing and future Senior Subordinated Indebtedness of such
Guarantor, and will be senior in right of payment to all existing and future
Subordinated Indebtedness of such Guarantor; and only Indebtedness of such
Guarantor that is Senior Indebtedness shall rank senior to the obligations of
such Guarantor under its Guarantee in accordance with the provisions set forth
herein.  All provisions of this Article 12
shall be subject to Section 12.12.

 

Section 12.02                       Liquidation, Dissolution, Bankruptcy.

 

Upon
any payment or distribution of the assets of a Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of such
Guarantor or in a reorganization of or similar proceeding relating to such
Guarantor or its property:

 

(i)                                     the holders of Senior Indebtedness of such
Guarantor shall be entitled to receive payment in full in cash of such Senior
Indebtedness before Holders shall be entitled to receive any payment; and

 

(ii)                                  until the Senior Indebtedness of such
Guarantor is paid in full in cash, any payment or distribution to which Holders
of the Notes would be entitled but for the subordination provisions of this
Indenture shall be made to holders of such Senior Indebtedness as their
interests may appear, except that Holders of the Notes may receive Permitted
Junior Securities; and

 

(iii)                               if a distribution is made to Holders of the
Notes that, due to the subordination provisions, should not have been made to
them, such Holders of the Notes are required to hold it

 

95

 

in
trust for holders of Senior Indebtedness of such Guarantor and pay it over to
them as their interests may appear.

 

Section 12.03                       Default on Senior Indebtedness of a Guarantor.

 

A
Guarantor shall not make any payment pursuant to its Guarantee (or pay any
other Obligations relating to its Guarantee, including Additional Interest,
fees, costs, expenses, indemnities and rescission or damage claims) and may not
purchase, redeem or otherwise retire any Notes (collectively, “pay its
Guarantee”) (except in the form of Permitted Junior Securities), if either of
the following occurs (a “Guarantor Payment Default”):

 

(i)                                     any Obligation on any Designated Senior
Indebtedness of such Guarantor is not paid in full in cash when due (after
giving effect to any applicable grace period); or

 

(ii)                                  any other default on Designated Senior
Indebtedness of such Guarantor occurs and the maturity of such Designated
Senior Indebtedness is accelerated in accordance with its terms;

 

unless,
in either case, the Guarantor Payment Default has been cured or waived and any
such acceleration has been rescinded or such Designated Senior Indebtedness has
been paid in full in cash; provided, however, that such Guarantor
shall be entitled to pay its Guarantee without regard to the foregoing if such
Guarantor and the Trustee receive written notice approving such payment from
the Representatives of all Designated Senior Indebtedness with respect to which
the Guarantor Payment Default has occurred and is continuing.

 

During
the continuance of any default (other than a Guarantor Payment Default) (a “Guarantor
Non-Payment Default”) with respect to any Designated Senior Indebtedness of
a Guarantor pursuant to which the maturity thereof may be accelerated without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, such Guarantor
shall not pay its Guarantee (except in the form of Permitted Junior Securities)
for a period (a “Guarantee Payment Blockage Period”) commencing upon the
receipt by the Trustee (with a copy to such Guarantor and the Issuer) of
written notice (a “Guarantee Blockage Notice”) of such Guarantor
Non-Payment Default from the Representative of such Designated Senior
Indebtedness specifying an election to effect a Guarantee Payment Blockage
Period and ending 179 days thereafter. 
So long as there shall remain outstanding any Senior Indebtedness under
the Senior Credit Facility, a Guarantee Blockage Notice may be given only by
the administrative agent thereunder unless otherwise agreed to in writing by
the requisite lenders named therein.  The
Guarantee Payment Blockage Period shall end earlier if such Guarantee Payment
Blockage Period is terminated (i) by written notice to the Trustee, the
relevant Guarantor and the Issuer from the Person or Persons who gave such
Guarantee Blockage Notice; (ii) because the default giving rise to such
Guarantee Blockage Notice is cured, waived or otherwise no longer continuing;
or (iii) because such Designated Senior Indebtedness has been discharged
or repaid in full in cash.

 

Notwithstanding
the provisions described in the immediately preceding paragraph (but subject to
the provisions contained in the first sentence of this Section 12.03 and Section 12.02
hereof), unless the holders of such Designated Senior Indebtedness or the
Representative of such Designated Senior Indebtedness shall have accelerated
the maturity of such Designated Senior Indebtedness or a Guarantor Payment
Default has occurred and is continuing, the relevant Guarantor shall be
permitted to resume paying its Guarantee after the end of such Guarantee
Payment Blockage Period.  Each Guarantee
shall not be subject to more than one Guarantee Payment Blockage Period in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of the relevant Guarantor during such period;
provided that if any Guarantee Blockage Notice is delivered to the

 

96

 

Trustee
by or on behalf of the holders of Designated Senior Indebtedness of such
Guarantor (other than the holders of Indebtedness under the Senior Credit
Facility), a Representative of holders of Indebtedness under the Senior Credit
Facility may give another Guarantee Blockage Notice within such period.  However, in no event shall the total number
of days during which any Guarantee Payment Blockage Period or Periods on a
Guarantee is in effect exceed 179 days in the aggregate during any consecutive
360-day period, and there must be at least 181 days during any consecutive
360-day period during which no Guarantee Payment Blockage Period is in
effect.  Notwithstanding the foregoing,
however, no default that existed or was continuing on the date of delivery of
any Guarantee Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Guarantee Blockage Notice unless such default shall have been
cured or waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants during the period after the date of delivery of a Guarantee Blockage
Notice, that, in either case, would give rise to a Guarantor Non-Payment
Default pursuant to any provisions under which a Guarantor Non-Payment Default previously
existed or was continuing shall constitute a new Guarantor Non-Payment Default
for this purpose).

 

Section 12.04                       Demand for Payment.

 

If
payment of the Notes is accelerated because of an Event of Default and a demand
for payment is made on a Guarantor pursuant to Article 11 hereof, the
Issuer or such Guarantor shall promptly notify the holders of the Designated
Senior Indebtedness of such Guarantor or the Representative of such Designated
Senior Indebtedness of such demand; provided that any failure to give
such notice shall have no effect whatsoever on the provisions of this Article 12.  If any Designated Senior Indebtedness of a
Guarantor is outstanding, such Guarantor may not pay its Guarantee until five
Business Days after the Representatives of all the issuers of such Designated
Senior Indebtedness receive notice of such acceleration and, thereafter, may
pay its Guarantee only if this Indenture otherwise permits payment at that
time.

 

Section 12.05                       When Distribution Must Be Paid Over.

 

If
a distribution is made to Holders that, due to the subordination provisions,
should not have been made to them, such Holders are required to hold it in
trust for the holders of Senior Indebtedness of the relevant Guarantor and pay
it over to them as their interests may appear.

 

Section 12.06                       Subrogation.

 

After
all Senior Indebtedness of a Guarantor is paid in full and until the Notes are
paid in full, Holders shall be subrogated to the rights of holders of such
Senior Indebtedness to receive distributions applicable to such Senior
Indebtedness.  A distribution made under
this Article 12 to holders of such Senior Indebtedness which otherwise
would have been made to Holders is not, as between the relevant Guarantor and
Holders, a payment by such Guarantor on such Senior Indebtedness.

 

Section 12.07                       Relative Rights.

 

This
Article 12 defines the relative rights of Holders and holders of Senior
Indebtedness of a Guarantor.  Nothing in
this Indenture shall:

 

(i)                                     impair, as between such Guarantor and
Holders, the obligation of such Guarantor, which is absolute and unconditional,
to make payments under its Guarantee in accordance with its terms;

 

(ii)                                  prevent the Trustee or any Holder from
exercising its available remedies upon a default by such Guarantor under its
obligations with respect to its Guarantee, subject to the rights

 

97

 

of
holders of Senior Indebtedness of such Guarantor to receive payments or
distributions otherwise payable to Holders and such other rights of such
holders of Senior Indebtedness as set forth herein; or

 

(iii)                               affect the relative rights of Holders and
creditors of such Guarantor other than their rights in relation to holders of
Senior Indebtedness.

 

Section 12.08                       Subordination May Not Be Impaired by a Guarantor.

 

No
right of any holder of Senior Indebtedness of a Guarantor to enforce the
subordination of the obligations of such Guarantor under its Guarantee shall be
impaired by any act or failure to act by such Guarantor or by its failure to
comply with this Indenture.

 

Section 12.09                       Rights of Trustee and Paying Agent.

 

Notwithstanding
Section 12.03 hereof, the Trustee or any Paying Agent may continue to make
payments on the Notes and shall not be charged with knowledge of the existence
of facts that would prohibit the making of any payments unless, not less than
three Business Days prior to the date of such payment, a Responsible Officer at
the Corporate Trust Office of the Trustee receives notice satisfactory to him
that payments may not be made under this Article 12.  A Guarantor, the Registrar, the Paying Agent,
a Representative or a holder of Senior Indebtedness of such Guarantor shall be
entitled to give the notice; provided, however, that, if an issue
of Senior Indebtedness of such Guarantor has a Representative, only the
Representative shall be entitled to give the notice.

 

The
Trustee in its individual or any other capacity shall be entitled to hold
Senior Indebtedness of a Guarantor with the same rights it would have if it
were not Trustee.  The Registrar and the
Paying Agent shall be entitled to do the same with like rights.  The Trustee shall be entitled to all the
rights set forth in this Article 12 with respect to any Senior
Indebtedness of a Guarantor which may at any time be held by it, to the same
extent as any other holder of such Senior Indebtedness; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder.  Nothing in this Article 12 shall apply
to claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof or any other Section of this Indenture.

 

Section 12.10                       Distribution or Notice to Representative.

 

Whenever
a distribution is to be made or a notice given to holders of Senior
Indebtedness of a Guarantor, the distribution may be made and the notice given
to their Representative (if any).

 

Section 12.11                       Article 12 Not To Prevent Events of Default or Limit Right To
Demand Payment.

 

The
failure of a Guarantor to make a payment pursuant its Guarantee by reason of
any provision in this Article 12 shall not be construed as preventing the
occurrence of a default by such Guarantor under its Guarantee.  Nothing in this Article 12 shall have
any effect on the right of the Holders or the Trustee to make a demand for
payment on a Guarantor pursuant to Article 11 hereof.

 

Section 12.12                       Trust Moneys Not Subordinated.

 

Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of  Government Securities held in trust
by the Trustee for the payment of principal of and interest on the Notes
pursuant to Article 8 or Article 13 hereof shall not be subordinated
to the prior payment of any Senior Indebtedness of any Guarantor or subject to
the restrictions set forth in this Article 12, and none of the Holders
shall be obligated to pay over any such amount to such Guarantor or any

 

98

 

holder
of Senior Indebtedness of such Guarantor or any other creditor of such
Guarantor, provided that the subordination provisions of this Article 12
were not violated at the time the applicable amounts were deposited in trust
pursuant to Article 8 or Article 13 hereof, as the case may be.

 

Section 12.13                       Trustee Entitled To Rely.

