Document:

Exhibit 4.2

 

EXECUTION
COPY

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS
AGREEMENT dated as of March 2, 2007 (the “Agreement”) is entered into by
and among The Reader’s Digest Association, Inc., a Delaware corporation
(the “Company”), the guarantors listed on the signature pages hereto (the “Guarantors”),
and J.P. Morgan Securities Inc. (“JPMorgan”), Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Citigroup Global Markets Inc. and Greenwich Capital Markets, Inc.
(the “Initial Purchasers”).

 

Doctor Acquisition Co., a
Delaware corporation (“Acquisition Co.”) and the Initial Purchasers are parties
to the Purchase Agreement dated February 27, 2007 (the “Purchase Agreement”),
which provides for the sale by the Company to the Initial Purchasers of $600,000,000
aggregate principal amount of the Company’s 9% Senior Subordinated Notes due
2017 (the “Securities”), which will be guaranteed on an unsecured senior
subordinated basis by each of the Guarantors. 
Acquisition Co. is a special purpose company and a subsidiary of RDA
Holding Co., a Delaware corporation (“Holdings”), formed by Ripplewood Holdings
L.L.C. (“Ripplewood”) in connection with the acquisition by Ripplewood and its
affiliates and certain other investors of the Company pursuant to the Agreement
and Plan of Merger, dated as of November 16, 2006, among Holdings,
Acquisition Co. and the Company (the “Merger Agreement”).  Pursuant to the Merger Agreement, Acquisition
Co. has merged into the Company with the Company as the surviving corporation.  Immediately following the Merger, the Company
and the Guarantors were joined as parties to the Purchase Agreement pursuant to
a Joinder Agreement dated as of the date hereof.

 

As an inducement to the
Initial Purchasers to enter into the Purchase Agreement, the Company and the
Guarantors have agreed to provide to the Initial Purchasers and their direct
and indirect transferees the registration rights set forth in this
Agreement.  The execution and delivery of
this Agreement is a condition to the closing under the Purchase Agreement.

 

In consideration of the
foregoing, the parties hereto agree as follows:

 

1.                                       Definitions.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Additional
Guarantor” shall mean any subsidiary of the Company that executes a Subsidiary
Guarantee under the Indenture after the date of this Agreement.

 

 

“Business
Day” shall mean any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain
closed.

 

“Company” shall have the
meaning set forth in the preamble and shall also include the Company’s
successors.

 

“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended from time to time.

 

“Exchange Dates” shall
have the meaning set forth in Section 2(a)(ii) hereof.

 

“Exchange
Offer” shall mean the exchange offer by the Company and the Guarantors of
Exchange Securities for Securities pursuant to Section 2(a) hereof.

 

“Exchange Offer
Registration” shall mean a registration under the Securities Act effected
pursuant to Section 2(a) hereof.

 

“Exchange Offer
Registration Statement” shall mean an exchange offer registration statement on Form S-4
(or, if applicable, on another appropriate form) and all amendments and
supplements to such registration statement, in each case including the
Prospectus contained therein or deemed a part thereof, all exhibits thereto and
any document incorporated by reference therein.

 

“Exchange Securities”
shall mean senior subordinated notes issued by the Company and guaranteed by
the Guarantors under the Indenture containing terms identical to the Securities
(except that the Exchange Securities will not be subject to restrictions on
transfer or to any increase in annual interest rate for failure to comply with
this Agreement) and to be offered to Holders of Securities in exchange for
Securities pursuant to the Exchange Offer.

 

“Free Writing Prospectus”
means each free writing prospectus (as defined in Rule 405 under the
Securities Act) prepared by or on behalf of the Company or used or referred to
by the Company in connection with the sale of the Securities or the Exchange
Securities.

 

“Guarantors” shall have
the meaning set forth in the preamble and shall also include any Guarantor’s
successors and any Additional Guarantors.

 

“Holders” shall mean the
Initial Purchasers, for so long as they own any Registrable Securities, and
each of their successors, assigns and direct and indirect transferees who
become owners of Registrable Securities under the Indenture; provided
that for purposes of Sections 4 and 5 of this Agreement, the term “Holders”
shall include Participating Broker-Dealers.

 

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“Indemnified Person”
shall have the meaning set forth in Section 5(c) hereof.

 

“Indemnifying Person”
shall have the meaning set forth in Section 5(c) hereof.

 

“Indenture” shall mean
the Indenture relating to the Securities dated as of March 2, 2007, among
the Company, the Guarantors and The Bank of New York, as trustee, and as the
same may be amended from time to time in accordance with the terms thereof.

 

“Initial Purchasers”
shall have the meaning set forth in the preamble.

 

“Inspector” shall have
the meaning set forth in Section 3(a)(xiii) hereof.

 

“Issuer Information” shall have the meaning set forth
in Section 5(a) hereof.

 

“JPMorgan” shall have the
meaning set forth in the preamble.

 

“Majority Holders” shall
mean the Holders of a majority of the aggregate principal amount of the
outstanding Registrable Securities; provided that whenever the consent
or approval of Holders of a specified percentage of Registrable Securities is
required hereunder, any Registrable Securities owned directly or indirectly by
the Company or any of its affiliates shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage or amount; and provided, further, that if the Company
shall issue any additional Securities under the Indenture prior to consummation
of the Exchange Offer or, if applicable, the effectiveness of any Shelf
Registration Statement, such additional Securities and the Registrable
Securities to which this Agreement relates shall be treated together as one
class for purposes of determining whether the consent or approval of Holders of
a specified percentage of Registrable Securities has been obtained.

 

“Participating
Broker-Dealers” shall have the meaning set forth in Section 4(a) hereof.

 

“Person” shall mean an
individual, partnership, limited liability company, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

 

“Prospectus” shall mean
the prospectus included in, or, pursuant to the rules and regulations of
the Securities Act, deemed a part of, a Registration Statement, including any
preliminary prospectus, and any such prospectus as 

 

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amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Shelf Registration Statement, and by
all other amendments and supplements to such prospectus, and in each case
including any document incorporated by reference therein.

 

“Purchase Agreement”
shall have the meaning set forth in the preamble.

 

“Registrable Securities”
shall mean the Securities; provided that the Securities shall cease to
be Registrable Securities (i) when a Registration Statement with respect
to such Securities has become effective under the Securities Act and such
Securities have been exchanged or disposed of pursuant to such Registration
Statement, (ii) when such Securities are eligible to be sold pursuant to Rule 144(k) (or
any similar provision then in force, but not Rule 144A) under the
Securities Act or (iii) when such Securities cease to be outstanding.

 

“Registration Expenses”
shall mean any and all expenses incident to performance of or compliance by the
Company and the Guarantors with this Agreement, including without limitation: (i) all
SEC, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws (including
reasonable fees and disbursements of one firm of counsel for any Underwriters
or Holders in connection with blue sky qualification of any Exchange Securities
or Registrable Securities, which firm shall be selected by the Underwriters or
the Majority Holders), (iii) all expenses of the Company in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments or supplements
thereto, any underwriting agreements, securities sales agreements or other
similar agreements and any other documents relating to the performance of and
compliance with this Agreement, (iv) all rating agency fees, (v) all
fees and disbursements relating to the qualification of the Indenture under
applicable securities laws, (vi) the fees and disbursements of the Trustee
and its counsel, (vii) the fees and disbursements of counsel for the
Company and the Guarantors and, in the case of a Shelf Registration Statement,
the fees and disbursements of one counsel for the Holders (which counsel shall
be selected by the Majority Holders and which counsel may also be counsel for
the Initial Purchasers) and (viii) the fees and disbursements of the
independent public accountants of the Company and the Guarantors, including the
expenses of any special audits or “comfort” letters required by or incident to
the performance of and compliance with this Agreement, but excluding fees and
expenses of counsel to the Underwriters (other than fees and expenses set forth
in clause (ii) above) or the Holders and underwriting discounts and
commissions, brokerage commissions and transfer taxes, if any, relating to the
sale or disposition of Registrable Securities by a Holder.

 

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“Registration Statement”
shall mean any registration statement of the Company and the Guarantors that
covers any of the Exchange Securities or Registrable Securities pursuant to the
provisions of this Agreement and all amendments and supplements to any such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein or deemed a part thereof, all
exhibits thereto and any document incorporated by reference therein.

 

“SEC” shall mean the
United States Securities and Exchange Commission.

 

“Securities” shall have
the meaning set forth in the preamble.

 

“Securities Act” shall
mean the Securities Act of 1933, as amended from time to time.

 

“Shelf Additional
Interest Date” shall have the meaning set forth in Section 2(d) hereof.

 

“Shelf Effectiveness Period”
shall have the meaning set forth in Section 2(b) hereof.

 

“Shelf Registration”
shall mean a registration effected pursuant to Section 2(b) hereof.

 

“Shelf Registration
Statement” shall mean a “shelf” registration statement of the Company and the
Guarantors that covers all or a portion of the Registrable Securities (but no
other securities unless approved by a majority of the Holders whose Registrable
Securities are to be covered by such Shelf Registration Statement) on an
appropriate form under Rule 415 under the Securities Act, or any similar rule that
may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein or deemed a part thereof, all
exhibits thereto and any document incorporated by reference therein.

 

“Shelf Request” shall
have the meaning set forth in Section 2(b) hereof.

 

“Staff” shall mean the
staff of the SEC.

 

“Subsidiary Guarantees”
shall mean the guarantees of the Securities and Exchange Securities by the
Guarantors under the Indenture.

 

“Target Registration Date”
shall have the meaning set forth in Section 2(d) hereof.

 

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“Trigger Date” shall have
the meaning set forth in Section 2(d) hereof.

 

“Trust Indenture Act”
shall mean the Trust Indenture Act of 1939, as amended from time to time.

 

“Trustee” shall mean the
trustee with respect to the Securities under the Indenture.

 

“Underwriter” shall have
the meaning set forth in Section 3(e) hereof.

 

“Underwritten Offering”
shall mean an offering in which Registrable Securities are sold to an
Underwriter for reoffering to the public.

 

2.                                       Registration
Under the Securities Act.  (a) 
To the extent not prohibited by any applicable law or applicable
interpretations of the Staff, the Company and the Guarantors shall use their
reasonable best efforts to (i) cause to be filed an Exchange Offer
Registration Statement covering an offer to the Holders to exchange all the
Registrable Securities for Exchange Securities and (ii) have such
Registration Statement remain effective until 180 days after the last Exchange
Date for use by one or more Participating Broker-Dealers.  The Company and the Guarantors shall commence
the Exchange Offer promptly after the Exchange Offer Registration Statement is
declared effective by the SEC and use their reasonable best efforts to complete
the Exchange Offer not later than 60 days after such effective date.