 

Upon
any payment or distribution pursuant to this Article 12, the Trustee and
the Holders shall be entitled to rely (a) upon any order or decree of a
court of competent jurisdiction in which any proceedings of the nature referred
to in Section 12.02 hereof are pending, (b) upon a certificate of the
liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or to the Holders or (c) upon the
Representatives of Senior Indebtedness of a Guarantor for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of such Senior Indebtedness and other Indebtedness of
such Guarantor, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this Article 12.  In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness of a Guarantor to participate in any payment
or distribution pursuant to this Article 12, the Trustee shall be entitled
to request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of such Senior Indebtedness held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this Article 12,
and, if such evidence is not furnished, the Trustee shall be entitled to defer
any payment to such Person pending judicial determination as to the right of
such Person to receive such payment.  The
provisions of Sections 7.01 and 7.02 hereof shall be applicable to all actions
or omissions of actions by the Trustee pursuant to this Article 12.

 

Section 12.14                       Trustee To Effectuate Subordination.

 

A
Holder by its acceptance of a Note agrees to be bound by this Article 12
and authorizes and expressly directs the Trustee, on his behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
between the Holders and the holders of Senior Indebtedness of a Guarantor as
provided in this Article 12 and appoints the Trustee as attorney-in-fact
for any and all such purposes.

 

Section 12.15                       Trustee Not Fiduciary for Holders of Senior Indebtedness of Guarantors.

 

The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of a Guarantor and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or such Guarantor or any
other Person, money or assets to which any holders of Senior Indebtedness of
such Guarantor shall be entitled by virtue of this Article 12 or
otherwise.

 

Section 12.16                       Reliance by Holders of Senior Indebtedness of a Guarantor on
Subordination Provisions.

 

Each
Holder by accepting a Note acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness of a Guarantor, whether
such Senior Indebtedness was created or acquired before or after the issuance
of the Notes, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.

 

Without
in any way limiting the generality of the foregoing paragraph, the holders of
Senior Indebtedness of a Guarantor may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Trustee or the Holders and without impairing or
releasing the subordination provided in this Article 12 or the obligations
hereunder

 

99

 

of the Holders to the holders
of the Senior Indebtedness of such Guarantor, do any one or more of the
following:  (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness of such Guarantor, or otherwise amend or supplement in any
manner Senior Indebtedness of such Guarantor, or any instrument evidencing the
same or any agreement under which Senior Indebtedness of such Guarantor is
outstanding; (ii) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness of such
Guarantor; (iii) release any Person liable in any manner for the payment
or collection of Senior Indebtedness of such Guarantor; and (iv) exercise
or refrain from exercising any rights against such Guarantor and any other
Person.

 

ARTICLE
13

 

SATISFACTION
AND DISCHARGE

 

Section 13.01                       Satisfaction and Discharge.

 

This
Indenture shall be discharged and shall cease to be of further effect as to all
Notes when either:

 

(1)                                  all Notes theretofore authenticated and
delivered, except lost, stolen or destroyed Notes which have been replaced or
paid and Notes for whose payment money has theretofore been deposited in trust,
have been delivered to the Trustee for cancellation; or

 

(2)                                  (A)  all Notes not theretofore delivered
to the Trustee for cancellation have become due and payable by reason of the
making of a notice of redemption or otherwise, will become due and payable
within one year or may be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Issuer, and the Issuer
or any Guarantor has irrevocably deposited or caused to be deposited with the
Trustee, as trust funds in trust solely for the benefit of the Holders of the
Notes, cash in U.S. dollars, Government Securities, or a combination thereof,
in such amounts as will be sufficient without consideration of any reinvestment
of interest to pay and discharge the entire indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation for principal, premium,
if any, and accrued interest to the date of maturity or redemption;

 

(B)                                no Default (other than that resulting from borrowing funds to be
applied to make such deposit and any similar and simultaneous deposit relating
to other Indebtedness and, in each case, the granting of Liens in connection
therewith) with respect to this Indenture or the Notes shall have occurred and
be continuing on the date of such deposit or shall occur as a result of such
deposit, and such deposit will not result in a breach or violation of, or
constitute a default under the Senior Credit Facility or any other material agreement
or instrument (other than this Indenture) to which the Issuer or any Guarantor
is a party or by which the Issuer or any Guarantor is bound (other than that
resulting from borrowing funds to be applied to make such deposit and any
similar and simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith);

 

(C)                                the Issuer has paid or caused to be paid all sums payable by it under
this Indenture; and

 

(D)                               the Issuer has delivered irrevocable instructions to the Trustee to
apply the deposited money toward the payment of the Notes at maturity or the
redemption date, as the case may be.

 

100

 

In
addition, the Issuer must deliver an Officer’s Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied. 
Notwithstanding the satisfaction and discharge of this Indenture, if
money shall have been deposited with the Trustee pursuant to subclause (A) of
clause (2) of this Section 13.01, the provisions of Section 13.02
and Section 8.06 shall survive.

 

Section 13.02         Application of Trust Money.

 

Subject
to the provisions of Section 8.06 hereof, all money deposited with the
Trustee pursuant to Section 13.01 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium and
Additional Interest, if any) and interest for whose payment such money has been
deposited with the Trustee; but such money need not be segregated from other
funds except to the extent required by law.

 

If
the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 13.01 hereof by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Issuer’s and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to Section 13.01
hereof; provided that if the Issuer has made any payment of principal
of, premium and Additional Interest, if any, or interest on any Notes because
of the reinstatement of its obligations, the Issuer shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.

 

ARTICLE
14

MISCELLANEOUS

 

Section 14.01         Trust Indenture Act Controls.

 

If
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by Trust Indenture Act Section 318(c), the imposed duties shall
control.

 

Section 14.02         Notices.

 

Any
notice or communication by the Issuer, any Guarantor or the Trustee to the others
is duly given if in writing and delivered in person or mailed by first-class
mail (registered or certified, return receipt requested), fax or overnight air
courier guaranteeing next day delivery, to the others’ addresses:

 

If
to the Issuer and/or any Guarantor:

 

c/o
The Reader’s Digest Association, Inc. 

Reader’s Digest Road

Pleasantville, New York 10570

Fax No.: (914) 244-7807

Attention: General Counsel

 

101

 

If
to the Trustee:

 

The
Bank of New York

101 Barclay Street – 8W

New
York, New York 10286

Fax No.: (212) 815-5704/3272

Attention:  Global Trust Administration

 

The
Issuer, any Guarantor or the Trustee, by notice to the others, may designate
additional or different addresses for subsequent notices or communications.

 

All
notices and communications (other than those sent to Holders) shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; five calendar days after being deposited in the mail, postage
prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed;
and the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery; provided that any
notice or communication delivered to the Trustee shall be deemed effective upon
actual receipt thereof.

 

Any
notice or communication to a Holder shall be mailed by first-class mail,
certified or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar or by other electronic means or such other delivery system as the
Trustee agrees to accept.  Any notice or
communication shall also be so mailed to any Person described in Trust
Indenture Act Section 313(c), to the extent required by the Trust
Indenture Act.  Failure to mail a notice
or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.

 

If
a notice or communication is mailed in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it.

 

If
the Issuer mails a notice or communication to Holders, they shall mail a copy
to the Trustee and each Agent at the same time.

 

Section 14.03         Communication by Holders of Notes with Other
Holders of Notes.

 

Holders
may communicate pursuant to Trust Indenture Act Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Notes.  The Issuer, the Trustee, the
Registrar and anyone else shall have the protection of Trust Indenture Act Section 312(c).

 

Section 14.04         Certificate and Opinion as to Conditions
Precedent.

 

Upon
any request or application by the Issuer or any of the Guarantors to the
Trustee to take any action under this Indenture, the Issuer or such Guarantor,
as the case may be, shall furnish to the Trustee:

 

(a)           An Officer’s Certificate in form and
substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 14.05 hereof) stating that, in the opinion
of the signers, all conditions precedent and covenants, if any, provided for in
this Indenture relating to the proposed action have been satisfied; and

 

(b)           An Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 14.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been satisfied;

 

102

 

provided that, subject to Section 5.01(c) hereof,
no Opinion of Counsel shall be required in connection with the addition of a
Guarantor under this Indenture upon execution and delivery by such Guarantor
and the Trustee of a supplemental indenture to this Indenture, the form of
which is attached as Exhibit D hereto.

 

Section 14.05         Statements Required in Certificate or
Opinion.

 

Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to Section 4.04
hereof or Trust Indenture Act Section 314(a)(4)) shall comply with the
provisions of Trust Indenture Act Section 314(e) and shall include:

 

(a)           a statement that the Person making such
certificate or opinion has read such covenant or condition;

 

(b)           a brief statement as to the nature and scope
of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;

 

(c)           a statement that, in the opinion of such
Person, he or she has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with (and, in the case of an Opinion of Counsel,
may be limited to reliance on an Officer’s Certificate as to matters of fact);
and

 

(d)           a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been complied with.

 

Section 14.06         Rules by Trustee and Agents.

 

The
Trustee may make reasonable rules for action by or at a meeting of
Holders.  The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for its
functions.

 

Section 14.07         No Personal Liability of Directors, Officers,
Employees and Stockholders.

 

No
director, officer, employee, incorporator or stockholder of the Issuer or any
Guarantor or any of their parent entities (other than the Issuer and the
Guarantors) shall have any liability for any obligations of the Issuer or the
Guarantors under the Notes, the Guarantees or this Indenture or for any claim
based on, in respect of, or by reason of such obligations or their creation.
Each Holder by accepting Notes waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.

 

Section 14.08         Governing Law.

 

THIS
INDENTURE, THE NOTES AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Section 14.09         Waiver of Jury Trial.

 

EACH
OF THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

103

 

Section 14.10         Force Majeure.

 

In
no event shall the Trustee be responsible or liable for any failure or delay in
the performance of its obligations under this Indenture arising out of or
caused by, directly or indirectly, forces beyond its reasonable control,
including without limitation strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software or hardware) services.

 

Section 14.11         No Adverse Interpretation of Other
Agreements.

 

This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Issuer or its Restricted Subsidiaries or of any other
Person.  Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.

 

Section 14.12         Successors.

 

All
agreements of the Issuer in this Indenture and the Notes shall bind its
successors.  All agreements of the
Trustee in this Indenture shall bind its successors.  All agreements of each Guarantor in this
Indenture shall bind its successors, except as otherwise provided in Section 11.05
hereof.

 

Section 14.13         Severability.

 

In
case any provision in this Indenture or in the Notes shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

Section 14.14         Counterpart Originals.

 

The
parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.

 

Section 14.15         Table of Contents, Headings, etc.

 

The
Table of Contents, Cross-Reference Table and headings of the Articles and Sections
of this Indenture have been inserted for convenience of reference only, are not
to be considered a part of this Indenture and shall in no way modify or
restrict any of the terms or provisions hereof.

 

Section 14.16         Qualification of Indenture.

 

The
Issuer and the Guarantors shall qualify this Indenture under the Trust
Indenture Act in accordance with the terms and conditions of the Registration
Rights Agreement and shall pay all reasonable costs and expenses (including
attorneys’ fees and expenses for the Issuer, the Guarantors and the Trustee)
incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of this Indenture and the Notes and printing this
Indenture and the Notes.  The Trustee
shall be entitled to receive from the Issuer and the Guarantors any such
Officer’s Certificates, Opinions of Counsel or other documentation as it may
reasonably request in connection with any such qualification of this Indenture
under the Trust Indenture Act.

 

[Signatures on following page]

 

104

 

	
   

  	
  THE
  READER’S DIGEST ASSOCIATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  William H. Magill

  
	
   

  	
   

  	
  Title:Vice
  President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALLRECIPES.COM,
  INC.

  ARDEE MUSIC PUBLISHING, INC.

  BOOKS ARE FUN, LTD.

  CHRISTMAS ANGEL PRODUCTIONS, INC.

  FAMILY READING PROGRAM CORP.

  FUNDRAISING.COM, INC.

  HOME SERVICE PUBLICATIONS, INC.

  PEGASUS ASIA INVESTMENTS INC.

  PEGASUS FINANCE CORP.

  PEGASUS INVESTMENT, INC.

  PEGASUS SALES, INC.

  PLEASANTVILLE MUSIC PUBLISHING, INC.

  QSP DISTRIBUTION SERVICES, LLC

  QSP PRODUCTS AND PROGRAMS, LLC

  QSP SALES, LLC

  QSP SERVICES, LLC

  QSP VENTURES, LLC

  QSP, INC.

  R.D. MANUFACTURING CORPORATION

  RD LARGE EDITION, INC.

  RD MAGAZINE VALUE PARTNERS, INC.

  RD MEMBER SERVICES INC.

  RD PUBLICATIONS, INC.

  RD TRADE SHOWS, INC.

  RD WALKING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William H. Magill

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  

 

Indenture

509335-1044-10908-NY01.2630218

 

 

	
   

  	
  READER’S
  DIGEST CHILDREN’S

          PUBLISHING, INC.

  READER’S DIGEST CONSUMER SERVICES,

          INC.

  READER’S DIGEST ENTERTAINMENT, INC.

  READER’S DIGEST FINANCIAL SERVICES,

          INC.

  READER’S DIGEST LATINOAMERICA S.A.

  READER’S DIGEST SALES AND SERVICES,

          INC.

  READER’S DIGEST SUB NINE, INC.

  READER’S DIGEST YOUNG FAMILIES, INC.

  REIMAN MEDIA GROUP, INC.

  RETIREMENT LIVING PUBLISHING

          COMPANY, INC.

  SMDDMS, INC.

  TASTE OF HOME ENTERTAINING, INC.

  TASTE OF HOME MEDIA GROUP, INC.

  TASTE OF HOME PRODUCTIONS, INC.

  THE READER’S DIGEST ASSOCIATION

          (RUSSIA) INCORPORATED

  TRAVEL PUBLICATIONS, INC.

  VIDEOVATION, INC.

  W.A. PUBLICATIONS, LLC

  WAPLA, LLC

  WORLD WIDE COUNTRY TOURS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William
  H. Magill

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  

 

Indenture

509335-1044-10908-NY01.2630218

 

 

	
   

  	
  WRC
  MEDIA INC.

  COMPASSLEARNING, INC.

  WEEKLY READER CORPORATION

  LIFETIME LEARNING SYSTEMS, INC.

  WORLD ALMANAC EDUCATION GROUP,

          INC.

  FUNK & WAGNALLS YEARBOOK CORP.

  GARETH STEVENS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  Robert S. Yingling

  
	
   

  	
   

  	
  Title:  
  Chief Financial Officer

  

 

 

	
   

  	
  DIRECT
  HOLDINGS U.S. CORP.

  ALEX INC.

  DIRECT HOLDINGS AMERICAS INC.

  DIRECT HOLDINGS CUSTOM PUBLISHING

          INC.

  DIRECT HOLDINGS CUSTOMER SERVICE,

          INC.

  DIRECT HOLDINGS EDUCATION INC.

  DIRECT HOLDINGS LIBRARIES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christopher
  Hearing

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President, Chief Financial

  Officer and Treasurer

  

 

Indenture

509335-1044-10908-NY01.2630218

 

 

	
   

  	
  THE
  BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Indenture

509335-1044-10908-NY01.2630218

 

 

APPENDIX A

 

PROVISIONS RELATING TO INITIAL NOTES,

ADDITIONAL NOTES AND EXCHANGE NOTES

 

Section 1.1             Definitions.

 

                (a)  Capitalized Terms.

 

Capitalized
terms used but not defined in this Appendix A have the meanings given to them
in the Indenture.  The following
capitalized terms have the following meanings:

 

                                “Applicable Procedures” means, with
respect to any transfer or transaction involving a Regulation S Global
Note or beneficial interest therein, the rules and procedures of the
Depositary for such Global Note, Euroclear and Clearstream, in each case to the
extent applicable to such transaction and as in effect from time to time.

 

                                “Clearstream” means Clearstream
Banking, Société Anonyme, or any successor securities clearing agency.

 

                                “Euroclear” means the Euroclear
Clearance System or any successor securities clearing agency.

 

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

 

                “QIB” means a “qualified institutional
buyer” as defined in Rule 144A.

 

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

 

                “Regulation S Notes” means all Notes
offered and sold outside the United States in reliance on Regulation S.

 

                “Restricted Period”, with respect to
any Notes, means the period of 40 consecutive days beginning on and including
the later of (a) the day on which such Notes are first offered to persons
other than distributors (as defined in Regulation S under the Securities
Act) in reliance on Regulation S, notice of which day shall be promptly given
by the Issuer to the Trustee, and (b) the date of issuance with respect to
any such Notes.

 

                “Rule 501” means Rule 501(a)(1),
(2), (3) or (7) under the Securities Act.

 

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

 

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

 

                “Rule 144A Notes” means all Notes
offered and sold to QIBs in reliance on Rule 144A.

 

                “Rule 904” means Rule 904
promulgated under the Securities Act.

 

 

                (b) Other Definitions.

 

	
  Term:

  	
   

  	
  Defined in Section:

  
	
  “Agent
  Members”

  	
   

  	
  2.1(c)

  
	
  “Global Note”

  	
   

  	
  2.1(b)

  
	
  “IAI Global
  Note”

  	
   

  	
  2.1(b)

  
	
  “Regulation
  S Global Note”

  	
   

  	
  2.1(b)

  
	
  “Rule 144A
  Global Note”

  	
   

  	
  2.1(b)

  

 

Section 2.1             Form and Dating

 

(a)  The
Initial Notes issued on the date hereof will be (i) offered and sold by
the Issuer to the Initial Purchasers and (ii) resold, initially only to (1) QIBs
in reliance on Rule 144A and (2) Persons other than U.S. Persons (as
defined in Regulation S) in reliance on Regulation S.  Such Initial Notes may thereafter be
transferred to, among others, QIBs, purchasers in reliance on Regulation S and,
except as set forth below, IAIs in accordance with Rule 501.

 

(b)  Global
Notes.  Rule 144A Notes shall be
issued initially in the form of one or more permanent global Notes in
definitive, fully registered form (collectively, the “Rule 144A Global
Note”) and Regulation S Notes shall be issued initially in the form of
one or more global Notes (collectively, the “Regulation S Global Note”),
in each case without interest coupons and bearing the Global Notes Legend and
Restricted Notes Legend, which shall be deposited on behalf of the purchasers
of the Notes represented thereby with the Custodian, and registered in the name
of the Depositary or a nominee of the Depositary, duly executed by the Issuer
and authenticated by the Trustee as provided in this Indenture.  One or more global Notes in definitive, fully
registered form without interest coupons and bearing the Global Notes Legend
and the Restricted Notes Legend (collectively, the “IAI Global Note”)
shall also be issued on the Issue Date, deposited with the Custodian, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Issuer and authenticated by the Trustee as provided in this
Indenture to accommodate transfers of beneficial interests in the Notes to IAIs
subsequent to the initial distribution. 
Beneficial ownership interests in the Regulation S Global Note
shall not be exchangeable for interests in the Rule 144A Global Note, the
IAI Global Note or any other Note without a Restricted Notes Legend until the
expiration of the Restricted Period.  The
Rule 144A Global Note, the IAI Global Note and the Regulation S
Global Note are each referred to herein as a “Global Note” and are
collectively referred to herein as “Global Notes”, provided that
the term “Global Note” when used in Sections 2.1(c), 2.3(f), 2.3(g)(i),
2.3(h)(i), 2.3(h)(ii) and 2.4 shall also include any Note in global form
issued in connection with aN Exchange Offer. 
The aggregate principal amount of the Global Notes may from time to time
be increased or decreased by adjustments made on the records of the Trustee and
the Depositary or its nominee and on the schedules thereto as hereinafter
provided.

 

(c) 
Book-Entry Provisions.  This Section 2.1(c) shall
apply only to a Global Note deposited with or on behalf of the Depositary.

 

The
Issuer shall execute and the Trustee shall, in accordance with this Section 2.1(c) and
Section 2.2 and pursuant to an order of the Issuer signed by one Officer
of the Issuer, authenticate and deliver initially one or more Global Notes that
(i) shall be registered in the name of the Depositary for such Global Note
or Global Notes or the nominee of such Depositary and (ii) shall be
delivered by the

 

3

 

Trustee
to such Depositary or pursuant to such Depositary’s instructions or held by the
Trustee as Custodian.

 

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

 

(d) 
Definitive Notes.  Except as
provided in Section 2.3 or 2.4, owners of beneficial interests in Global
Notes will not be entitled to receive physical delivery of certificated Notes.

 

Section 2.2             Authentication.  The
Trustee shall authenticate and make available for delivery upon a written order
of the Issuer signed by one Officer of the Issuer (a)  Initial Notes for
original issue on the date hereof in an aggregate principal amount of
$600,000,000, (b) subject to the terms of this Indenture, Additional Notes
and (c) the Exchange Notes for issue only in an Exchange Offer and
pursuant to the Registration Rights Agreement and for a like principal amount
of Initial Notes exchanged pursuant thereto. 
Such order shall specify the amount of the Notes to be authenticated,
the date on which the original issue of Notes is to be authenticated and
whether the Notes are to be Initial Notes, Additional Notes or Exchange Notes.

 

Section 2.3             Transfer and Exchange.

 

                                (a)  Transfer and Exchange of
Definitive Notes.  When Definitive
Notes are presented to the Registrar with a request:

 

(i)  to register the transfer of such Definitive Notes; or

 

(ii)  to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations,

 

the
Registrar shall register the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met; provided, however,
that the Definitive Notes surrendered for transfer or exchange:

 

(1)  shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Issuer and the
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing; and

 

(2)  in the case of Transfer Restricted Notes, are
accompanied by the following additional information and documents, as applicable:

 

(A)  if such Definitive Notes are being
delivered to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that effect (in
the form set forth on the reverse side of the Initial Note); or

 

(B)  if such Definitive Notes are being
transferred to the Issuer, a certification to that effect (in the form set
forth on the reverse side of the Initial Note); or

 

4

 

(C)  if such Definitive Notes are being
transferred pursuant to an exemption from registration in accordance with Rule 144
under the Securities Act or in reliance upon another exemption from the
registration requirements of the Securities Act, (x) a certification to
that effect (in the form set forth on the reverse side of the Initial  Note) and (y) if the Issuer so requests,
an opinion of counsel or other evidence reasonably satisfactory to them as to
the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i).