 

The Company and the
Guarantors shall commence the Exchange Offer by mailing the related Prospectus,
appropriate letters of transmittal and other accompanying documents to each
Holder stating, in addition to such other disclosures as are required by
applicable law, substantially the following:

 

(i)                                     that
the Exchange Offer is being made pursuant to this Agreement and that all
Registrable Securities validly tendered and not properly withdrawn will be
accepted for exchange;

 

(ii)                                  the
dates of acceptance for exchange (which shall be a period of at least 20
Business Days from the date such notice is mailed) (the “Exchange Dates”);

 

(iii)                               that any Registrable
Security not tendered will remain outstanding and continue to accrue interest
but will not retain any rights under this Agreement, except as otherwise specified
herein;

 

(iv)                              that
any Holder electing to have a Registrable Security exchanged pursuant to the
Exchange Offer will be required to (A) surrender such 

 

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Registrable
Security, together with the appropriate letters of transmittal, to the
institution and at the address (located in the Borough of Manhattan, The City
of New York) and in the manner specified in the notice, or (B) effect such
exchange otherwise in compliance with the applicable procedures of the
depositary for such Registrable Security, in each case prior to the close of
business on the last Exchange Date; and

 

(v)                                 that
any Holder will be entitled to withdraw its election, not later than the close
of business on the last Exchange Date, by (A) sending to the institution
and at the address (located in the Borough of Manhattan, The City of New York)
specified in the notice, a telegram, telex, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of Registrable
Securities delivered for exchange, such other information as may be reasonably
required to identify the Securities to be withdrawn and a statement that such
Holder is withdrawing its election to have such Securities exchanged or (B) effecting
such withdrawal in compliance with the applicable procedures of the depositary
for the Registrable Securities.

 

As a condition to participating in the Exchange Offer, a
Holder will be required to represent to the Company and the Guarantors that (i) any
Exchange Securities to be received by it will be acquired in the ordinary
course of its business, (ii) at the time of the commencement of the
Exchange Offer it has no arrangement or understanding with any Person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Securities in violation of the Securities Act, (iii) it is
not an “affiliate” (within the meaning of Rule 405 under the Securities
Act) of the Company or any Guarantor, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer that will receive Exchange Securities for its own account in
exchange for Registrable Securities that were acquired as a result of
market-making or other trading activities, then such Holder will deliver a
Prospectus (or, to the extent permitted by law, make available a Prospectus to
purchasers) in connection with any resale of such Exchange Securities.

 

As soon as practicable
after the last Exchange Date, the Company and the Guarantors shall:

 

(i)                                     accept
for exchange Registrable Securities or portions thereof validly tendered and
not properly withdrawn pursuant to the Exchange Offer; and

 

(ii)                                  deliver,
or cause to be delivered, to the Trustee for cancellation all Registrable
Securities or portions thereof so accepted for exchange by the Company and
issue, and cause the Trustee to promptly authenticate and deliver to each
Holder, Exchange Securities equal in principal amount to 

 

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the principal amount of the Registrable Securities
tendered by such Holder.

 

The Company and the
Guarantors shall use their reasonable best efforts to complete the Exchange
Offer as provided above and shall comply with the applicable requirements of
the Securities Act, the Exchange Act and other applicable laws and regulations
in connection with the Exchange Offer. 
The Exchange Offer shall not be subject to any conditions, other than
that the Exchange Offer does not violate any applicable law or applicable
interpretations of the Staff and customary conditions relating to the delivery
of Securities or other actions customarily taken by Holders participating in
the Exchange Offer or the execution and delivery of customary documentation
relating to the Exchange Offer.

 

(b)                                 In
the event that (i) the Company and the Guarantors determine that the
Exchange Offer Registration provided for in Section 2(a) above is not
available or may not be completed as soon as practicable after the last
Exchange Date because it would violate any applicable law or applicable
interpretations of the Staff, (ii) the Exchange Offer is not for any other
reason completed by February 24, 2008, (iii) a Holder participating
in the Exchange Offer does not receive Exchange Securities on the date of the
exchange that may be sold without restriction under state and federal
securities laws (other than due solely to the status of such Holder as an
affiliate of the Company within the meaning of the Securities Act) and notifies
the Company within 30 days after such Holder first becomes aware of such
restrictions or (iv) upon receipt of a written request (a “Shelf Request”)
from any Initial Purchaser representing that it holds Registrable Securities
that are or were ineligible to be exchanged in the Exchange Offer, the Company
and the Guarantors shall use their reasonable best efforts to cause to be
filed, as soon as practicable after such determination, date or Shelf Request,
as the case may be, a Shelf Registration Statement providing for the sale of
all the Registrable Securities by the Holders thereof and to have such Shelf
Registration Statement become effective.

 

In the event that the
Company and the Guarantors are required to file a Shelf Registration Statement
pursuant to clause (iii) of the preceding sentence, the Company and the
Guarantors shall use their reasonable best efforts to file and have become
effective both an Exchange Offer Registration Statement pursuant to Section 2(a) with
respect to all Registrable Securities and a Shelf Registration Statement (which
may be a combined Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable Securities held by
the Initial Purchasers after completion of the Exchange Offer.

 

The Company and the
Guarantors agree to use their reasonable best efforts to keep the Shelf
Registration Statement continuously effective until the 

 

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earliest of (i) the
expiration of the period referred to in Rule 144(k) (or any similar rule then
in force, but not Rule 144A) under the Securities Act with respect to the
Registrable Securities, (ii) the second anniversary of the date hereof and
(iii) such time as all the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (the “Shelf Effectiveness Period”). 
The Company and the Guarantors further agree to supplement or amend the
Shelf Registration Statement and the related Prospectus if required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Shelf Registration Statement or by the Securities Act or
by any other rules and regulations thereunder or if reasonably requested
by a Holder of Registrable Securities with respect to information relating to
such Holder, and to use their reasonable best efforts to cause any such
amendment to become effective, if required, and such Shelf Registration
Statement and Prospectus to become usable as soon as thereafter
practicable.  The Company and the
Guarantors agree to furnish to the Holders of Registrable Securities registered
on such Shelf Registration Statement copies of any such supplement or amendment  promptly after its being used or filed with
the SEC.

 

(c)                                  The
Company and the Guarantors shall pay all Registration Expenses in connection
with any registration pursuant to Section 2(a) or Section 2(b) hereof.  Each Holder shall pay all underwriting
discounts and commissions, brokerage commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder’s Registrable Securities
pursuant to the Shelf Registration Statement.

 

(d)                                 An
Exchange Offer Registration Statement pursuant to Section 2(a) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC.  A Shelf
Registration Statement pursuant to Section 2(b) hereof will not be
deemed to have become effective unless it has been declared effective by the
SEC or is automatically effective upon filing with the SEC as provided by Rule 462
under the Securities Act.

 

                                                In
the event that either the Exchange Offer is not completed or the Shelf
Registration Statement, if required pursuant to Section 2(b)(i) or
2(b)(ii) hereof, is not effective on or prior to February 24, 2008
(the “Target Registration Date”), the interest rate on the Registrable
Securities will be increased by (i) 0.25% per annum for the first 90-day
period immediately following the Target Registration Date and (ii) an
additional 0.25% per annum with respect to each subsequent 90-day period, in
each case until the Exchange Offer is completed or the Shelf Registration
Statement, if required hereby, becomes effective or the Securities become
freely tradable by a non-affiliate under the Securities Act, up to a maximum
increase of 1.00% per annum.  In the
event that the Company receives a Shelf Request pursuant to Section 2(b)(iii),
and the Shelf Registration Statement required to be filed thereby has not
become effective by the later of 

 

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February 24, 2008 or
(y) 90 days after delivery of such Shelf Request (such later date, the “Shelf
Additional Interest Date”), then the interest rate on the Registrable
Securities will be increased by (i) 0.25% per annum for the first 90-day
period payable commencing from one day after the Shelf Additional Interest Date
and (ii) an additional 0.25% per annum with respect to each subsequent
90-day period, in each case until the Shelf Registration Statement is effective
or the Securities become freely tradable by a non-affiliate under the
Securities Act, up to a maximum increase of 1.00% per annum.

 

If the Shelf Registration Statement, if required
hereby, is effective and thereafter either ceases to be effective or the
Prospectus contained therein ceases to be usable, in each case whether or not
permitted by this Agreement, at any time during the Shelf Effectiveness Period,
and such failure to remain effective or usable exists for more than 30 days
(whether or not consecutive) in any 12-month period (the 30th such date, the “Trigger
Date”), then the interest rate on the Registrable Securities will be increased
by (i) 0.25% per annum for the first 90-day period immediately following
the Trigger Date and (ii) an additional 0.25% per annum with respect to
each subsequent 90-day period, up to a maximum increase of 1.0% per annum, and
ending on such date that the Shelf Registration Statement is again effective or
the Prospectus again becomes usable.

 

(e)                                  Without
limiting the remedies available to the Initial Purchasers and the Holders, the
Company and the Guarantors acknowledge that any failure by the Company or the
Guarantors to comply with their obligations under Section 2(a) and Section 2(b) hereof
may result in material irreparable injury to the Initial Purchasers or the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such
relief as may be required to specifically enforce the Company’s and the
Guarantors’ obligations under Section 2(a) and Section 2(b) hereof.

 

(f)                                    The
Company represents, warrants and covenants that it (including its agents and
representatives) will not prepare, make, use, authorize, approve or refer to
any Free Writing Prospectus.

 

3.                                       Registration
Procedures.  (a) In connection
with their obligations pursuant to Section 2(a) and Section 2(b) hereof,
the Company and the Guarantors shall:

 

(i)                                     prepare
and file with the SEC a Registration Statement on the appropriate form under
the Securities Act, which form (x) shall be selected by the Company and
the Guarantors, (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the Holders thereof and
(z) shall comply as to form in all material respects with the requirements
of the 

 

10

 

applicable form and include all financial statements required by the
SEC to be filed therewith; and use their reasonable best efforts to cause such
Registration Statement to become effective and remain effective for the
applicable period in accordance with Section 2 hereof;

 

(ii)                                  prepare
and file with the SEC such amendments and post-effective amendments to each
Registration Statement as may be necessary to keep such Registration Statement
effective for the applicable period in accordance with Section 2 hereof
and cause each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424 under
the Securities Act; and keep each Prospectus current during the period
described in Section 4(3) of and Rule 174 under the Securities
Act that is applicable to transactions by brokers or dealers with respect to
the Registrable Securities or Exchange Securities;

 

(iii)                               in
the case of a Shelf Registration, furnish to each Holder of Registrable
Securities included on such Shelf Registration Statement, to counsel for the
Initial Purchasers, to counsel for such Holders and to each Underwriter of an
Underwritten Offering of Registrable Securities, if any, without charge, as
many copies of each Prospectus or preliminary prospectus, and any amendment or
supplement thereto, as such Holder, counsel or Underwriter may reasonably
request in order to facilitate the sale or other disposition of the Registrable
Securities thereunder; and the Company and the Guarantors consent to the use of
such Prospectus, preliminary prospectus and any amendment or supplement thereto
in accordance with applicable law by each of the Holders of Registrable
Securities and any such Underwriters in connection with the offering and sale
of the Registrable Securities covered by and in the manner described in such
Prospectus, preliminary prospectus or any amendment or supplement thereto in
accordance with applicable law;

 

(iv)                              use
their reasonable best efforts to register or qualify the Registrable Securities
under all applicable state securities or blue sky laws of such jurisdictions as
any Holder of Registrable Securities covered by a Registration Statement shall
reasonably request in writing by the time the applicable Registration Statement
becomes effective; cooperate with such Holders in connection with any filings
required to be made with the National Association of Securities Dealers, Inc.;
and do any and all other acts and things that may be reasonably necessary or
advisable to enable each Holder to complete the disposition in each such
jurisdiction of the Registrable Securities owned by such Holder; provided
that neither the Company nor any Guarantor shall be required to (1) qualify
as a foreign corporation or other entity or as a dealer in securities in any
such jurisdiction where it would not otherwise be required to so qualify, (2) file
any general consent to service of process in any such jurisdiction or (3) subject
itself to taxation in any such jurisdiction if it is not so subject;

 