 

(b)  Restrictions
on Transfer of a Definitive Note for a Beneficial Interest in a Global Note.  A Definitive Note may not be exchanged for a
beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below.  Upon
receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the Issuer
and the Registrar, together with:

 

(i) certification (in the form set forth on the reverse side of
the Initial Note) that such Definitive Note is being transferred (1) to a
QIB in accordance with Rule 144A, (2) to an IAI that has furnished to
the Trustee a signed letter substantially in the form of Exhibit C
or (3) outside the United States in an offshore transaction within
the meaning of Regulation S and in compliance with Rule 904 under the
Securities Act; and

 

(ii) written instructions directing the Trustee to make, or to
direct the Custodian to make, an adjustment on its books and records with respect
to such Global Note to reflect an increase in the aggregate principal amount of
the Notes represented by the Global Note, such instructions to contain
information regarding the Depositary account to be credited with such increase,
then the Trustee shall cancel such Definitive Note and cause, or direct the
Custodian to cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Custodian, the aggregate principal
amount of Notes represented by the Global Note to be increased by the aggregate
principal amount of the Definitive Note to be exchanged and shall credit or
cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Global Note equal to the principal amount
of the Definitive Note so canceled.  If
no Global Notes are then outstanding and the Global Note has not been
previously exchanged for certificated securities pursuant to Section 2.4,
the Issuer shall issue and the Trustee shall authenticate, upon written order
of the Issuer in the form of an Officers’ Certificate, a new Global Note in the
appropriate principal amount.

 

(c)  Transfer
and Exchange of Global Notes.  (i)  The
transfer and exchange of Global Notes or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor.  A
transferor of a beneficial interest in a Global Note shall deliver a written
order given in accordance with the Depositary’s procedures containing
information regarding the participant account of the Depositary to be credited
with a beneficial interest in such Global Note or another Global Note and such
account shall be credited in accordance with such order with a beneficial
interest in the applicable Global Note and the account of the Person making the
transfer shall be debited by an amount equal to the beneficial interest in the
Global Note being transferred.  Transfers
by an owner of a beneficial interest in the Rule 144A Global Note or the
IAI Global  Note to a transferee who
takes delivery of such interest through the Regulation S Global Note, whether
before or after the expiration of the Restricted Period, shall be made only
upon receipt by the Trustee of a certification in the form provided on the
reverse of the Initial Notes from the transferor to the effect that such
transfer is being made in accordance with Regulation S or (if available) Rule 144
under the Securities Act and that, if such transfer is being made prior to the
expiration of the Restricted Period, the interest transferred shall be held
immediately thereafter through Euroclear or Clearstream.  In the case of a transfer of a beneficial
interest in either the

 

5

 

Regulation S
Global Note or the Rule 144A Global Note for an interest in the IAI Global
Note, the transferee must furnish a signed letter substantially in the form of Exhibit C
to the Trustee.

 

(ii)  If the proposed transfer is a transfer of a beneficial
interest in one Global Note to a beneficial interest in another Global Note,
the Registrar shall reflect on its books and records the date and an increase
in the principal amount of the Global Note to which such interest is being
transferred in an amount equal to the principal amount of the interest to be so
transferred, and the Registrar shall reflect on its books and records the date
and a corresponding decrease in the principal amount of Global Note from which
such interest is being transferred.

 

(iii)  Notwithstanding any other provisions of this Appendix
A (other than the provisions set forth in Section 2.4), a Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

 

(iv)  In the event that a Global  Note is exchanged for Definitive Notes
pursuant to Section 2.4 prior to the consummation of the Exchange Offer or
the effectiveness of a Shelf Registration Statement with respect to such Notes,
such Notes may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of the
Initial Notes intended to ensure that such transfers comply with Rule 144A,
Regulation S or such other applicable exemption from registration under the
Securities Act, as the case may be) and such other procedures as may from time
to time be adopted by the Issuer.

 

(d) 
Restrictions on Transfer of Regulation S Global Note.  (i) Prior to the expiration of the
Restricted Period, interests in the Regulation S Global Note may only be
held through Euroclear or Clearstream. 
During the Restricted Period, beneficial ownership interests in the
Regulation S Global Note may only be sold, pledged or transferred through
Euroclear or Clearstream in accordance with the Applicable Procedures and only (1) to
the Issuer, (2) so long as such security is eligible for resale pursuant
to Rule 144A, to a person whom the selling holder reasonably believes is a
QIB that purchases for its own account or for the account of a QIB to whom
notice is given that the resale, pledge or transfer is being made in reliance
on Rule 144A, (3) in an offshore transaction in accordance with
Regulation S, (4) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 (if applicable) under the Securities
Act or another available exemption , (5) to an IAI purchasing for its own
account, or for the account of such an IAI, in a minimum principal amount of
Notes of $250,000 or (6) pursuant to an effective registration statement
under the Securities Act, in each case in accordance with any applicable
securities laws of any state of the United States.  Prior to the expiration of the Restricted
Period, transfers by an owner of a beneficial interest in the Regulation S
Global Note to a transferee who takes delivery of such interest through the Rule 144A
Global Note or the IAI Global Note shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Initial Note to the effect that such transfer is being made to (1) a
QIB within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A or (2) an IAI purchasing for its own
account, or for the account of such an IAI, in a minimum principal amount of
the Notes of $250,000.  Such written
certification shall no longer be required after the expiration of the Restricted
Period.  In the case of a transfer of a
beneficial interest in the Regulation S Global Note for an interest in the
IAI Global Note, the transferee must furnish a signed letter substantially in
the form of Exhibit C to the Trustee.

 

6

 

(ii)  Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Note shall be transferable in
accordance with applicable law and the other terms of this Indenture.

 

(e)  Legend.

 

(i)  Except as permitted by the following
paragraphs (ii), (iii) or (iv), each Note certificate evidencing the
Global Notes and the Definitive Notes (and all Notes issued in exchange
therefor or in substitution thereof) shall bear a legend in substantially the
following form (each defined term in the legend being defined as such for
purposes of the legend only):

 

“THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY,
BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY
INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION
TERMINATION DATE”) THAT IS [IN THE CASE OF
RULE 144A NOTES: TWO YEARS] [IN
THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO
AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER

 

7

 

INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY
ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S.
PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT.]”

 

Each
Definitive Note shall bear the following additional legend:

 

“IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”

 

(ii)  Upon any sale or transfer of a Transfer Restricted Note that
is a Definitive Note, the Registrar shall permit the Holder thereof to exchange
such Transfer Restricted Note for a Definitive Note that does not bear the
legends set forth above and rescind any restriction on the transfer of such
Transfer Restricted Note if the Holder certifies in writing to the Registrar
that its request for such exchange was made in reliance on Rule 144 (such
certification to be in the form set forth on the reverse of the Initial Note).

 

(iii)  After a transfer of any Initial Notes or Additional
Notes during the period of the effectiveness of a Shelf Registration Statement
with respect to such Initial Notes or Additional Notes, as the case may be, all
requirements pertaining to the Restricted Notes Legend on such Initial Notes or
Additional Notes shall cease to apply and the requirements that any such
Initial Notes or Additional Notes be issued in global form shall continue to
apply.

 

(iv)  Upon the consummation of an Exchange Offer with respect
to the Initial Notes or Additional Notes pursuant to which Holders of such
Initial Notes or Additional Notes are offered Exchange Notes in exchange for
their Initial Notes or Additional Notes, all requirements pertaining to Initial
Notes or Additional Notes that Initial Notes or Additional Notes be issued in
global form shall continue to apply, and Exchange Notes in global form without
the Restricted Notes Legend shall be available to Holders that exchange such
Initial Notes or Additional Notes in such Exchange Offer.

 

(v)  Upon a sale or transfer after the expiration of the
Restricted Period of any Initial Note or Additional Note acquired pursuant to
Regulation S, all requirements that such Initial  Note or Additional Note bear the Restricted
Notes Legend shall cease to apply and the requirements requiring any such
Initial Note or Additional Note be issued in global form shall continue to
apply.

 

(vi)  Any Additional Notes sold in a registered offering
shall not be required to bear the Restricted Notes Legend.

 

(f) 
Cancelation or Adjustment of Global Note.  At such time as all beneficial interests in a
Global Note have either been exchanged for Definitive Notes, transferred,
redeemed, repurchased or canceled, such Global Note shall be returned by the
Depositary to the Trustee for cancelation or retained and canceled by the
Trustee.  At any time prior to such
cancelation, if any beneficial interest in a Global

 

8

 

Note
is exchanged for Definitive Notes, transferred in exchange for an interest in
another Global Note, redeemed, repurchased or canceled, the principal amount of
Notes represented by such Global Note shall be reduced and an adjustment shall
be made on the books and records of the Trustee (if it is then the Custodian
for such Global Note) with respect to such Global Note, by the Trustee or the
Custodian, to reflect such reduction.

 

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

 

(i)  To permit registrations of transfers and exchanges, the
Issuer shall execute and the Trustee shall authenticate, Definitive Notes and
Global Notes at the Registrar’s request.

 

(ii) No service charge shall be made for any registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchanges pursuant to
Sections 2.07, 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05 of this Indenture).

 

(iii)  Prior to the due presentation for registration of transfer
of any Note, the Issuer, the Trustee, the Paying Agent or the Registrar may
deem and treat the person in whose name a Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of and
interest on such Note and for all other purposes whatsoever, whether or not
such Note is overdue, and none of the Issuer, the Trustee, the Paying Agent or
the Registrar  shall be affected by
notice to the contrary.

 

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

 

(h) 
No Obligation of the Trustee.

 

(i)  The Trustee shall have no responsibility or obligation
to any beneficial owner of a Global Note, a member of, or a participant in the
Depositary or any other Person with respect to the accuracy of the records of
the Depositary or its nominee or of any participant or member thereof, with
respect to any ownership interest in the Notes or with respect to the delivery
to any participant, member, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption or repurchase) or
the payment of any amount, under or with respect to such Notes.  All notices and communications to be given to
the Holders and all payments to be made to Holders under the Notes shall be
given or made only to the registered Holders (which shall be the Depositary or
its nominee in the case of a Global Note). 
The rights of beneficial owners in any Global Note shall be exercised
only through the Depositary subject to the applicable rules and procedures
of the Depositary.  The Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depositary with respect to its members, participants and any beneficial owners.

 

(ii)  The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Note (including any transfers between or
among Depositary participants, members or beneficial owners in any Global Note)
other than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

 

9

 

Section 2.4             Definitive
Notes.

 

(a)  A
Global Note deposited with the Depositary or with the Trustee as Custodian
pursuant to Section 2.1 or issued in connection with an Exchange Offer
shall be transferred to the beneficial owners thereof in the form of Definitive
Notes in an aggregate principal amount equal to the principal amount of such
Global Note, in exchange for such Global Note, only if such transfer complies
with Section 2.3 and (i) the Depositary notifies the Issuer that it
is unwilling or unable to continue as a Depositary for such Global Note or if
at any time the Depositary ceases to be a “clearing agency” registered under
the Exchange Act and, in each case, a successor depositary is not appointed by
the Issuer within 90 days of such notice or after the Issuer becomes aware
of such cessation, or (ii) an Event of Default has occurred and is
continuing or (iii) the Issuer, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of certificated Notes
under this Indenture.

 

(b)  Any
Global Note that is transferable to the beneficial owners thereof pursuant to
this Section 2.4 shall be surrendered by the Depositary to the Trustee, to
be so transferred, in whole or from time to time in part, without charge, and
the Trustee shall authenticate and deliver, upon such transfer of each portion
of such Global Note, an equal aggregate principal amount of Definitive Notes of
authorized denominations.  Any portion of
a Global Note transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $2,000 and integral
multiples of $1,000 in excess thereof and registered in such names as the
Depositary shall direct.  Any
certificated Initial Note or Additional Note in the form of a Definitive Note
delivered in exchange for an interest in the Global Note shall, except as
otherwise provided by Section 2.3(e), bear the Restricted Notes Legend.