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(v)                                 notify
counsel for the Initial Purchasers and, in the case of a Shelf Registration,
notify each Holder of Registrable Securities included on such Shelf
Registration Statement and counsel for such Holders promptly and, if requested
by any such Holder or counsel, confirm such advice in writing (1) when a
Registration Statement is effective, when any post-effective amendment thereto
has been filed and becomes effective and when any amendment or supplement to
the Prospectus has been filed, (2) of any request by the SEC or any state
securities authority for amendments and supplements to a Registration Statement
or Prospectus or for additional information after the Registration Statement
has become effective, (3) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
including the receipt by the Company of any notice of objection of the SEC to
the use of a Shelf Registration Statement or any post-effective amendment
thereto pursuant to Rule 401(g)(2) under the Securities Act, (4) if,
between the applicable effective date of a Shelf Registration Statement and the
closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company or any Guarantor contained in any
underwriting agreement, securities sales agreement or other similar agreement,
if any, relating to an offering of such Registrable Securities cease to be true
and correct in all material respects or if the Company or any Guarantor
receives any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the initiation of
any proceeding for such purpose, (5) of the happening of any event during
the period a Registration Statement is effective that makes any statement made
in such Registration Statement or the related Prospectus untrue in any material
respect or that requires the making of any changes in such Registration
Statement or Prospectus in order to make the statements therein not misleading
and (6) of any determination by the Company or any Guarantor that a
post-effective amendment to a Registration Statement or any amendment or
supplement to the Prospectus would be appropriate;

 

(vi)                              use
their reasonable best efforts to obtain the withdrawal of any order suspending
the effectiveness of a Registration Statement or, in the case of a Shelf
Registration, the resolution of any objection of the SEC pursuant to Rule 401(g)(2),
including by filing an amendment to such Shelf Registration Statement on the
proper form, at the earliest possible moment and provide immediate notice to
each Holder of the withdrawal of any such order or such resolution;

 

(vii)                           in the
case of a Shelf Registration, furnish to each Holder of Registrable Securities
included on such Shelf Registration Statement, without charge, at least one
conformed copy of each Registration Statement and any post-effective amendment
thereto (without any documents incorporated therein by reference or exhibits
thereto, unless requested in writing);

 

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(viii)                        in the
case of a Shelf Registration, cooperate with the Holders of Registrable
Securities included on such Shelf Registration Statement to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends and enable such
Registrable Securities to be issued in such denominations and registered in
such names (consistent with the provisions of the Indenture) as such Holders
may reasonably request at least one Business Day prior to the closing of any
sale of Registrable Securities;

 

(ix)                                in
the case of a Shelf Registration, upon the occurrence of any event contemplated
by Section 3(a)(v)(5) hereof, use their reasonable best efforts to
prepare and file with the SEC a supplement or post-effective amendment to such
Shelf Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered (or, to the extent permitted by law, made available) to
purchasers of the Registrable Securities, such Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and the Company and the Guarantors shall notify
the Holders of Registrable Securities to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and such Holders
hereby agree to suspend use of the Prospectus until the Company and the
Guarantors have amended or supplemented the Prospectus to correct such
misstatement or omission;

 

(x)                                   a
reasonable time prior to the filing of any Registration Statement, any
Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus other than any document that is to be incorporated
by reference into a Registration Statement or a Prospectus after initial filing
of a Registration Statement, provide copies of such document to the Initial
Purchasers and their counsel (and, in the case of a Shelf Registration
Statement, to the Holders of Registrable Securities included on such Shelf
Registration Statement and their counsel) and make such of the representatives
of the Company and the Guarantors as shall be reasonably requested by the
Initial Purchasers or their counsel (and, in the case of a Shelf Registration
Statement, the Holders of Registrable Securities included on such Shelf
Registration Statement or their counsel) available for discussion of such
document; and the Company and the Guarantors shall not, at any time after
initial filing of a Registration Statement, use or file any Prospectus, any
amendment of or supplement to a Registration Statement or a Prospectus, or any
document that is to be incorporated by reference into a Registration Statement
or a Prospectus, of which the Initial Purchasers and their counsel (and, in the
case of a Shelf Registration Statement, the Holders of Registrable Securities
and their counsel) shall not have previously been advised and furnished a copy
or to which the 

 

13

 

Initial Purchasers or their counsel (and, in the case of a Shelf
Registration Statement, the Holders of Registrable Securities or their counsel)
shall object;

 

(xi)                                use
reasonable best efforts to obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the initial
effective date of a Registration Statement;

 

(xii)                             use
reasonable best efforts to cause the Indenture to be qualified under the Trust
Indenture Act in connection with the registration of the Exchange Securities or
Registrable Securities, as the case may be; cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for the
Indenture to be so qualified in accordance with the terms of the Trust
Indenture Act; and execute, and use their reasonable best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes and
all other forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;

 

(xiii)                          in the
case of a Shelf Registration, make available for inspection by a representative
of the Holders of the Registrable Securities (an “Inspector”), any Underwriter
participating in any disposition pursuant to such Shelf Registration Statement,
any attorneys and accountants designated by a majority of the Holders of
Registrable Securities to be included in such Shelf Registration and any
attorneys and accountants designated by such Underwriter, at reasonable times
and in a reasonable manner, all pertinent financial and other records,
documents and properties of the Company and its subsidiaries, and cause the
respective officers, directors and employees of the Company and the Guarantors
to supply all information reasonably requested by any such Inspector,
Underwriter, attorney or accountant in connection with a Shelf Registration
Statement; provided that if any such information is identified by
the Company or any Guarantor as being confidential or proprietary, each Person
receiving such information shall take such actions as are reasonably necessary
to protect the confidentiality of such information to the extent such action is
otherwise not inconsistent with, an impairment of or in derogation of the
rights and interests of any Inspector, Holder or Underwriter);

 

(xiv)                         in the
case of a Shelf Registration, use their reasonable best efforts to cause all
Registrable Securities to be listed on any securities exchange or any automated
quotation system on which similar securities issued or guaranteed by the
Company or any Guarantor are then listed if requested by the Majority Holders,
to the extent such Registrable Securities satisfy applicable listing
requirements; (xv) if reasonably requested by any Holder of Registrable
Securities covered by a Shelf Registration Statement, promptly include in a
Prospectus supplement or post-effective amendment such information with respect
to such Holder as such Holder reasonably requests to be included therein and
make all required filings of such Prospectus supplement or such 

 

14

 

post-effective amendment as soon as the Company has received
notification of the matters to be so included in such filing;

 

(xv)                            in the
case of a Shelf Registration, enter into such customary agreements and take all
such other actions in connection therewith (including those requested by the
Holders of a majority in principal amount of the Registrable Securities covered
by the Shelf Registration Statement) in order to expedite or facilitate the
disposition of such Registrable Securities including, but not limited to, an
Underwritten Offering and in such connection, (1) to the extent possible,
make such representations and warranties to the Holders and any Underwriters of
such Registrable Securities with respect to the business of the Company and its
subsidiaries and the Registration Statement, Prospectus and documents
incorporated by reference or deemed incorporated by reference, if any, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (2) obtain opinions of counsel to the Company and the
Guarantors (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to the Holders and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Securities, covering the matters customarily covered in opinions
requested in underwritten offerings, (3) obtain “comfort” letters from the
independent certified public accountants of the Company and the Guarantors
(and, if necessary, any other certified public accountant of any subsidiary of
the Company or any Guarantor, or of any business acquired by the Company or any
Guarantor for which financial statements and financial data are or are required
to be included in the Registration Statement) addressed to each selling Holder
(to the extent permitted by applicable professional standards) and Underwriter
of Registrable Securities, such letters to be in customary form and covering
matters of the type customarily covered in “comfort” letters in connection with
underwritten offerings, including but not limited to financial information
contained in any preliminary prospectus or Prospectus and (4) deliver such
documents and certificates as may be reasonably requested by the Holders of a
majority in principal amount of the Registrable Securities being sold or the
Underwriters, and which are customarily delivered in underwritten offerings, to
evidence the continued validity of the representations and warranties of the
Company and the Guarantors made pursuant to clause (1) above and to
evidence compliance with any customary conditions contained in an underwriting
agreement; it being agreed that the representations and warranties, opinions of
counsel and comfort letters delivered in connection with the initial offering
of the Securities are customary; and

 

(xvi)                         so long
as any Registrable Securities remain outstanding, cause each Additional
Guarantor upon the creation or acquisition by the Company of such Additional
Guarantor, to execute a counterpart to this Agreement in the 

 

15

 

form attached hereto as Annex A and to deliver such counterpart to the
Initial Purchasers no later than five Business Days following the execution
thereof.

 

(b)                                 In
the case of a Shelf Registration Statement, the Company may require each Holder
of Registrable Securities to furnish to the Company such information regarding
such Holder and the proposed disposition by such Holder of such Registrable
Securities as the Company and the Guarantors may from time to time reasonably
request in writing; provided that if such Holder fails to provide the requested
information within 20 Business Days, the Company may exclude such Holder’s
Registrable Securities from such Shelf Registration Statement until such time
as the information is provided.

 

(c)                                  In
the case of a Shelf Registration Statement, each Holder of Registrable
Securities covered in such Shelf Registration Statement agrees that, upon
receipt of any notice from the Company and the Guarantors of the happening of
any event of the kind described in Section 3(a)(v)(3) or 3(a)(v)(5) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the Shelf Registration Statement until such Holder’s receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(a)(ix) hereof
and, if so directed by the Company and the Guarantors, such Holder will deliver
to the Company and the Guarantors all copies in its possession, other than
permanent file copies then in such Holder’s possession, of the Prospectus
covering such Registrable Securities that is current at the time of receipt of
such notice.

 

(d)                                 If
the Company and the Guarantors shall give any notice to suspend the disposition
of Registrable Securities pursuant to a Registration Statement, the Company and
the Guarantors shall extend the period during which such Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holders of such Registrable Securities shall
have received copies of the supplemented or amended Prospectus necessary to
resume such dispositions. The Company and the Guarantors may give any such
notice only twice during any 365-day period, any such suspensions shall not
exceed 45 days for each suspension and there shall not be more than two
suspensions in effect during any 365-day period.

 

(e)                                  The
Holders of Registrable Securities covered by a Shelf Registration Statement who
desire to do so may sell such Registrable Securities in an Underwritten
Offering.  In any such Underwritten
Offering, the investment bank or investment banks and manager or managers (each
an “Underwriter”) that will administer the offering will be selected by the
Holders of a majority in principal amount of the Registrable Securities
included in such offering and reasonably acceptable to the Company.  However, each Holder agrees that, neither
such Holder nor any Underwriter participating in any disposition pursuant 

 

16

 

to any Registration Statement on such Holder’s behalf, will make any
offer relating to the Registrable Securities that would constitute an Issuer
Free Writing Prospectus (as defined in Rule 433 under the Act) or that
would otherwise constitute a “free writing prospectus” (as defined in Rule 405
under the Act) required to be filed by the Company with the Commission or
retained by the Company under Rule 433 of the Securities Act, unless it
has obtained the prior written consent of the Company.

 

4.                                       Participation
of Broker-Dealers in Exchange Offer. 
(a)  The Company has been advised that the Staff has taken the
position that any broker-dealer that receives Exchange Securities for its own
account in the Exchange Offer in exchange for Securities that were acquired by
such broker-dealer as a result of market-making or other trading activities (a “Participating
Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of the
Securities Act and must deliver a prospectus  meeting the requirements of
the Securities Act in connection with any resale of such Exchange Securities.

 

The Company and the
Guarantors have been advised that it is the Staff’s position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means
by which Participating Broker-Dealers may resell the Exchange Securities,
without naming the Participating Broker-Dealers or specifying the amount of
Exchange Securities owned by them, such Prospectus may be delivered by
Participating Broker-Dealers (or, to the extent permitted by law, made
available to purchasers) to satisfy their prospectus delivery obligation
under the Securities Act in connection with resales of Exchange Securities for
their own accounts, so long as the Prospectus otherwise meets the requirements
of the Securities Act.

 

(b)                                 In
light of the above, and notwithstanding the other provisions of this Agreement,
the Company and the Guarantors agree to amend or supplement the Prospectus
contained in the Exchange Offer Registration Statement for a period of up to
180 days after the last Exchange Date (as such period may be extended pursuant
to Section 3(d) of this Agreement), in order to expedite or
facilitate the disposition of any Exchange Securities by Participating
Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above.  The Company and the Guarantors further agree
that Participating Broker-Dealers shall be authorized to deliver such
Prospectus (or, to the extent permitted by law, make available) during such
period in connection with the resales contemplated by this Section 4.

 

(c)                                  The
Initial Purchasers shall have no liability to the Company, any Guarantor or any
Holder with respect to any request that they may make pursuant to Section 4(b) above.

 

17

 

5.                                       Indemnification
and Contribution.  (a)  The
Company and each Guarantor, jointly and severally, agree to indemnify and hold
harmless each Initial Purchaser and each Holder, their respective affiliates,
directors and officers and each Person, if any, who controls any Initial
Purchaser or any Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, legal
fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred),
joint or several, that arise out of, or are based upon, (1) any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or (2) any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus, any Free
Writing Prospectus used in violation of this Agreement or any “issuer
information” (“Issuer Information”) filed or required to be filed pursuant to Rule 433(d) under
the Securities Act, or any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in each case
except insofar as such losses, claims, damages or liabilities arise out of, or
are based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information furnished
to the Company in writing through JPMorgan, or any selling Holder, respectively
expressly for use therein.  In connection
with any Underwritten Offering permitted by Section 3, the Company and the
Guarantors, jointly and severally, will also indemnify the Underwriters, if
any, selling brokers, dealers and similar securities industry professionals
participating in the distribution, their respective affiliates and each Person who
controls such Persons (within the meaning of the Securities Act and the
Exchange Act) to the same extent as provided above with respect to the
indemnification of the Holders, if requested in connection with any
Registration Statement, any Prospectus, any Free Writing Prospectus or any
Issuer Information.

 

                                                (b)                                 Each
Holder agrees, severally and not jointly, to indemnify and hold harmless the
Company, the Guarantors, the Initial Purchasers and the other selling Holders,
the directors of the Company and the Guarantors, each officer of the Company
and the Guarantors who signed the Registration Statement and each Person, if
any, who controls the Company, the Guarantors, any Initial Purchaser and any
other selling Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the indemnity
set forth in paragraph (a) above, but only with respect to any losses,
claims, damages or liabilities that arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with any information furnished to the Company in writing

 

18

 

by such Holder expressly
for use in any Registration Statement and any Prospectus.

 

(c)                                  If
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnification may be sought pursuant to either paragraph (a) or
(b) above, such Person (the “Indemnified Person”) shall promptly notify
the Person against whom such indemnification may be sought (the “Indemnifying
Person”) in writing; provided that the failure to notify the Indemnifying
Person shall not relieve it from any liability that it may have under this Section 5
except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have to an Indemnified Person
otherwise than under this Section 5. 
If any such proceeding shall be brought or asserted against an
Indemnified Person and it shall have notified the Indemnifying Person thereof,
the Indemnifying Person shall retain counsel reasonably satisfactory to
the Indemnified Person to represent the Indemnified Person and any others
entitled to indemnification pursuant to this Section 5 that the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding, as incurred.  In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary; (ii) the Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person; (iii) the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it that are different
from or in addition to those available to the Indemnifying Person; or (iv) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. 
It is understood and agreed that the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred.  Any such separate firm (x) for any
Initial Purchaser, its affiliates, directors and officers and any control
Persons of such Initial Purchaser shall be designated in writing by JPMorgan, (y) for
any Holder, its directors and officers and any control Persons of such Holder
shall be designated in writing by the Majority Holders and (z) in all
other cases shall be designated in writing by the Company.  The Indemnifying Person shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the Indemnifying Person agrees to indemnify each Indemnified Person 

 

19

 

from and against any loss
or liability by reason of such settlement or judgment.  No Indemnifying Person shall, without the
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (A) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to or
any admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.

 

(d)                                 If
the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors from the offering of the Securities and the
Exchange Securities, on the one hand, and by the Holders from receiving Securities
or Exchange Securities registered under the Securities Act, on the other hand,
or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative fault of
the Company and the Guarantors on the one hand and the Holders on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations.  The relative fault of
the Company and the Guarantors on the one hand and the Holders on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and the
Guarantors or by the Holders and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.

 

(e)                                  The
Company, the Guarantors and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above.  The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to
in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with any such action or claim.  Notwithstanding the provisions of this Section 5,
in no event shall a Holder be 

 

20

 

required to contribute
any amount in excess of the amount by which the
total price at which the Securities or Exchange Securities sold by such Holder exceeds
the amount of any damages that such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.  The
Holders’ obligations to contribute pursuant to this Section 5 are several
and not joint.

 

(f)                                    The
remedies provided for in this Section 5 are not exclusive and shall not
limit any rights or remedies that may otherwise be available to any Indemnified
Person at law or in equity.

 

(g)                                 The
indemnity and contribution provisions contained in this Section 5 shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf
of the Initial Purchasers or any Holder or any Person controlling any Initial
Purchaser or any Holder, or by or on behalf of the Company or the Guarantors or
the officers or directors of or any Person controlling the Company or the
Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any
sale of Registrable Securities pursuant to a Shelf Registration Statement.

 

6.                                       General.

 

(a)                                  No Inconsistent Agreements.   The Company and the Guarantors represent,
warrant and agree that (i) the rights granted to the Holders hereunder do
not in any way conflict with and are not inconsistent with the rights granted
to the holders of any other outstanding securities issued or guaranteed by the
Company or any Guarantor under any other agreement and (ii) neither the
Company nor any Guarantor has entered into, or on or after the date of this
Agreement will enter into, any agreement that is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof.

 

(b)                                 Amendments and Waivers.   The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company and the Guarantors have obtained the written consent
of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or consent; provided that no amendment, modification,
supplement, waiver or consent to any departure from the provisions of Section 5
hereof shall be effective as against any Holder of Registrable Securities
unless consented to in writing by such Holder. 
Any amendments, 

 

21

 

modifications, supplements, waivers or consents pursuant to this Section 6(b) shall
be by a writing executed by each of the parties hereto.

 

(c)                                  Notices.  Except as
otherwise specified herein, all notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the
provisions of this Section 6(c), which address initially is, with respect
to the Initial Purchasers, the address set forth in the Purchase Agreement; (ii) if
to the Company and the Guarantors, initially at the Company’s address set forth
in the Purchase Agreement and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 6(c); and (iii) to
such other persons at their respective addresses as provided in the Purchase
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c).  All such notices and communications shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed or e-mailed; when receipt is
acknowledged, if telecopied; and on the next Business Day if timely delivered
to an air courier guaranteeing overnight delivery.  Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person giving the same to
the Trustee, at the address specified in the Indenture.

 

(d)                                 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Purchase Agreement or
the Indenture.  If any transferee of any
Holder shall acquire Registrable Securities in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof.  The Initial Purchasers (in their capacity as
Initial Purchasers) shall have no liability or obligation to the Company or the
Guarantors with respect to any failure by any other Holder to comply with, or
any breach by any other Holder of, any of the obligations of such Holder under
this Agreement.

 

(e)                                  Third-Party Beneficiaries. 
Each Holder shall be a third-party beneficiary to the agreements made
hereunder between the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, and shall have the right to enforce such
agreements directly to the extent it deems 

 

22

 

such enforcement necessary or advisable to protect its rights or the
rights of other Holders hereunder.

 

(f)                                    Counterparts. This Agreement may be signed on counterparts
(which may include counterparts delivered by any standard forum of
telecommunication), each of which shall be an original and all of which
together shall constitute one and the same instrument.

 

(g)                                 Headings.  The
headings in this Agreement are for convenience of reference only, are not a
part of this Agreement and shall not limit or otherwise affect the meaning
hereof.

 

(h)                                 Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.

 

(i)                                     Entire Agreement; Severability.  This
Agreement contains the entire agreement between the parties relating to the
subject matter hereof and supersedes all oral statements and prior writings
with respect thereto.  If any term,
provision, covenant or restriction contained in this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable or against
public policy, the remainder of the terms, provisions, covenants and
restrictions contained herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. 
The Company, the Guarantors and the Initial Purchasers shall endeavor in
good faith negotiations to replace the invalid, void or unenforceable
provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, void or unenforceable provisions.

 

23

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first written above.

 

	
   

  	
  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

  

 

Registration Rights Agreement 

 

 

	
   

  	
  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

  

 

Registration Rights Agreement 

 

 

	
   

  	
  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

  

 

Registration Rights Agreement 

 

 

Confirmed and accepted as
of the date first above written:

 

J.P. MORGAN SECURITIES
INC.

 

For itself and on behalf
of the

 several Initial Purchasers

 

 

	
  By:

  	
   

  	
   

  
	
  Authorized
  Signatory

  	
   

  

 

Registration Rights Agreement 

 

 

Annex A

 

Counterpart to Registration
Rights Agreement

 

The undersigned hereby
absolutely, unconditionally and irrevocably agrees as a Guarantor (as defined
in the Registration Rights Agreement, dated as of March 2, 2007, by and
among the Company, a Delaware corporation, the guarantors party thereto and
J.P. Morgan Securities Inc., on behalf of itself and the other Initial
Purchasers) to be bound by the terms and provisions of such Registration Rights
Agreement.

 

IN WITNESS WHEREOF, the
undersigned has executed this counterpart as of                               .

 

	
   

  	
  [NAME]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:Exhibit 10.1

 

EXECUTION COPY

 

 

CREDIT AGREEMENT

 

Dated as of March 2, 2007

 

among

 

DOCTOR ACQUISITION CO.,

 

RDA HOLDING CO.,

 

THE READER’S DIGEST ASSOCIATION, INC.,

 

THE OVERSEAS BORROWERS PARTY HERETO,

 

The Lenders Party Hereto

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

CITICORP NORTH AMERICA, INC. and

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

as Co-Syndication Agents,

 

and

 

THE ROYAL BANK OF SCOTLAND PLC,

as Documentation Agent

 

 

 

 

J.P. MORGAN SECURITIES INC.,

CITIGROUP GLOBAL MARKETS INC.,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

and RBS SECURITIES CORPORATION,

as Co-Lead Arrangers and Joint Bookrunners

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

  	
  2

  
	
   

  	
   

  
	
  SECTION 1.01.

  	
  Defined Terms

  	
  2

  
	
  SECTION 1.02.

  	
  Other Interpretive Provisions

  	
  48

  
	
  SECTION 1.03.

  	
  Accounting Terms

  	
  48

  
	
  SECTION 1.04.

  	
  Rounding

  	
  48

  
	
  SECTION 1.05.

  	
  References to Agreements, Laws, Etc

  	
  49

  
	
  SECTION 1.06.

  	
  Times of Day

  	
  49

  
	
  SECTION 1.07.

  	
  Timing of Payment of Performance

  	
  49

  
	
  SECTION 1.08.