 

(c)  Subject
to the provisions of Section 2.4(b), the registered Holder of a Global
Note may grant proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or the Notes.

 

(d) 
In the event of the occurrence of any of the events specified in Section 2.4(a)(i),
(ii) or (iii), the Issuer will promptly make available to the Trustee a
reasonable supply of Definitive Notes in fully registered form without interest
coupons.

 

10

 

EXHIBIT A

 

[FORM OF FACE OF INITIAL NOTE]

 

[Global Notes Legend]

 

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

 

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

 

[Restricted Notes Legend]

 

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY,
BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY
INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION
TERMINATION DATE”) THAT IS [IN THE CASE OF
RULE 144A NOTES: TWO YEARS] [IN
THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO
AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
ACCREDITED

 

 

INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT
OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO
OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND
THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE. [IN THE CASE
OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER
HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE
ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]

 

Each
Definitive Note shall bear the following additional legend:

 

IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

A-3

 

CUSIP  [                     ]

 

ISIN  [                     ](1)

 

[RULE 144A][REGULATION S][IAI][GLOBAL] NOTE

 

9% Senior Subordinated Notes due 2017

 

	
  No.

  	
   

  	
  Up to [$                    ]

  

 

THE READER’S DIGEST ASSOCIATION, INC.

 

promises
to pay to CEDE & CO. or registered assigns, the principal sum [set
forth on the Schedule of Exchanges of Interests in the Global Note attached
hereto] [of
                                                
United States Dollars] on February 15, 2017.

 

Interest
Payment Dates:  February 15 and August 15

 

Record
Dates:  February 1 and August 1

 

 (1)          Rule 144A
Note CUSIP:  755267AD3

                Rule 144A Note ISIN:   US755267AD36

                Regulation S Note CUSIP:  U75338AB6

                Regulation S Note ISIN:  USU75338AB62

                IAI Note CUSIP:  755267AE1

                IAI Note ISIN:  US755267AE19

 

A-4

 

IN
WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated:

 

	
   

  	
  THE
  READER’S DIGEST ASSOCIATION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-5

 

This
is one of the Notes referred to in the within-mentioned Indenture:

 

	
   

  	
  THE
  BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  

 

A-6

 

[Back of Note]

 

9% Senior Subordinated Notes due 2017

 

Capitalized
terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

 

1.                                       INTEREST. 
The Reader’s Digest Association, Inc., a Delaware corporation,
promises to pay interest on the principal amount of this Note at 9% per annum
from March 2, 2007 until maturity and shall pay the Additional Interest,
if any, payable pursuant to the Registration Rights Agreement referred to
below.  The Issuer will pay interest and
Additional Interest, if any, semi-annually in arrears on February 15 and August 15
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that the first Interest
Payment Date shall be August 15, 2007. 
The Issuer will pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at the interest rate on the Notes; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Additional Interest, if
any, (without regard to any applicable grace periods) from time to time on
demand at the interest rate on the Notes. 
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.

 

2.                                       METHOD OF PAYMENT.  The Issuer will pay interest on the Notes and
Additional Interest, if any, to the Persons who are registered Holders of Notes
at the close of business on February 1 or August 1 (whether or not a
Business Day), as the case may be, next preceding the Interest Payment Date,
even if such Notes are canceled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. 
Principal of, premium, if any, and interest on the Notes will be payable
at the office or agency of the Issuer maintained for such purpose in the
Borough of Manhattan in the City of New York or, at the option of the Issuer,
payment of interest and Additional Interest, if any, may be made by check
mailed to the Holders at their respective addresses set forth in the register
of Holders; provided that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest,
premium and Additional Interest, if any, on, all Global Notes and all other
Notes the Holders of which shall have provided wire transfer instructions to
the Issuer or the Paying Agent.  Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.

 

3.                                       PAYING AGENT AND REGISTRAR.  Initially, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar.  The Issuer may change any Paying Agent or Registrar
without notice to the Holders.  The
Issuer or any of its Subsidiaries may act in any such capacity.

 

4.                                       INDENTURE. 
The Issuer issued the Notes under an Indenture, dated as of March 2,
2007 (the “Indenture”), among The Reader’s Digest Association, Inc.,
the Guarantors named therein and the Trustee. 
This Note is one of a duly authorized issue of notes of the Issuer
designated as its 9% Senior Subordinated Notes due 2017.  The Issuer shall be entitled to issue
Additional Notes pursuant to Section 2.01 and 4.09 of the Indenture.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”).  The Notes are subject to all such terms, and
Holders are referred to the Indenture

 

A-7

 

and
such Act for a statement of such terms. 
To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and
be controlling.

 

5.                                       OPTIONAL REDEMPTION.

 

(a)                                  Except as described below under clauses 5(b) and
5(c) hereof, the Notes will not be redeemable at the Issuer’s option
before February 15, 2012.

 

(b)                                 At any time prior to February 15, 2012,
the Issuer may redeem all or a part of the Notes, upon not less than 30 nor
more than 60 days’ prior notice mailed by first-class mail to the registered
address of each Holder or otherwise in accordance with the procedures of DTC,
at a redemption price equal to 100% of the principal amount of the Notes
redeemed plus the Applicable Premium as of, and accrued and unpaid interest and
Additional Interest, if any, to the date of redemption (the “Redemption Date”),
subject to the rights of Holders on the relevant Record Date to receive
interest due on the relevant Interest Payment Date.

 

(c)                                  Until February 15, 2010, the Issuer may,
at its option, redeem up to 35% of the aggregate principal amount of Notes
issued by it at a redemption price equal to 109% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon and Additional
Interest, if any, to the applicable Redemption Date, subject to the right of
Holders of Notes of record on the relevant record date to receive interest due
on the relevant Interest Payment Date, with the net cash proceeds of one or
more Equity Offerings; provided that at least 65% of the sum of the
original aggregate principal amount of Notes issued under the Indenture and the
original aggregate principal amount any Additional Notes that are Notes issued
under the Indenture after the Issue Date remains outstanding immediately after
the occurrence of each such redemption; provided,  further, that each such redemption
occurs within 90 days of the date of closing of each such Equity Offering.

 

(d)                                 On and after February 15, 2012, the
Issuer may redeem the Notes, in whole or in part, upon notice pursuant to Section 3.02
of the Indenture at the redemption prices (expressed as percentages of
principal amount of the Notes to be redeemed) set forth below, plus accrued and
unpaid interest thereon and Additional Interest, if any, to the applicable
Redemption Date, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant Interest Payment Date, if
redeemed during the twelve-month period beginning on February 15 of each
of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2012

  	
   

  	
  104.500

  	
  %

  
	
  2013

  	
   

  	
  103.000

  	
  %

  
	
  2014

  	
   

  	
  101.500

  	
  %

  
	
  2015 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(e)                                  Any notice of redemption upon any Equity
Offering may be given prior to the completion of such Equity Offering, and any
such redemption or notice may, at the Issuer’s discretion, be subject to one or
more conditions precedent, including, but not limited to, completion of the
related Equity Offering.

 

(f)                                    Any redemption pursuant to this paragraph 5
shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the
Indenture.

 

A-8

 

6.                                       MANDATORY REDEMPTION.  The Issuer shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.

 

7.                                       NOTICE OF REDEMPTION.  Subject to Section 3.03 of the
Indenture, notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date (except that
redemption notices may be mailed more than 60 days prior to a redemption date
if the notice is issued in connection with Article 8 or Article 13 of
the Indenture) to each Holder whose Notes are to be redeemed at its registered
address or otherwise in accordance with the procedures of DTC.  Notes in denominations larger than $2,000 may
be redeemed in part but only in whole multiples of $1,000 in excess of $2,000,
unless all of the Notes held by a Holder are to be redeemed.  On and after the redemption date interest
ceases to accrue on Notes or portions thereof called for redemption.

 

8.                                       OFFERS TO REPURCHASE.

 

(a)                                  Upon the occurrence of a Change of Control,
the Issuer shall make an offer (a “Change of Control Offer”) to each
Holder to repurchase all or any part (equal to $2,000 or an integral multiple
of $1,000 in excess thereof) of each Holder’s Notes at a purchase price equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Additional Interest thereon, if any, to the date of purchase (the
“Change of Control Payment”).  The
Change of Control Offer shall be made in accordance with Section 4.14 of
the Indenture.

 

(b)                                 If the Issuer or any of its Restricted
Subsidiaries consummates an Asset Sale, within 10 Business Days of each date
that Excess Proceeds exceed $20.0 million, the Issuer shall commence an offer
to all Holders of the Notes and, if required by the terms of any Indebtedness
that is pari passu with the Notes
(“Pari Passu Indebtedness”), to the holders of such Pari Passu
Indebtedness (an “Asset Sale Offer”), to purchase the maximum principal
amount of Notes and such other Pari Passu Indebtedness that is a minimum of
$2,000 or an integral multiple of $1,000 in excess thereof 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
and Additional Interest, if any, to the date fixed for the closing of such
offer, in accordance with the procedures set forth in the Indenture.  To the extent that the aggregate amount of
Notes (including any Additional Notes) and such Pari Passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Issuer may use any remaining Excess Proceeds for any purpose, subject to other
covenants contained in the Indenture.  If
the aggregate principal amount of Notes or the Pari Passu Indebtedness
surrendered by such holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such Pari Passu Indebtedness to be purchased
on a pro rata basis based on the
accreted value or principal amount of the Notes or such Pari Passu Indebtedness
tendered.  Upon completion of any such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.  Additionally, the Issuer may, at its option,
make an Asset Sale Offer using proceeds from any Asset Sale at any time after
consummation of such Asset Sale; provided that such Asset Sale Offer
shall be in an aggregate amount of not less than $10.0 million.  Upon consummation of such Asset Sale Offer,
any Net Proceeds not required to be used to purchase Notes shall not be deemed
Excess Proceeds.  Holders of Notes that
are the subject of an offer to purchase will receive an Asset Sale Offer from
the Issuer prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled “Option of Holder to Elect Purchase”
attached to the Notes.

 

9.                                       DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without
coupons in denominations of $2,000 and integral multiples of $1,000 in excess
thereof.  The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements

 

A-9

 

and
transfer documents, and Holders shall be required to pay any taxes and fees
required by law or permitted by the Indenture. 
The Issuer need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part.  Also,
the Issuer need not exchange or register the transfer of any Notes for a period
of 15 days before a selection of Notes to be redeemed.

 

10.                                 SUBORDINATION.  The Notes and the Guarantees are subordinated
to Senior Indebtedness of the Issuer and the Guarantors on the terms and
subject to the conditions set forth in the Indenture.  To the extent provided in the Indenture,
Senior Indebtedness must be paid before the Notes and Guarantees may be
paid.  The Issuer agrees, and each Holder
by accepting a Note agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.

 

11.                                 PERSONS DEEMED OWNERS.  The registered Holder of a Note may be
treated as its owner for all purposes.

 

12.                                 AMENDMENT, SUPPLEMENT AND WAIVER.  The Indenture, the Guarantees or the Notes
may be amended or supplemented as provided in the Indenture.