  	
  Currency Equivalents Generally

  	
  49

  
	
  SECTION 1.09.

  	
  Change of Currency

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS

  	
  50

  
	
   

  	
   

  
	
  SECTION 2.01.

  	
  The Loans

  	
  50

  
	
  SECTION 2.02.

  	
  Borrowings, Conversions and Continuations of Loans

  	
  51

  
	
  SECTION 2.03.

  	
  Letters of Credit

  	
  52

  
	
  SECTION 2.04.

  	
  Swing Line Loans

  	
  59

  
	
  SECTION 2.05.

  	
  Prepayments

  	
  61

  
	
  SECTION 2.06.

  	
  Termination or Reduction of Commitments

  	
  64

  
	
  SECTION 2.07.

  	
  Repayment of Loans

  	
  65

  
	
  SECTION 2.08.

  	
  Interest

  	
  65

  
	
  SECTION 2.09.

  	
  Fees

  	
  66

  
	
  SECTION 2.10.

  	
  Computation of Interest and Fees

  	
  66

  
	
  SECTION 2.11.

  	
  Evidence of Indebtedness

  	
  66

  
	
  SECTION 2.12.

  	
  Payments Generally

  	
  67

  
	
  SECTION 2.13.

  	
  Sharing of Payments

  	
  69

  
	
  SECTION 2.14.

  	
  Incremental Credit Extensions

  	
  70

  
	
  SECTION 2.15.

  	
  Overseas Borrower Costs

  	
  73

  
	
   

  	
   

  	
   

  
	
  ARTICLE III TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

  	
  73

  
	
   

  	
   

  
	
  SECTION 3.01.

  	
  Taxes

  	
  73

  
	
  SECTION 3.02.

  	
  Illegality

  	
  76

  
	
  SECTION 3.03.

  	
  Inability to Determine Rates

  	
  76

  
	
  SECTION 3.04.

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

  	
  76

  
	
  SECTION 3.05.

  	
  Funding Losses

  	
  78

  
	
  SECTION 3.06.

  	
  Matters Applicable to All Requests for Compensation

  	
  78

  
	
  SECTION 3.07.

  	
  Replacement of Lenders under Certain Circumstances

  	
  79

  
	
  SECTION 3.08.

  	
  Survival

  	
  80

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

  	
  80

  
	
   

  	
   

  
	
  SECTION 4.01.

  	
  Conditions of Initial Credit Extension

  	
  80

  
	
  SECTION 4.02.

  	
  Conditions to All Credit Extensions

  	
  83

  
	
  SECTION 4.03.

  	
  Conditions of Initial Credit Extension to Overseas Borrower

  	
  84

  
				

 

i

 

	
  ARTICLE V REPRESENTATIONS AND WARRANTIES

  	
  85

  
	
   

  	
   

  
	
  SECTION 5.01.

  	
  Existence, Qualification and Power; Compliance with Laws

  	
  85

  
	
  SECTION 5.02.

  	
  Authorization; No Contravention

  	
  85

  
	
  SECTION 5.03.

  	
  Governmental Authorization; Other Consents

  	
  85

  
	
  SECTION 5.04.

  	
  Binding Effect

  	
  86

  
	
  SECTION 5.05.

  	
  Financial Statements; No Material Adverse Effect

  	
  86

  
	
  SECTION 5.06.

  	
  Litigation

  	
  87

  
	
  SECTION 5.07.

  	
  No Default

  	
  87

  
	
  SECTION 5.08.

  	
  Ownership of Property; Liens

  	
  87

  
	
  SECTION 5.09.

  	
  Environmental Compliance

  	
  87

  
	
  SECTION 5.10.

  	
  Taxes

  	
  88

  
	
  SECTION 5.11.

  	
  ERISA Compliance

  	
  88

  
	
  SECTION 5.12.

  	
  Subsidiaries; Equity Interests

  	
  89

  
	
  SECTION 5.13.

  	
  Margin Regulations; Investment Company Act

  	
  89

  
	
  SECTION 5.14.

  	
  Disclosure

  	
  89

  
	
  SECTION 5.15.

  	
  Intellectual Property; Licenses, Etc

  	
  89

  
	
  SECTION 5.16.

  	
  Solvency

  	
  90

  
	
  SECTION 5.17.

  	
  Labor Matters

  	
  90

  
	
  SECTION 5.18.

  	
  Collateral

  	
  90

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI AFFIRMATIVE COVENANTS

  	
  91

  
	
   

  	
   

  
	
  SECTION 6.01.

  	
  Financial Statements

  	
  91

  
	
  SECTION 6.02.

  	
  Certificates; Other Information

  	
  92

  
	
  SECTION 6.03.

  	
  Notices

  	
  94

  
	
  SECTION 6.04.

  	
  Payment of Obligations

  	
  94

  
	
  SECTION 6.05.

  	
  Preservation of Existence, Etc

  	
  94

  
	
  SECTION 6.06.

  	
  Maintenance of Properties

  	
  94

  
	
  SECTION 6.07.

  	
  Maintenance of Insurance

  	
  95

  
	
  SECTION 6.08.

  	
  Compliance with Laws

  	
  95

  
	
  SECTION 6.09.

  	
  Inspection Rights

  	
  95

  
	
  SECTION 6.10.

  	
  Covenant to Guarantee Obligations and Give Security

  	
  95

  
	
  SECTION 6.11.

  	
  Compliance with Environmental Laws

  	
  97

  
	
  SECTION 6.12.

  	
  Further Assurances

  	
  98

  
	
  SECTION 6.13.

  	
  Use of Proceeds

  	
  99

  
	
  SECTION 6.14.

  	
  Interest Rate Protection

  	
  99

  
	
  SECTION 6.15.

  	
  Designation of Subsidiaries

  	
  99

  
	
  SECTION 6.16.

  	
  Ownership of Overseas Borrowers

  	
  99

  
	
  SECTION 6.17.

  	
  Post-Closing Covenants

  	
  99

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII NEGATIVE COVENANTS

  	
  100

  
	
   

  	
   

  
	
  SECTION 7.01.

  	
  Liens

  	
  100

  
	
  SECTION 7.02.

  	
  Investments

  	
  103

  
	
  SECTION 7.03.

  	
  Indebtedness

  	
  107

  
	
  SECTION 7.04.

  	
  Fundamental Changes

  	
  110

  
	
  SECTION 7.05.

  	
  Dispositions

  	
  112

  
	
  SECTION 7.06.

  	
  Restricted Payments

  	
  113

  
	
  SECTION 7.07.

  	
  Change in Nature of Business

  	
  115

  
	
  SECTION 7.08.

  	
  Transactions with Affiliates

  	
  115

  

 

ii

 

	
  SECTION 7.09.

  	
  Burdensome Agreements

  	
  116

  
	
  SECTION 7.10.

  	
  Financial Covenant

  	
  116

  
	
  SECTION 7.11.

  	
  Accounting Changes

  	
  117

  
	
  SECTION 7.12.

  	
  Prepayments, Etc. of Indebtedness

  	
  117

  
	
  SECTION 7.13.

  	
  Holding Company

  	
  117

  
	
  SECTION 7.14.

  	
  Capital Expenditures

  	
  118

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES

  	
  119

  
	
   

  	
   

  
	
  SECTION 8.01.

  	
  Events of Default

  	
  119

  
	
  SECTION 8.02.

  	
  Remedies Upon Event of Default

  	
  121

  
	
  SECTION 8.03.

  	
  Exclusion of Immaterial Subsidiaries

  	
  121

  
	
  SECTION 8.04.

  	
  Application of Funds

  	
  122

  
	
  SECTION 8.05.

  	
  Company’s Right to Cure

  	
  123

  
	
  SECTION 8.06.

  	
  CAM Exchange

  	
  123

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX ADMINISTRATIVE AGENT AND OTHER AGENTS

  	
  124

  
	
   

  	
   

  
	
  SECTION 9.01.

  	
  Appointment and Authorization of Agents

  	
  124

  
	
  SECTION 9.02.

  	
  Delegation of Duties

  	
  125

  
	
  SECTION 9.03.

  	
  Liability of Agents

  	
  125

  
	
  SECTION 9.04.

  	
  Reliance by Agents

  	
  126

  
	
  SECTION 9.05.

  	
  Notice of Default

  	
  126

  
	
  SECTION 9.06.

  	
  Credit Decision; Disclosure of Information by Agents

  	
  126

  
	
  SECTION 9.07.

  	
  Indemnification of Agents

  	
  127

  
	
  SECTION 9.08.

  	
  Agents in their Individual Capacities

  	
  127

  
	
  SECTION 9.09.

  	
  Successor Agents

  	
  128

  
	
  SECTION 9.10.

  	
  Administrative Agent May File Proofs of Claim

  	
  128

  
	
  SECTION 9.11.

  	
  Collateral and Guarantee Matters

  	
  129

  
	
  SECTION 9.12.

  	
  Other Agents; Arrangers and Managers

  	
  130

  
	
  SECTION 9.13.

  	
  Appointment of Supplemental Administrative Agents

  	
  130

  
	
   

  	
   

  	
   

  
	
  ARTICLE X MISCELLANEOUS

  	
  131

  
	
   

  	
   

  
	
  SECTION 10.01.

  	
  Amendments, Etc

  	
  131

  
	
  SECTION 10.02.

  	
  Notices and Other Communications; Facsimile Copies

  	
  133

  
	
  SECTION 10.03.

  	
  No Waiver; Cumulative Remedies

  	
  135

  
	
  SECTION 10.04.

  	
  Attorney Costs, Expenses and Taxes

  	
  135

  
	
  SECTION 10.05.

  	
  Indemnification by the Company

  	
  135

  
	
  SECTION 10.06.

  	
  Payments Set Aside

  	
  136

  
	
  SECTION 10.07.

  	
  Successors and Assigns

  	
  137

  
	
  SECTION 10.08.

  	
  Confidentiality

  	
  140

  
	
  SECTION 10.09.

  	
  Setoff

  	
  142

  
	
  SECTION 10.10.

  	
  Interest Rate Limitation

  	
  142

  
	
  SECTION 10.11.

  	
  Counterparts

  	
  142

  
	
  SECTION 10.12.

  	
  Integration

  	
  143

  
	
  SECTION 10.13.

  	
  Survival of Representations and Warranties

  	
  143

  
	
  SECTION 10.14.

  	
  Severability

  	
  143

  
	
  SECTION 10.15.

  	
  Tax Forms

  	
  143

  
	
  SECTION 10.16.

  	
  GOVERNING LAW

  	
  145

  
	
  SECTION 10.17.

  	
  WAIVER OF RIGHT TO TRIAL BY JURY

  	
  146

  

 

iii

 

	
  SECTION 10.18.

  	
  Binding Effect

  	
  146

  
	
  SECTION 10.19.

  	
  Lender Action

  	
  146

  
	
  SECTION 10.20.

  	
  USA PATRIOT Act

  	
  146

  
	
  SECTION 10.21.

  	
  Agent for Service of Process

  	
  146

  
	
  SECTION 10.22.

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

  	
  147

  
	
  SECTION 10.23.

  	
  Judgment Currency

  	
  147

  
	
  SECTION 10.24.

  	
  German Tax Confirmation

  	
  147

  

 

iv

 

	
  SCHEDULES

  
	
   

  
	
   

  	
  1.01A

  	
   

  	
  Certain
  Security Interests and Guarantees

  	
   

  
	
   

  	
  1.01B

  	
   

  	
  Mortgaged
  Properties

  	
   

  
	
   

  	
  1.01C

  	
   

  	
  Management
  Adjustments

  	
   

  
	
   

  	
  1.01D

  	
   

  	
  Excluded
  Subsidiaries

  	
   

  
	
   

  	
  1.01E

  	
   

  	
  Foreign
  Subsidiaries

  	
   

  
	
   

  	
  1.01F

  	
   

  	
  Holdings
  Contractual Obligations

  	
   

  
	
   

  	
  1.01G

  	
   

  	
  Unrestricted
  Subsidiaries

  	
   

  
	
   

  	
  1.01H

  	
   

  	
  Mandatory
  Cost Formulae

  	
   

  
	
   

  	
  1.01I

  	
   

  	
  Existing
  Letters of Credit

  	
   

  
	
   

  	
  2.01

  	
   

  	
  Commitments

  	
   

  
	
   

  	
  5.05

  	
   

  	
  Certain Liabilities

  	
   

  
	
   

  	
  5.09

  	
   

  	
  Environmental Matters

  	
   

  
	
   

  	
  5.10

  	
   

  	
  Taxes

  	
   

  
	
   

  	
  5.11

  	
   

  	
  ERISA Compliance

  	
   

  
	
   

  	
  5.12

  	
   

  	
  Subsidiaries
  and Other Equity Investments

  	
   

  
	
   

  	
  5.18

  	
   

  	
  Collateral
  Matters

  	
   

  
	
   

  	
  7.01(b)

  	
   

  	
  Existing
  Liens

  	
   

  
	
   

  	
  7.02(f)

  	
   

  	
  Existing
  Investments

  	
   

  
	
   

  	
  7.03(b)

  	
   

  	
  Existing
  Indebtedness

  	
   

  
	
   

  	
  7.05(k)

  	
   

  	
  Dispositions

  	
   

  
	
   

  	
  7.08

  	
   

  	
  Transactions
  with Affiliates

  	
   

  
	
   

  	
  7.09

  	
   

  	
  Existing
  Restrictions

  	
   

  
	
   

  	
  10.02

  	
   

  	
  Administrative
  Agent’s Office, Certain Addresses for Notices

  	
   

  

 

	
  EXHIBITS

  

 

	
              Form of

  

 

	
   

  	
  A

  	
   

  	
  Committed
  Loan Notice

  	
   

  
	
   

  	
  B

  	
   

  	
  Swing
  Line Loan Notice

  	
   

  
	
   

  	
  C-1

  	
   

  	
  U.S.
  Term Note

  	
   

  
	
   

  	
  C-2

  	
   

  	
  Revolving
  Credit Note

  	
   

  
	
   

  	
  C-3

  	
   

  	
  Euro
  Term Note

  	
   

  
	
   

  	
  D

  	
   

  	
  Compliance
  Certificate

  	
   

  
	
   

  	
  E

  	
   

  	
  Assignment
  and Assumption

  	
   

  
	
   

  	
  F

  	
   

  	
  Guarantee
  and Security Agreement

  	
   

  
	
   

  	
  G

  	
   

  	
  Mortgage

  	
   

  
	
   

  	
  H-1

  	
   

  	
  Opinion
  of Cravath, Swaine & Moore LLP

  	
   

  
	
   

  	
  H-2

  	
   

  	
  Opinion
  of Richards, Layton & Finger

  	
   

  
	
   

  	
  H-3

  	
   

  	
  Opinion
  of General Counsel (Company)

  	
   

  
	
   

  	
  H-4

  	
   

  	
  Opinion
  of General Counsel (WRC Media)

  	
   

  
	
   

  	
  H-5

  	
   

  	
  Opinion
  of General Counsel (Direct Holdings)

  	
   

  
	
   

  	
  I

  	
   

  	
  Letter
  of Credit Application (commercial)

  	
   

  
	
   

  	
  J

  	
   

  	
  Letter
  of Credit Application (standby)

  	
   

  
	
   

  	
  K

  	
   

  	
  Continuing
  Agreement

  	
   

  
	
   

  	
  L

  	
   

  	
  German
  Tax Confirmation

  	
   

  

 

v

 

CREDIT AGREEMENT

 

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

 

PRELIMINARY
STATEMENTS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

“Agreement” means this Credit Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Applicable Rate

  
	
  Pricing

  Level

  	
   

  	
  Total Leverage Ratio

  	
   

  	
  Eurocurrency

  Rate and

  Letter of

  Credit Fees

  	
   

  	
  Base Rate

  	
   

  	
  Commitment

  Fee Rate

  	
   

  
	
  1

  	
   

  	
  >6.0:1

  	
   

  	
  2.25%

  	
   

  	
  1.25%

  	
   

  	
  0.375%

  	
   

  
	
  2

  	
   

  	
  <6.0:1 but
  >5.0:1

  	
   

  	
  2.00%

  	
   

  	
  1.00%

  	
   

  	
  0.375%

  	
   

  

 

3

 

	
  Applicable Rate

  
	
  Pricing

  Level

  	
   

  	
  Total Leverage Ratio

  	
   

  	
  Eurocurrency

  Rate and

  Letter of

  Credit Fees

  	
   

  	
  Base Rate

  	
   

  	
  Commitment

  Fee Rate

  	
   

  
	
  3

  	
   

  	
  <5.0:1 but
  >4.0:1

  	
   

  	
  1.75%

  	
   

  	
  0.75%

  	
   

  	
  0.375%

  	
   

  
	
  4

  	
   

  	
  <4.0:1

  	
   

  	
  1.50%

  	
   

  	
  0.50%

  	
   

  	
  0.250%

  	
   

  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

“Australian Dollars” means the lawful
currency of Australia.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

“Canadian Dollars” means the lawful currency
of Canada.

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

“Charges” has the meaning
specified in Section 10.10.

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

(iii)  depreciation and amortization,

 

(iv)  Non-Cash Charges,

 

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

 

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

 

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

 

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

 

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

 

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

 

(xi)  expenses
resulting from liability or casualty events,

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

“Decrees” has the meaning specified in Section 10.24.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

“Dollar Amount” means, at any time:

 

(a) 
with respect to any Loan denominated in Dollars (including, with respect to any
Swing Line Loan, any funded participation therein), the principal amount
thereof then outstanding (or in which such participation is held);

 

(b) 
with respect to any Alternative Currency Loan, the principal amount thereof
then outstanding in the relevant Alternative Currency, converted to Dollars in
accordance with Section 1.08.

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

(a) 
the rate per annum equal to the rate determined by the Administrative Agent to
be the offered rate that appears on the page of the Dow Jones Market
screen (or any successor thereto) that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars or the relevant Alternative
Currency (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such
Interest Period, or, if different, the date on which quotations would
customarily be provided by leading banks in the London Interbank Market for
deposits of amounts in the relevant currency for delivery on the first day of
such Interest Period, or

 

(b) 
if the rate referenced in the preceding clause (a) does not appear on such
page or service or such page or service shall not be available, the
rate per annum equal to the rate determined by the Administrative Agent to be
the offered rate on such other page or other service that displays an
average British Bankers Association Interest Settlement Rate for deposits in
Dollars or the relevant Alternative Currency (for delivery on the first day of
such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day

 

21

 

of
such Interest Period, or, if different, the date on which quotations would
customarily be provided by leading banks in the London Interbank Market for
deposits of amounts in the relevant currency for delivery on the first day of
such Interest Period, or

 

(c) 
if the rates referenced in the preceding clauses (a) and (b) are not
available, the rate per annum determined by the Administrative Agent as the
rate of interest at which deposits in Dollars or the relevant Alternative
Currency for delivery on the first day of such Interest Period in Same Day
Funds in the approximate amount of the Eurocurrency Rate Loan being made, continued
or converted by JPMorgan Chase Bank and with a term equivalent to such Interest
Period would be offered by JPMorgan Chase Bank’s London Branch to major banks
in the London interbank eurodollar market at their request at approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day
of such Interest Period or, if different, the date on which quotations would
customarily be provided by leading banks in the London Interbank Market for
deposits of amounts in the relevant currency for delivery on the first day of
such Interest Period.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a) the
sum, without duplication, of:

 

(i) Consolidated Net Income for such period,

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

“Existing Notes” means Reader’s Digest’s
existing 61⁄2% senior unsecured notes due 2011.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

“German Borrower” means RD German Holdings
GmbH.

 

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

 

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

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

(f)  all Attributable Indebtedness;

 

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

 

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

 

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

 

30

 

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

 

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

 

“Information” has the meaning specified in Section 10.08.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

“IRS” means the United States Internal
Revenue Service.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

“Net Cash Proceeds” means:

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“NPL” means the National Priorities List
under CERCLA.

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“PBGC” means the Pension Benefit Guaranty
Corporation.

 

37

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

“Securities Act” means the Securities Act of
1933.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

45

 

“Threshold Amount” means $20,000,000.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

46

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

47

 

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

 

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

 

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

 

(a)  The
meanings of defined terms are equally applicable to the singular and plural forms
of the defined terms.

 

(b)  (i)  The
words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import
when used in any Loan Document shall refer to such Loan Document as a whole and
not to any particular provision thereof.

 

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

 

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

 

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

 

(c)  In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including;” the words “to” and “until”
each mean “to but excluding;” and the word “through” means “to and including.”

 

(d)  Section headings
herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.

 

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

 

(b)  Notwithstanding
anything to the contrary herein, for purposes of determining compliance with
any test or covenant contained in this Agreement with respect to any period
during which any Specified Transaction occurs, the Total Leverage Ratio shall
be calculated with respect to such period and such Specified Transaction on a
Pro Forma Basis.  To the extent that any
provision of any Loan Document requires or tests for Pro Forma Compliance with Section 7.10
prior to the first test date set forth in Section 7.10, such provision
shall be deemed to refer to the first covenant level set forth therein.

 

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

 

48

 

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

 

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

 

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

 

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

 

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

 

(b)  For
purposes of determining compliance under Sections 7.02, 7.05, 7.06, 7.10 and
7.14, any amount in a currency other than Dollars will be converted to Dollars
based on the average Exchange Rate for such currency for the most recent
twelve-month period immediately prior to the date of determination determined
in a manner consistent with that used in calculating EBITDA for the applicable
period, provided, however, that
the foregoing shall not be deemed to apply to the determination of any amount
of Indebtedness.  For purposes of
determining compliance with Section 7.10, (i) the Dollar Amount of
the Euro Term Loans will be determined based on the Exchange Rate in effect on
the Closing Date, (ii) the Dollar Amount of any 

 

49

 

Incremental Overseas Term
Loans will be determined based on the Exchange Rate in effect on the applicable
Incremental Overseas Facility Closing Date and (iii) the equivalent in
Dollars of any other Indebtedness denominated in a currency other than Dollars
will reflect the currency translation effects, determined in accordance with
GAAP, of Swap Contracts for currency exchange risks with respect to the
applicable currency in effect on the date of determination of the Dollar
equivalent of such other Indebtedness.

 

(c)  For
all purposes under this Agreement, the Administrative Agent shall determine the
Dollar Amount of each Alternative Currency Loan as of the Closing Date, in the
case of any Euro Term Loan, and as of the relevant Incremental Overseas Closing
Date, in the case of any other Alternative Currency Loan.  Each such determination shall be based on the
Exchange Rate on or about the date of the related initial Committed Loan Notice.  Notwithstanding the foregoing, the Exchange
Rate applicable to the Euro Term Loans on the Closing Date shall be deemed to
be 1.3206.