 

13.                                 DEFAULTS AND REMEDIES.  The Events of Default relating to the Notes
are defined in Section 6.01 of the Indenture.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the principal, premium, if any, interest
and any other monetary obligations on all the then outstanding Notes to be due
and payable immediately; provided, however, that so long as any
Indebtedness permitted to be incurred under the Indenture as part of the Senior
Credit Facility shall be outstanding, no such acceleration shall be effective
until the earlier of: (1) acceleration of any such Indebtedness under the
Senior Credit Facility; or (2) five Business Days after the giving of
written notice of such acceleration to the Issuer and the administrative agent
under the Senior Credit Facility. 
Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
will become due and payable immediately without further action or notice.  Holders may not enforce the Indenture, the
Notes or the Guarantees except as provided in the Indenture.  Subject to certain limitations, Holders of a
majority in aggregate principal amount of the then outstanding Notes may direct
the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the
Notes notice of any continuing Default (except a Default relating to the
payment of principal, premium, if any, Additional Interest, if any, or
interest) if it determines that withholding notice is in their interest.  The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default and its
consequences under the Indenture except a continuing Default in payment of the
principal of, premium, if any, Additional Interest, if any, or interest on, any
of the Notes held by a non-consenting Holder. 
The Issuer and each Guarantor (to the extent that such Guarantor is so
required under the Trust Indenture Act) are required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Issuer is
required within five (5) Business Days, upon becoming aware of any
Default, to deliver to the Trustee a statement specifying such Default and what
action the Issuer proposes to take with respect thereto.

 

14.                                 AUTHENTICATION.  This Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose until
authenticated by the manual signature of the Trustee.

 

A-10

 

15.                                 ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER
RESTRICTED NOTES.  In addition to the
rights provided to Holders of Notes under the Indenture, Holders of Transfer
Restricted Notes shall have all the rights set forth in the Registration Rights
Agreement, dated as of March 2, 2007, among The Reader’s Digest
Association, Inc., the Guarantors named therein and the other parties
named on the signature pages thereof (the “Registration Rights
Agreement”), including the right to receive Additional Interest (as defined
in the Registration Rights Agreement).

 

16.                                 GOVERNING LAW.  THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES.

 

17.                                 CUSIP NUMBERS.  Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Issuer has
caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy
of such numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.

 

The
Issuer will furnish to any Holder upon written request and without charge a
copy of the Indenture and/or the Registration Rights Agreement.  Requests may be made to the Issuers at the
following address:

 

c/o
The Reader’s Digest Association, Inc.

Reader’s Digest Road

Pleasantville, New York 10570

Fax No.: (914) 244-7807

Attention: General Counsel

 

A-11

 

ASSIGNMENT FORM

 

To
assign this Note, fill in the form below:

 

	
  (I) or
  (we) assign and transfer this Note to:

  	
   

  
	
   

  	
  (Insert
  assignee’s legal name)

  
	
   

  
	
  (Insert assignee’s soc. sec. or tax I.D. no.)

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Print or type assignee’s name, address and zip code)

  
	
  and
  irrevocably appoint

  	
   

  
				

to
transfer this Note on the books of the Issuer. The agent may substitute another
to act for him.

	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears

  on the face of this Note)

  
	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  
							

 

*
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

 

A-12

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR

REGISTRATIONOF TRANSFER RESTRICTED NOTES

 

This
certificate relates to
$                  
principal amount of Notes held in (check applicable space)
         book-entry or
           definitive form by
the undersigned.

 

The
undersigned (check one box below):

 

·                                          has requested the Trustee by written order to
deliver in exchange for its beneficial interest in the Global Note held by the
Depositary a Note or Notes in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Note (or the portion thereof indicated above) in
accordance with the Indenture; or

 

·                                          has requested the Trustee by written order to
exchange or register the transfer of a Note or Notes.

 

In
connection with any transfer of any of the Notes evidenced by this certificate
occurring prior to the expiration of the period referred to in Rule 144(k) under
the Securities Act, the undersigned confirms that such Notes are being
transferred in accordance with its terms:

 

CHECK
ONE BOX BELOW

 

(1)                                  ·                                          to the Issuer; or

 

(2)                                  ·                                          to the Registrar for registration in the name
of the Holder, without transfer; or

 

(3)                                  ·                                          pursuant to an effective registration
statement under the Securities Act of 1933; or

 

(4)                                  ·                                          inside the United States to a “qualified
institutional buyer” (as defined in Rule 144A under the Securities Act of
1933) that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or

 

(5)                                  ·                                          outside the United States in an offshore
transaction within the meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act of 1933; or

 

(6)                                  ·                                          to an institutional “accredited investor” (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act of 1933) that has furnished to the Trustee a signed letter containing
certain representations and agreements; or

 

(7)                                  ·                                          pursuant to another available exemption from
registration under the Securities Act of 1933.

 

Unless
one of the boxes is checked, the Trustee will refuse to register any of the
Notes evidenced by this certificate in the name of any Person other than the
registered Holder thereof; provided, however, that if
box (5), (6) or (7) is checked, the Trustee may require, prior
to registering any

 

A-13

 

such
transfer of the Notes, such legal opinions, certifications and other
information as the Issuer has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Your
  Signature

  

 

	
  Signature
  Guarantee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature
  must be guaranteed

  by a participant in a

  recognized signature guaranty

  medallion program or other

  signature guarantor acceptable

  to the Trustee

  	
   

  	
          Signature
  of Signature

          Guarantee

  

 

 

TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.

 

The
undersigned represents and warrants that it is purchasing this Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act of 1933, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned’s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NOTICE:
  To be executed by

                   an
  executive officer

  

 

A-14

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If
you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10
or 4.14 of the Indenture, check the appropriate box below:

 

[   ] Section 4.10                  [   ] Section 4.14

 

If
you want to elect to have only part of this Note purchased by the Issuer
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:

 

	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign
  exactly as your name appears on

  the face of this Note)

  
	
   

  	
   

  	
  Tax
  Identification No.:

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  
											

 

*
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

 

A-15

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

The
initial outstanding principal amount of this Global Note is
$                    .  The following exchanges of a part of this
Global Note for an interest in another Global Note or for a Definitive Note, or
exchanges of a part of another Global or Definitive Note for an interest in
this Global Note, have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of

  decrease

  in Principal

  Amount

  	
   

  	
  Amount of increase

  in Principal

  Amount of this

  Global Note

  	
   

  	
  Principal Amount

  of

  this Global Note

  following such

  decrease or

  increase

  	
   

  	
  Signature of

  authorized officer

  of Trustee or

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*This
schedule should be included only if the Note is issued in global form.

 

A-16

EXHIBIT B

 

[FORM OF FACE OF EXCHANGE NOTE]

 

[Global Notes Legend]

 

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

 

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

 

B-1

 

CUSIP:  755267AF8

ISIN:  USU755267AF83

 

[GLOBAL] NOTE

 

9% Senior Subordinated Notes due 2017

 

	
  No.

  	
   

  	
  Up to [$               ]

  

 

THE READER’S DIGEST ASSOCIATION, INC.

 

promises
to pay to CEDE & CO. or registered assigns, the principal sum [set
forth on the Schedule of Exchanges of Interests in the Global Note attached
hereto] [of
                                                
United States Dollars] on February 15, 2017.

 

Interest
Payment Dates:  February 15 and August 15

 

Record
Dates:  February 1 and August 1

 

B-2

 

IN
WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

 

Dated: 
                  ,
20

 

	
   

  	
  THE
  READER’S DIGEST ASSOCIATION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

B-3

 

This
is one of the Notes referred to in the within-mentioned Indenture:

 

	
   

  	
  THE
  BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  
	
   

  	
   

  

 

B-4

 

[Back of Note]

 

9% Senior Subordinated Notes due 2017

 

Capitalized
terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

 

1.                                       INTEREST. 
The Reader’s Digest Association, Inc., a Delaware corporation,
promises to pay interest on the principal amount of this Note at 9% per annum
from March 2, 2007 until maturity. 
The Issuer will pay interest semi-annually in arrears on February 15
and August 15 of each year, or if any such day is not a Business Day, on
the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that the first Interest
Payment Date shall be August 15, 2007. 
The Issuer will pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at the interest rate on the Notes; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the interest rate on
the Notes.  Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.

 

2.                                       METHOD OF PAYMENT.  The Issuer will pay interest on the Notes to
the Persons who are registered Holders of Notes at the close of business on the
February 1 or August 1 (whether or not a Business Day), as the case
may be, next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to
defaulted interest.  Principal of,
premium, if any, and interest on the Notes will be payable at the office or
agency of the Issuer maintained for such purpose in the Borough of Manhattan in
the City of New York or, at the option of the Issuer, payment of interest may
be made by check mailed to the Holders at their addresses set forth in the
register of Holders, provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest and premium on all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Issuer or the
Paying Agent.  Such payment shall be in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts.

 

3.                                       PAYING AGENT AND REGISTRAR.  Initially, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar.  The Issuer may change any Paying Agent or
Registrar without notice to the Holders. 
The Issuer or any of its Subsidiaries may act in any such capacity.

 

4.                                       INDENTURE. 
The Issuer issued the Notes under an Indenture, dated as of March 2,
2007 (the “Indenture”), among The Reader’s Digest Association, Inc.,
the Guarantors named therein and the Trustee. 
This Note is one of a duly authorized issue of notes of the Issuer
designated as its 9% Senior Subordinated Notes due 2017.  The Issuer shall be entitled to issue
Additional Notes pursuant to Section 2.01 and 4.09 of the Indenture.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.

 

B-5

 

5.                                       OPTIONAL REDEMPTION.

 

(a)                                  Except as described below under clauses 5(b) and
5(c) hereof, the Notes will not be redeemable at the Issuer’s option before
February 15, 2012.

 

(b)                                 At any time prior to February 15, 2012,
the Issuer may redeem all or a part of the Notes, upon not less than 30 nor
more than 60 days’ prior notice mailed by first-class mail to the registered
address of each Holder or otherwise in accordance with the procedures of DTC,
at a redemption price equal to 100% of the principal amount of the Notes
redeemed plus the Applicable Premium as of, and accrued and unpaid interest and
Additional Interest, if any, to the date of redemption (the “Redemption Date”),
subject to the rights of Holders on the relevant Record Date to receive
interest due on the relevant Interest Payment Date.

 

(c)                                  Until February 15, 2010, the Issuer may,
at its option, redeem up to 35% of the aggregate principal amount of Notes
issued by it at a redemption price equal to 109% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon and Additional
Interest, if any, to the applicable Redemption Date, subject to the right of
Holders of Notes of record on the relevant record date to receive interest due
on the relevant Interest Payment Date, with the net cash proceeds of one or
more Equity Offerings; provided that at least 65% of the sum of the
original aggregate principal amount of Notes issued under the Indenture and the
original aggregate principal amount any Additional Notes that are Notes issued
under the Indenture after the Issue Date remains outstanding immediately after
the occurrence of each such redemption; provided,  further, that each such redemption
occurs within 90 days of the date of closing of each such Equity Offering.