 

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

 

ARTICLE II

 

THE COMMITMENTS AND CREDIT EXTENSIONS

 

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

 

(b)  The Revolving Credit Borrowings.  Subject to the terms and conditions set forth
herein, each Revolving Credit Lender severally agrees to make loans denominated
in Dollars to the Company as elected by the Company pursuant to Section 2.02
(each such loan, a “Revolving Credit Loan”)
from time to time, on any Business Day until the Maturity Date, in an aggregate
principal amount not to exceed at any time outstanding the amount of such
Lender’s Revolving Credit Commitment; provided
that (i) after giving effect to any Revolving Credit Borrowing, the amount
of the Revolving Credit Exposure of any Lender shall not exceed such Lender’s
Revolving Credit Commitment, and (ii) the aggregate principal amount of
Revolving Credit Loans made on the Closing Date shall not exceed $10,000,000.  Within the limits of each Lender’s Revolving
Credit Commitment, and subject to the other terms and conditions hereof, the
Company may borrow under this Section 2.01(b), prepay under Section 2.05,
and reborrow under this Section 2.01(b). 
Revolving Credit Loans may be Base Rate Loans or Eurocurrency Rate
Loans, as further provided herein.

 

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

 

50

 

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

 

(b)  Following
receipt of a Committed Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount of its Pro Rata Share of the applicable Class of
Loans, and if no timely notice of a conversion or continuation is provided by
the Company, the Administrative Agent shall notify each Lender of the details
of any automatic conversion to Base Rate Loans or continuation described in Section 2.02(a).  In the case of each Borrowing, each
Appropriate Lender shall make the amount of its Loan available to the Administrative
Agent in Same Day Funds at the Administrative Agent’s Office for the applicable
currency not later than 1:00 p.m. (New York time) on the Business Day
specified in the applicable Committed Loan Notice.  Upon satisfaction of the applicable conditions
set forth in Section 4.02 (and, if such Borrowing is the initial Credit
Extension, Section 4.01, and, if such Borrowing is made by an Overseas
Borrower, Section 4.03), the Administrative Agent shall make all funds so
received available to the relevant Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of such Borrower
on the books of JPMorgan Chase Bank with the amount of such funds or (ii) wire
transfer of such funds, in each case in accordance with instructions provided
to (and reasonably acceptable to) the Administrative Agent by such 

 

51

 

Borrower; provided that if, on the date the
Committed Loan Notice with respect to such Borrowing is given by the relevant
Borrower, there are Swing Line Loans or L/C Borrowings outstanding, then the
proceeds of such Borrowing shall be applied, first, to the payment in full of
any such L/C Borrowings, second, to the payment in full of any such Swing Line
Loans, and third, to the relevant Borrower as provided above.

 

(c)  Except
as otherwise provided herein, a Eurocurrency Rate Loan may be continued or
converted only on the last day of an Interest Period for such Eurocurrency Rate
Loan unless the Company pays the amount due, if any, under Section 3.05 in
connection therewith.

 

(d)  The
Administrative Agent shall promptly notify the Company and the Lenders of the
interest rate applicable to any Interest Period for Eurocurrency Rate Loans
upon determination of such interest rate. 
The determination of the Eurocurrency Rate by the Administrative Agent
shall be conclusive in the absence of manifest error.  At any time that Base Rate Loans are
outstanding, the Administrative Agent shall notify the Company and the Lenders
of any change in JPMorgan Chase Bank prime rate used in determining the Base
Rate promptly following the public announcement of such change.

 

(e)  After
giving effect to all Term Borrowings, all Revolving Credit Borrowings, all
conversions of Term Loans or Revolving Credit Loans from one Type to the other,
and all continuations of Term Loans or Revolving Credit Loans as the same Type,
there shall not be more than twenty (20) Interest Periods in effect.

 

(f)  The
failure of any Lender to make the Loan to be made by it as part of any
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Loan to be made
by such other Lender on the date of any Borrowing.

 

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

 

(ii)  An
L/C Issuer shall be under no obligation to issue any Letter of Credit if:

 

52

 

(A)  any
order, judgment or decree of any Governmental Authority or arbitrator shall by
its terms purport to enjoin or restrain such L/C Issuer from issuing such
Letter of Credit, or any Law applicable to such L/C Issuer or any directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over such L/C Issuer shall prohibit, or direct that such L/C
Issuer refrain from, the issuance of letters of credit generally or such Letter
of Credit in particular; or

 

(B)  the
issuance of such Letter of Credit would violate any Laws binding upon such L/C
Issuer.

 

(iii)  Each
Letter of Credit shall, unless otherwise agreed by the applicable L/C Issuer
and subject to Section 2.03(b)(iii), expire no later than the earlier of (x) twelve
months after the date of issuance or last renewal and (y) unless Cash
Collateralized prior to the Letter of Credit Expiration Date, the Letter of
Credit Expiration Date.  An L/C Issuer
shall be under no obligation to amend any Letter of Credit if (A) such L/C
Issuer would have no obligation at such time to issue such Letter of Credit in
its amended form under the terms hereof, or (B) the beneficiary of such
Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

(b)  Procedures for Issuance and Amendment of Letters of
Credit; Auto-Renewal Letters of
Credit.  (i)  Each
Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Company delivered to an L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the
Company.  Such Letter of Credit
Application must be received by the relevant L/C Issuer and the Administrative
Agent not later than 12:30 p.m. at least three (3) Business Days
prior to the proposed issuance date or date of amendment, as the case may be;
or, in each case, such later date and time as the relevant L/C Issuer may
agree in a particular instance in its sole discretion.  In the case of a request for an initial
issuance of a Letter of Credit, such Letter of Credit Application shall specify
in form and detail reasonably satisfactory to the relevant L/C Issuer:  (a) the proposed issuance date of the
requested Letter of Credit (which shall be a Business Day); (b) the amount
thereof; (c) the expiry date thereof; (d) the name and address of the
beneficiary thereof; (e) the documents to be presented by such beneficiary
in case of any drawing thereunder; (f) the full text of any certificate to
be presented by such beneficiary in case of any drawing thereunder; and (g) such
other matters as the relevant L/C Issuer may reasonably request.  In the case of a request for an amendment of
any outstanding Letter of Credit, such Letter of Credit Application shall specify
in form and detail reasonably satisfactory to the relevant L/C Issuer (1) the
Letter of Credit to be amended; (2) the proposed date of amendment thereof
(which shall be a Business Day); (3) the nature of the proposed amendment;
and (4) such other matters as the relevant L/C Issuer may reasonably
request.

 

(ii)  Promptly
after receipt of any Letter of Credit Application, the relevant L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that
the Administrative Agent has received a copy of such Letter of Credit
Application from the Company and, if not, such L/C Issuer will provide the
Administrative Agent with a copy thereof. 
Upon receipt by the relevant L/C Issuer of confirmation from the
Administrative Agent that the requested issuance or amendment is permitted in
accordance with the terms hereof, then, subject to the terms and conditions
hereof, such L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of the Company or enter into the applicable amendment, as the
case may be.  Immediately upon the
issuance of each Letter of Credit, each Revolving Credit Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
relevant L/C Issuer a risk participation in such Letter of Credit in an amount
equal to the product of such Lender’s Pro Rata Share times the amount of such
Letter of Credit.

 

53

 

(iii)  If
the Company so requests in any applicable Letter of Credit Application, the
relevant L/C Issuer shall agree to issue a Letter of Credit that has automatic
renewal provisions (each, an “Auto-Renewal
Letter of Credit”); provided that
any such Auto-Renewal Letter of Credit must permit the relevant L/C Issuer to
prevent any such renewal at least once in each twelve month period (commencing
with the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day (the “Nonrenewal Notice Date”) in each such twelve month period to
be agreed upon at the time such Letter of Credit is issued.  Unless otherwise directed by the relevant L/C
Issuer, the Company shall not be required to make a specific request to the
relevant L/C Issuer for any such renewal. 
Once an Auto-Renewal Letter of Credit has been issued, the Lenders shall
be deemed to have authorized (but may not require) the relevant L/C Issuer to
permit the renewal of such Letter of Credit at any time to an expiry date not
later than the Letter of Credit Expiration Date; provided that the relevant L/C Issuer shall not permit any
such renewal if (A) the relevant L/C Issuer has determined that it would
have no obligation at such time to issue such Letter of Credit in its renewed
form under the terms hereof (by reason of the provisions of Section 2.03(a)(ii) or
Section 2.03(a)(iii) or otherwise), or (B) it has received
notice (which may be by telephone or in writing) on or before the day that is
five (5) Business Days before the Nonrenewal Notice Date from the
Administrative Agent, any Revolving Credit Lender or the Company that one or
more of the applicable conditions specified in Section 4.02 is not then
satisfied.

 

(iv)  Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of
Credit to an advising bank with respect thereto or to the beneficiary thereof,
the relevant L/C Issuer will also deliver to the Company and the Administrative
Agent a true and complete copy of such Letter of Credit or amendment.

 

(c)  Drawings and Reimbursements; Funding of Participations.  (i)  Upon receipt from the
beneficiary of any Letter of Credit of any notice of a drawing under such
Letter of Credit, the relevant L/C Issuer shall notify promptly the Company and
the Administrative Agent thereof.  Not
later than 1:00 p.m. on (x) if notice that a payment is made on any
date by an L/C Issuer under a Letter of Credit is received by the Company on or
before 11:00 a.m. (New York time), the Business Day immediately following
such date or (y) if notice that a payment is made on any date by an L/C
Issuer under a Letter of Credit is received by the Company later than 11:00 a.m.
(New York time), the second Business Day immediately following such date (each
such date, an “Honor Date”), the
Company shall reimburse such L/C Issuer through the Administrative Agent in an
amount equal to the amount of such drawing. 
In order to reimburse any such drawing, the Company shall have the
option to request in accordance with Section 2.02 a Revolving Credit
Borrowing of Base Rate Loans (“Refunding Loans”),
without regard to the minimum and multiples specified in Section 2.02 for
the principal amount of Base Rate Loans but subject to the amount of the
unutilized portion of the Revolving Credit Commitments of the Revolving Credit
Lenders and the conditions set forth in Section 4.02.  If the Company fails to so reimburse such L/C
Issuer by such time, the Administrative Agent shall promptly notify each
Revolving Credit Lender of the Honor Date, the amount of the unreimbursed
drawing (the “Unreimbursed Amount”),
and the amount of such Revolving Credit Lender’s Pro Rata Share thereof.  Any notice given by an L/C Issuer or the
Administrative Agent pursuant to this Section 2.03(c)(i) may be given
by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.

 

(ii)  Each
Revolving Credit Lender (including any Lender acting as an L/C Issuer) shall,
upon any notice pursuant to Section 2.03(c)(i) to make a Refunding
Loan to the Company, make such funds available to the Administrative Agent for
the account of the relevant L/C Issuer, in Dollars, at the Administrative Agent’s
Office for payments not later than 1:00 p.m. on the

 

54

 

Business Day specified in
such notice by the Company.  The
Administrative Agent shall remit the funds so received to the relevant L/C
Issuer.

 

(iii)  With
respect to any Unreimbursed Amount, the Company shall be deemed to have
incurred from the relevant L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall
be due and payable on demand (together with interest) and shall bear interest
at the Default Rate.  In such event, upon
demand by the relevant L/C Issuer (through the Administrative Agent), each
Revolving Credit Lender shall make funds available to the Administrative Agent
for the account of the relevant L/C Issuer, in Dollars, at the Administrative
Agent’s Office for payments in an amount equal to its Pro Rata Share of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day following
the date of such demand, and such payment to the Administrative Agent for the
account of the relevant L/C Issuer shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Lender in satisfaction of its participation obligation under this Section 2.03.