 

(c)                                  On and after February 15, 2012, the
Issuer may redeem the Notes, in whole or in part, upon notice pursuant to Section 3.02
of the Indenture, at the redemption prices (expressed as percentages of
principal amount of the Notes to be redeemed) set forth below, plus accrued and
unpaid interest thereon and Additional Interest, if any, to the applicable
Redemption Date, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant Interest Payment Date, if
redeemed during the twelve-month period beginning on February 15 of each
of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2012

  	
   

  	
  104.500

  	
  %

  
	
  2013

  	
   

  	
  103.000

  	
  %

  
	
  2014

  	
   

  	
  101.500

  	
  %

  
	
  2015 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(e)                                  Any notice of redemption upon any Equity
Offering may be given prior to the completion of such Equity Offering, and any
such redemption or notice may, at the Issuer’s discretion, be subject to one or
more conditions precedent, including, but not limited to, completion of the
related Equity Offering.

 

(f)                                    Any redemption pursuant to this paragraph 5
shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the
Indenture.

 

6.                                       MANDATORY REDEMPTION.  The Issuer shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.

 

B-6

 

7.                                       NOTICE OF REDEMPTION.  Subject to Section 3.03 of the
Indenture, notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date (except that
redemption notices may be mailed more than 60 days prior to a redemption date
if the notice is issued in connection with Article 8 or Article 13 of
the Indenture) to each Holder whose Notes are to be redeemed at its registered
address or otherwise in accordance with the procedures of DTC.  Notes in denominations larger than $2,000 may
be redeemed in part but only in whole multiples of $1,000 in excess of $2,000,
unless all of the Notes held by a Holder are to be redeemed.  On and after the redemption date interest
ceases to accrue on Notes or portions thereof called for redemption.

 

8.                                       OFFERS TO REPURCHASE.

 

(a)                                  Upon the occurrence of a Change of Control,
the Issuer shall make an offer (a “Change of Control Offer”) to each
Holder to repurchase all or any part (equal to $2,000 or an integral multiple
of $1,000 in excess thereof) of each Holder’s Notes at a purchase price equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest to the date of purchase (the “Change of Control Payment”).  The Change of Control Offer shall be made in
accordance with Section 4.14 of the Indenture.

 

(b)                                 If the Issuer or any of its Restricted Subsidiaries
consummates an Asset Sale, within 10 Business Days of each date that Excess
Proceeds exceed $20.0 million, the Issuer shall commence, an offer to all
Holders of the Notes and, if required by the terms of any Indebtedness that is pari passu with the Notes (“Pari Passu
Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset
Sale Offer”), to purchase the maximum principal amount of Notes and such
other Pari Passu Indebtedness that is a minimum of $2,000 or an integral
multiple of $1,000 in excess thereof 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 to the date fixed for the
closing of such offer, in accordance with the procedures set forth in the
Indenture.  To the extent that the
aggregate amount of Notes (including any Additional Notes) and such Pari Passu
Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Issuer may use any remaining Excess Proceeds for any purpose,
subject to other covenants contained in the Indenture.  If the aggregate principal amount of Notes or
the Pari Passu Indebtedness surrendered by such holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and such Pari
Passu Indebtedness to be purchased on a pro
rata basis based on the accreted value or principal amount of the
Notes or such Pari Passu Indebtedness tendered. 
Upon completion of any such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero. 
Additionally, the Issuer may, at its option, make an Asset Sale Offer
using proceeds from any Asset Sale at any time after consummation of such Asset
Sale; provided that such Asset Sale Offer shall be in an aggregate
amount of not less than $10.0 million. 
Upon consummation of such Asset Sale Offer, any Net Proceeds not
required to be used to purchase Notes shall not be deemed Excess Proceeds.  Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer from the Issuer prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled “Option of Holder to Elect Purchase” attached to the Notes.

 

9.                                       DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without
coupons in denominations of $2,000 and integral multiples of $1,000 in excess
thereof.  The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents, and Holders shall be required to pay any taxes and fees required by
law or permitted by the Indenture.  The
Issuer need not exchange or register the transfer of any Note or portion of a
Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part.

 

B-7

 

Also,
the Issuer need not exchange or register the transfer of any Notes for a period
of 15 days before a selection of Notes to be redeemed.

 

10.                                 SUBORDINATION.  The Notes and the Guarantees are subordinated
to Senior Indebtedness of the Issuer and the Guarantors on the terms and
subject to the conditions set forth in the Indenture.  To the extent provided in the Indenture,
Senior Indebtedness must be paid before the Notes and Guarantees may be
paid.  The Issuer agrees, and each Holder
by accepting a Note agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.

 

11.                                 PERSONS DEEMED OWNERS.  The registered Holder of a Note may be
treated as its owner for all purposes.

 

12.                                 AMENDMENT, SUPPLEMENT AND WAIVER.  The Indenture, the Guarantees or the Notes
may be amended or supplemented as provided in the Indenture.

 

13.                                 DEFAULTS AND REMEDIES.  The Events of Default relating to the Notes
are defined in Section 6.01 of the Indenture.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the principal, premium, if any, interest
and any other monetary obligations on all the then outstanding Notes to be due
and payable immediately; provided, however, that so long as any
Indebtedness permitted to be incurred under the Indenture as part of the Senior
Credit Facility shall be outstanding, no such acceleration shall be effective
until the earlier of: (1) acceleration of any such Indebtedness under the
Senior Credit Facility; or (2) five Business Days after the giving of
written notice of such acceleration to the Issuer and the administrative agent
under the Senior Credit Facility. 
Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
will become due and payable immediately without further action or notice.  Holders may not enforce the Indenture, the Notes
or the Guarantees except as provided in the Indenture.  Subject to certain limitations, Holders of a
majority in aggregate principal amount of the then outstanding Notes may direct
the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the
Notes notice of any continuing Default (except a Default relating to the
payment of principal, premium, if any, or interest) if it determines that
withholding notice is in their interest. 
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all
of the Notes waive any existing Default or and its consequences under the
Indenture except a continuing Default in payment of the principal of, premium,
if any, or interest on, any of the Notes held by a non-consenting Holder.  The Issuer and each Guarantor (to the extent
that such Guarantor is so required under the Trust Indenture Act) are required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Issuer is required within five (5) Business Days, upon
becoming aware of any Default, to deliver to the Trustee a statement specifying
such Default and what action the Issuer proposes to take with respect thereto.

 

14.                                 AUTHENTICATION.  This Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose until
authenticated by the manual signature of the Trustee.

 

15.                                 GOVERNING LAW.  THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES.

 

B-8

 

16.                                 CUSIP NUMBERS.  Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Issuer has
caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy
of such numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.

 

The
Issuer will furnish to any Holder upon written request and without charge a
copy of the Indenture.  Requests may be
made to the Issuers at the following address:

 

c/o The Reader’s Digest Association, Inc.

Reader’s Digest Road

Pleasantville, New York 10570

Fax No.: (914) 244-7807

Attention: General Counsel

 

B-9

 

ASSIGNMENT FORM

 

To assign this Note, fill
in the form below:

 

	
  (I) or (we) assign
  and transfer this Note to:

  	
   

  
	
   

  	
  (Insert assignee’s
  legal name)

  
	
   

  
	
  (Insert
  assignee’s soc. sec. or tax I.D. no.)

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Print or type
  assignee’s name, address and zip code)

  
	
  and irrevocably appoint

  	
   

  
				

to transfer this Note on
the books of the Issuer. The agent may substitute another to act for him.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your
  name appears

  on the face of this Note)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
							

 

* Participant in a
recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

 

B-10

 

OPTION OF HOLDER
TO ELECT PURCHASE

 

If you want to elect to
have this Note purchased by the Issuer pursuant to Section 4.10 or 4.14 of
the Indenture, check the appropriate box below:

 

[   ]
Section 4.10         [   ]
Section 4.14

 

If you want to elect to
have only part of this Note purchased by the Issuer pursuant to Section 4.10
or Section 4.14 of the Indenture, state the amount you elect to have
purchased:

 

	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign exactly as your
  name appears on the face of this Note)

  
	
   

  	
   

  	
  Tax Identification No.:

  	
   

  
	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
										

 

* Participant in a
recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

 

B-11

 

SCHEDULE OF
EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

The initial outstanding
principal amount of this Global Note is
$                    .  The following exchanges of a part of this
Global Note for an interest in another Global Note or for a Definitive Note, or
exchanges of a part of another Global or Definitive Note for an interest in
this Global Note, have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of

  decrease

  in Principal

  Amount

  	
   

  	
  Amount of increase

  in Principal

  Amount of this

  Global Note

  	
   

  	
  Principal Amount

  of

  this Global Note

  following such

  decrease or

  increase

  	
   

  	
  Signature of

  authorized officer

  of Trustee or

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*This schedule should be
included only if the Note is issued in global form.

 

B-12

EXHIBIT C

 

FORM OF

TRANSFEREE LETTER OF REPRESENTATION

 

The Reader’s Digest
Association, Inc.

Reader’s Digest Road

Pleasantville, New York 10570

Fax No.: (914) 244-7807

Attention: General Counsel

 

In care of

The Bank of New York

101 Barclay Street – 8W

New York, New York 10280

Fax No.: (212) 815-5704/3272

Attention:  Global Trust Administration

 

Ladies and Gentlemen:

 

This certificate is
delivered to request a transfer of $[      
] principal amount of the 9% Senior Subordinated Notes due 2017 (the “Notes”)
of The Reader’s Digest Association, Inc. (the “Issuer”).

 

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

 

	
  Name:

  	
   

  	
   

  
	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  
	
  Taxpayer ID Number:

  	
   

  	
   

  
					

 

The undersigned
represents and warrants to you that:

 

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

 

2.  We understand that the Notes have not been
registered under the Securities Act and, unless so registered, may not be sold
except as permitted in the following sentence. 
We agree on our own behalf and on behalf of any investor account for
which we are purchasing Notes to offer, sell or otherwise transfer such Notes
prior to the date that is two years after the later of the date of original
issue and the last date on which the Issuer or any affiliate of the Issuer was
the owner of such Notes (or any predecessor thereto) (the “Resale
Restriction Termination Date”) only (a) to the Issuer, (b) pursuant
to a registration

 

 

statement that has been
declared effective under the Securities Act, (c) in a transaction
complying with the requirements of Rule 144A under the Securities Act (“Rule 144A”),
to a person we reasonably believe is a qualified institutional buyer under Rule 144A
(a “QIB”) that is purchasing for its own account or for the account of a
QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to an
institutional “accredited investor” within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act that is purchasing for its
own account or for the account of such an institutional “accredited investor,”
in each case in a minimum principal amount of Notes of $250,000, or (f) pursuant
to any other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws.  The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date.  If any resale or other transfer of the Notes
is proposed to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Issuer and the
Trustee, which shall provide, among other things, that the transferee is an
institutional “accredited investor” within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act and that it is acquiring
such Notes for investment purposes and not for distribution in violation of the
Securities Act.  Each purchaser
acknowledges that the Issuer and the Trustee reserve the right prior to the
offer, sale or other transfer prior to the Resale Restriction Termination Date
of the Notes pursuant to clause (d), (e) or (f) above to
require the delivery of an opinion of counsel, certifications or other
information satisfactory to the Issuer and the Trustee.

 

	
   

  	
  TRANSFEREE:

  	
                                     ,

  	
   

  
	
   

  
	
   

  	
  by:

  	
   

  	
   

  
							

 

B-3

EXHIBIT D

 

FORM OF
SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

 

Supplemental Indenture
(this “Supplemental Indenture”), dated as of
                    ,
among
                                    
(the “Guaranteeing Subsidiary”), a subsidiary of The Reader’s Digest
Association, Inc., a Delaware corporation (the “Issuer”), and The
Bank of New York, as trustee (the “Trustee”).

 

WITNESSETH

 

WHEREAS, each of the
Issuer and the Guarantors (as defined in the Indenture referred to below) has
heretofore executed and delivered to the Trustee an indenture (the “Indenture”),
dated as of March 2, 2007, providing for the issuance of an unlimited
aggregate principal amount of 9% Senior Subordinated Notes due 2017 (the “Notes”);

 

WHEREAS, the Indenture
provides that under certain circumstances the Guaranteeing Subsidiary shall
execute and deliver to the Trustee a supplemental indenture pursuant to which
the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s
Obligations under the Notes and the Indenture on the terms and conditions set
forth herein and under the Indenture (the “Guarantee”); and

 

WHEREAS, pursuant to Section 9.01
of the Indenture, the Trustee is authorized to execute and deliver this
Supplemental Indenture.

 

NOW THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties mutually covenant and
agree for the equal and ratable benefit of the Holders of the Notes as follows:

 

(1)                                  Capitalized Terms. 
Capitalized terms used herein without definition shall have the meanings
assigned to them in the Indenture.

 

(2)                                  Agreement to Guarantee. 
The Guaranteeing Subsidiary hereby agrees as follows:

 

(a)                                  Along with all Guarantors named in the
Indenture, to jointly and severally unconditionally guarantee to each Holder of
a Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Notes or the obligations of the Issuer hereunder or thereunder,
that:

 

(i)                                     the principal of and interest, premium
and Additional Interest, if any, on the Notes will be promptly paid in full
when due, whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Issuer to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and

 

(ii)                                  in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.  Failing payment when due
of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors and the Guaranteeing Subsidiary shall be jointly and
severally obligated to pay the same immediately.  This is a guarantee of payment and not a
guarantee of collection.

 

D-1

 

(b)                                 The obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Issuer, any action
to enforce the same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor.

 

(c)                                  The following is hereby waived:  diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of
either of the Issuer, any right to require a proceeding first against the
Issuer, protest, notice and all demands whatsoever.

 

(d)                                 This Guarantee shall not be discharged
except by complete performance of the obligations contained in the Notes, the
Indenture and this Supplemental Indenture, and the Guaranteeing Subsidiary
accepts all obligations of a Guarantor under the Indenture.

 

(e)                                  If any Holder or the Trustee is required
by any court or otherwise to return to the Issuer, the Guarantors (including
the Guaranteeing Subsidiary), or any custodian, trustee, liquidator or other
similar official acting in relation to either the Issuer or the Guarantors, any
amount paid either to the Trustee or such Holder, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.

 

(f)                                    The Guaranteeing Subsidiary shall not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.

 

(g)                                 As between the Guaranteeing Subsidiary,
on the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guaranteeing Subsidiary
for the purpose of this Guarantee.

 

(h)                                 The Guaranteeing Subsidiary shall have
the right to seek contribution from any non-paying Guarantor so long as the
exercise of such right does not impair the rights of the Holders under this
Guarantee.

 

(i)                                     Pursuant to Section 11.02 of the
Indenture, after giving effect to all other contingent and fixed liabilities
that are relevant under any applicable Bankruptcy Law or fraudulent conveyance
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under Article 11 of the
Indenture, this new Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Guaranteeing Subsidiary under
this Guarantee will not constitute a fraudulent transfer or conveyance.

 

(j)                                     This Guarantee shall remain in full force
and effect and continue to be effective should any petition be filed by or
against the Issuer for liquidation, reorganization, should the Issuer become
insolvent or make an assignment for the benefit of creditors or should a receiver
or 

 

D-2

 

trustee be appointed for
all or any significant part of the Issuer’s assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may
be, if at any time payment and performance of the Notes are, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by any obligee on the Notes and Guarantee, whether as a “voidable
preference,” “fraudulent transfer” or otherwise, all as though such payment or
performance had not been made.  In the
event that any payment or any part thereof, is rescinded, reduced, restored or
returned, the Note shall, to the fullest extent permitted by law, be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.

 

(k)                                  In case any provision of this Guarantee
shall be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

(l)                                     This Guarantee shall be a general
unsecured senior subordinated obligation of such Guaranteeing Subsidiary,
ranking pari passu with any other
future Senior Indebtedness of the Guaranteeing Subsidiary, if any.

 

(m)                               Each payment to be made by the
Guaranteeing Subsidiary in respect of this Guarantee shall be made without
set-off, counterclaim, reduction or diminution of any kind or nature.

 

(3)                                  Execution and Delivery. 
The Guaranteeing Subsidiary agrees that the Guarantee shall remain in
full force and effect notwithstanding the absence of the endorsement of any
notation of such Guarantee on the Notes.

 

(4)                                  Merger, Consolidation or Sale of All or
Substantially All Assets.

 

(a)                                  Except as otherwise provided in Section 5.01(c) of
the Indenture, the Guaranteeing Subsidiary may not consolidate or merge with or
into or wind up into (whether or not the Issuer or Guaranteeing Subsidiary is
the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets, in
one or more related transactions, to any Person unless:

 

(i)                                     (A) the Guaranteeing Subsidiary is
the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Guaranteeing Subsidiary) or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made is a corporation, partnership, limited partnership, limited
liability company or trust organized or existing under the laws of the
jurisdiction of organization of the Guaranteeing Subsidiary, as the case may
be, or the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof (the Guaranteeing Subsidiary or such Person,
as the case may be, being herein called the “Successor Person”);

 

(B)                                the Successor Person, if other than the
Guaranteeing Subsidiary, expressly assumes all the obligations of the
Guaranteeing Subsidiary under the Indenture and the Guaranteeing Subsidiary’s
related Guarantee pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee;

 

(C)                                immediately after such transaction, no
Default exists; and

 

D-3

 

(D)                               the Issuer shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture, if any,
comply with the Indenture; or

 

(ii)                                  if the transaction constitutes an Asset
Sale, such transaction is made in compliance with Section 4.10 of the
Indenture;

 

(b)                                 Subject to certain limitations described
in the Indenture, the Successor Person will succeed to, and be substituted for,
the Guaranteeing Subsidiary under the Indenture and the Guaranteeing Subsidiary’s
Guarantee.  Notwithstanding the
foregoing, the Guaranteeing Subsidiary may merge into or transfer all or part
of its properties and assets to another Guarantor or the Issuer or merge with a
Restricted Subsidiary of the Issuer solely for the purpose of reincorporating
the Guarantor in a State of the United States, the District of Columbia or any
territory of the United States, as long as the amount of Indebtedness,
Preferred Stock or Disqualified Stock of such Guarantor is not increased
thereby.

 

(5)                                  Releases.

 

The Guarantee of the
Guaranteeing Subsidiary shall be automatically and unconditionally released and
discharged, and no further action by the Guaranteeing Subsidiary, the Issuer or
the Trustee is required for the release of the Guaranteeing Subsidiary’s
Guarantee, upon:

 

(1)                                  (A)  any sale, exchange or transfer
(by merger or otherwise) of the Capital Stock of the Guaranteeing Subsidiary
(including any sale, exchange or transfer), after which the Guaranteeing
Subsidiary is no longer a Restricted Subsidiary, or all or substantially all
the assets of the Guaranteeing Subsidiary, which sale, exchange or transfer is
made in compliance with the applicable provisions of the Indenture;

 

(B)                                the release or discharge of such
Guaranteeing Subsidiary from its guarantee of Indebtedness of the Issuer and
the Guarantors under the Senior Credit Facility (including by reason of the
termination of the Senior Credit Facility) or the guarantee that resulted in
the obligation of such Guaranteeing Subsidiary to guarantee the Notes, if such
Guaranteeing Subsidiary would not then otherwise be required to guarantee the
Notes pursuant to this Indenture (and treating any guarantees of such
Guaranteeing Subsidiary that remain outstanding as incurred at least 30 days
prior to such release or discharge), except a discharge or release by or as a
result of payment under such guarantee;  provided, that if such Person has incurred any
Indebtedness or issued any Preferred Stock or Disqualified Stock in reliance on
its status as a Guaranteeing Subsidiary under Section 4.09 of the
Indenture, such Guaranteeing Subsidiary’s obligations under such Indebtedness,
Disqualified Stock or Preferred Stock, as the case may be, so incurred are
satisfied in full and discharged or are otherwise permitted to be incurred
under Section 4.09 of the Indenture.

 

(A)                              the proper designation of any Restricted
Subsidiary that is a Guaranteeing Subsidiary as an Unrestricted Subsidiary; or

 

(B)                                the Issuer exercising its Legal
Defeasance option or Covenant Defeasance option in accordance with Article 8
of the Indenture or the Issuer’s obligations under the Indenture being
discharged in accordance with the terms of the Indenture; and

 

D-4

 

(2)                                  such Guaranteeing Subsidiary delivering
to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for in the Indenture relating to such
transaction have been complied with.

 

(6)                                  No Recourse Against Others. 
No director, officer, employee, incorporator or stockholder of the
Guaranteeing Subsidiary shall have any liability for any obligations of the
Issuer or the Guarantors (including the Guaranteeing Subsidiary) under the
Notes, the Guarantees, the Indenture or this Supplemental Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation.  Each Holder by accepting Notes
waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.

 

(7)                                  Governing Law. 
THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(8)                                  Counterparts. 
The parties may sign any number of copies of this Supplemental
Indenture.  Each signed copy shall be an
original, but all of them together represent the same agreement.

 

(9)                                  Effect of Headings. 
The Section headings herein are for convenience only and shall not
affect the construction hereof.

 

(10)                            The Trustee. 
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplemental Indenture or for or
in respect of the recitals contained herein, all of which recitals are made
solely by the Guaranteeing Subsidiary.

 

(11)                            Subrogation. 
The Guaranteeing Subsidiary shall be subrogated to all rights of Holders
of Notes against the Issuer in respect of any amounts paid by the Guaranteeing
Subsidiary pursuant to the provisions of Section 2 hereof and Section 11.01
of the Indenture; provided that, if an Event of Default has occurred and
is continuing, the Guaranteeing Subsidiary shall not be entitled to enforce or
receive any payments arising out of, or based upon, such right of subrogation
until all amounts then due and payable by the Issuer under the Indenture or the
Notes shall have been paid in full.

 

(12)                            Benefits Acknowledged. 
The Guaranteeing Subsidiary’s Guarantee is subject to the terms and
conditions set forth in the Indenture. 
The Guaranteeing Subsidiary acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by the Indenture
and this Supplemental Indenture and that the guarantee and waivers made by it
pursuant to this Guarantee are knowingly made in contemplation of such
benefits.

 

(13)                            Successors.  All
agreements of the Guaranteeing Subsidiary in this Supplemental Indenture shall
bind its Successors, except as otherwise provided in Section 2(k) hereof
or elsewhere in this Supplemental Indenture. 
All agreements of the Trustee in this Supplemental Indenture shall bind
its successors.

 

D-5

 

IN WITNESS WHEREOF, the
parties hereto have caused this Supplemental Indenture to be duly executed, all
as of the date first above written.

 

 

	
   

  	
  [GUARANTEEING
  SUBSIDIARY]

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK,
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
				

 

 

D-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]