 

(iv)  Until
each Revolving Credit Lender funds its L/C Advance pursuant to this Section 2.03(c) to
reimburse the relevant L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lender’s Pro Rata Share of such amount
shall be solely for the account of the relevant L/C Issuer.

 

(v)  Each
Revolving Credit Lender’s obligation to make Refunding Loans or L/C Advances to
reimburse an L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have
against the relevant L/C Issuer, the Company or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any
other occurrence, event or condition, whether or not similar to any of the
foregoing; provided that each
Revolving Credit Lender’s obligation to make Refunding Loans pursuant to this Section 2.03(c) is
subject to the conditions set forth in Section 4.02.  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of the Company to reimburse the
relevant L/C Issuer for the amount of any payment made by such L/C Issuer under
any Letter of Credit, together with interest as provided herein.

 

(vi)  If
any Revolving Credit Lender fails to make available to the Administrative Agent
for the account of the relevant L/C Issuer any amount required to be paid by
such Lender pursuant to the foregoing provisions of this Section 2.03(c) by
the time specified in Section 2.03(c)(iii), such L/C Issuer shall be
entitled to recover from such Lender (acting through the Administrative Agent),
on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to such L/C Issuer at a rate per annum equal to the Federal Funds Rate
from time to time in effect.  A
certificate of the relevant L/C Issuer submitted to any Revolving Credit Lender
(through the Administrative Agent) with respect to any amounts owing under this
Section 2.03(c)(vi) shall be conclusive absent manifest error.

 

(d)  Repayment of Participations.  (i)  If at any time after an L/C
Issuer has made a payment under any Letter of Credit and has received from any
Revolving Credit Lender such Lender’s L/C Advance in respect of such payment in
accordance with Section 2.03(c), the Administrative Agent receives for the
account of such L/C Issuer any payment in respect of the related Unreimbursed
Amount or interest thereon (whether directly from the Company or otherwise,
including proceeds of Cash Collateral applied thereto by the Administrative
Agent),

 

55

 

the Administrative Agent
will distribute to such Lender its Pro Rata Share thereof (appropriately
adjusted, in the case of interest payments, to reflect the period of time
during which such Lender’s L/C Advance was outstanding) in the same funds as
those received by the Administrative Agent.

 

(ii)  If
any payment received by the Administrative Agent for the account of an L/C
Issuer pursuant to Section 2.03(c) is required to be returned under
any of the circumstances described in Section 10.06 (including pursuant to
any settlement entered into by such L/C Issuer in its discretion), each
Revolving Credit Lender shall pay to the Administrative Agent for the account
of such L/C Issuer its Pro Rata Share thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect.

 

(e)  Obligations Absolute.  The obligation of the Company to reimburse
the relevant L/C Issuer for each drawing under each Letter of Credit issued by
it and to repay each L/C Borrowing shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:

 

(i)  any
lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other agreement or instrument relating thereto;

 

(ii)  the
existence of any claim, counterclaim, setoff, defense or other right that any
Loan Party may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the relevant L/C Issuer or any other Person, whether
in connection with this Agreement, the transactions contemplated hereby or by
such Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

 

(iii)  any
draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;

 

(iv)  any
payment by the relevant L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the relevant L/C Issuer
under such Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of such Letter of Credit, including any arising in connection
with any proceeding under any Debtor Relief Law;

 

(v)  any
exchange, release or nonperfection of any Collateral, or any release or
amendment or waiver of or consent to departure from the Guarantee under the
Guarantee and Security Agreement or any other guarantee, for all or any of the
Obligations any Loan Party in respect of such Letter of Credit; or

 

(vi)  any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Loan Party;

 

56

 

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

 

(f)  Role of L/C Issuers.  Each Lender and the Company agree that, in
paying any drawing under a Letter of Credit, the relevant L/C Issuer shall not
have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.  None of the L/C Issuers, any Agent-Related
Person nor any of the respective correspondents, participants or assignees of
any L/C Issuer shall be liable to any Lender for (i) any action taken or
omitted in connection herewith at the request or with the approval of the
Lenders or the Required Lenders, as applicable; (ii) any action taken or
omitted in the absence of gross negligence or willful misconduct; or (iii) the
due execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit
Application.  The Company hereby assumes
all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided
that this assumption is not intended to, and shall not, preclude the Company’s
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. 
None of the L/C Issuers, any Agent-Related Person, nor any of the respective
correspondents, participants or assignees of any L/C Issuer, shall be liable or
responsible for any of the matters described in clauses (i) through (vi) of
Section 2.03(e); provided
that anything in such clauses to the contrary notwithstanding, the Company may
have a claim against an L/C Issuer, and such L/C Issuer may be liable to the
Company, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Company which the Company
proves were caused by such L/C Issuer’s willful misconduct or gross negligence
or such L/C Issuer’s willful or grossly negligent failure to pay under any
Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit.  In furtherance
and not in limitation of the foregoing, each L/C Issuer may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and no
L/C Issuer shall be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.

 

(g)  Cash Collateral.  (i) If as of the Letter of Credit
Expiration Date, any Letter of Credit may for any reason remain outstanding and
partially or wholly undrawn, (ii) if any Event of Default occurs and is
continuing and the Administrative Agent or the Required Lenders, as applicable,
require the Company to Cash Collateralize the L/C Obligations pursuant to Section 8.02(c) or
(iii) an Event of Default set forth under Section 8.01(f) occurs
and is continuing, then the Company shall Cash Collateralize the then
Outstanding Amount of such Letter of Credit (in the case of clause (i) above)
or of all L/C Obligations (in the case of clauses (ii) and (iii) above)
(in each case, in an amount equal to 102% of such Outstanding Amount), and
shall do so not later than 2:00 p.m., New York City time, on (x) in
the case of the immediately preceding clauses (i) and (ii), (1) the
Business Day that the Company receives notice thereof, if such notice is
received on such day prior to 12:00 Noon, New York City time (which notice, in
the case of clause (i) above, shall not be given prior to the Letter of
Credit Expiration Date), or (2) if clause (1) above does not apply,
the Business Day immediately following the day that the Company receives such

 

57

 

notice and (y) in the
case of the immediately preceding clause (iii), the Business Day on which an
Event of Default set forth under Section 8.01(f) occurs or, if such
day is not a Business Day, the Business Day immediately succeeding such
day.  For purposes hereof, “Cash Collateralize” means to pledge and
deposit with or deliver to the Administrative Agent, for the benefit of the
relevant L/C Issuer and the Lenders, as collateral for the L/C Obligations,
cash or deposit account balances (“Cash
Collateral”) pursuant to documentation in form and substance
reasonably satisfactory to the Administrative Agent and the relevant L/C Issuer
(which documents are hereby consented to by the Lenders).  Derivatives of such term have corresponding
meanings.  The Company hereby grants to
the Administrative Agent, for the benefit of the L/C Issuers and the Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing.  Cash
Collateral shall be maintained in blocked accounts at JPMorgan Chase Bank and
may be invested in readily available Cash Equivalents.  If at any time the Administrative Agent determines
that any funds held as Cash Collateral are subject to any right or claim of any
Person other than the Administrative Agent (on behalf of the Secured Parties)
or that the total amount of such funds is less than 102% of the aggregate
Outstanding Amount of all L/C Obligations, the Company will, forthwith upon
demand by the Administrative Agent, pay to the Administrative Agent, as
additional funds to be deposited and held in the deposit accounts at JPMorgan
Chase Bank as aforesaid, an amount equal to the excess of (a) 102% of such
aggregate Outstanding Amount over (b) the total amount of funds, if any,
then held as Cash Collateral that the Administrative Agent reasonably
determines to be free and clear of any such right and claim.  Upon the drawing of any Letter of Credit for
which funds are on deposit as Cash Collateral, such funds shall be applied, to
the extent permitted under applicable Law, to reimburse the relevant L/C
Issuer.  To the extent the amount of any
Cash Collateral exceeds 102% of the then Outstanding Amount of such L/C
Obligations and so long as no Event of Default has occurred and is continuing,
the excess shall be refunded to the Company. 
If the Company is required to provide an amount of Cash Collateral
hereunder as a result of the occurrence of an Event of Default, such amount plus any accrued interest or realized
profits with respect to such amount (to the extent not applied as aforesaid)
shall be returned to the Company within two Business Days after all Events of
Default have been cured or waived. 
Notwithstanding the occurrence of the Letter of Credit Expiration Date,
any full or partial failure by the Company to Cash Collateralize the
Outstanding Amount of any Letter of Credit in the case of clause (i) above
shall operate to continue the several obligations of the Revolving Credit
Lenders to participate in such Letter of Credit (x) to the extent so not
Cash Collateralized and (y) to the extent any such Cash Collateral is
required to be returned to the Company under any of the circumstances described
in Section 10.06 (including pursuant to any settlement entered into by
such L/C Issuer in its discretion), and upon any drawing under such Letter of
Credit, such participations by the Revolving Credit Lenders in any Unreimbursed
Amount shall be deemed to be L/C Borrowings and L/C Advances pursuant to this Section 2.03.

 

(h)  Letter of Credit Fees.  The Company shall pay to the Administrative
Agent for the account of each Revolving Credit Lender in accordance with its
Pro Rata Share a Letter of Credit fee for each Letter of Credit issued pursuant
to this Agreement equal to the Applicable Rate times the daily maximum amount
then available to be drawn under such Letter of Credit (whether or not such
maximum amount is then in effect under such Letter of Credit if such maximum
amount increases periodically pursuant to the terms of such Letter of
Credit).  Such letter of credit fees
shall be computed on a quarterly basis in arrears.  Such letter of credit fees shall be due and
payable in Dollars on the first Business Day after the end of each March, June,
September and December, commencing with the first such date to occur after
the issuance of such Letter of Credit, on the Letter of Credit Expiration Date
and thereafter on demand.  If there is
any change in the Applicable Rate during any quarter, the daily maximum amount
of each Letter of Credit

 

58

 

shall be computed and
multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.

 

(i)  Fronting Fee and Documentary and Processing Charges
Payable to L/C Issuers.  The
Company shall pay directly to each L/C Issuer for its own account a fronting
fee with respect to each Letter of Credit issued by it equal to 0.125% per
annum of the daily maximum amount then available to be drawn under such Letter
of Credit (whether or not such maximum amount is then in effect under such
Letter of Credit if such maximum amount increases periodically pursuant to the terms
of such Letter of Credit).  Such fronting
fees shall be computed on a quarterly basis in arrears.  Such fronting fees shall be due and payable
on the first Business Day after the end of each March, June, September and
December, commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter
on demand.  In addition, the Company
shall pay directly to each L/C Issuer for its own account the customary
issuance, presentation, amendment and other processing fees, and other standard
costs and charges, of such L/C Issuer relating to letters of credit as from
time to time in effect.  Such customary
fees and standard costs and charges are due and payable within ten (10) Business
Days of demand and are nonrefundable.

 

(j)  Conflict with Letter of Credit Application.  Notwithstanding anything else to the contrary
in this Agreement, in the event of any conflict between the terms hereof and
the terms of any Letter of Credit Application, the terms hereof shall control.

 

(k)  Addition of an L/C Issuer.  A Revolving Credit Lender may become an
additional L/C Issuer hereunder pursuant to a written agreement among the
Company, the Administrative Agent and such Revolving Credit Lender.  The Administrative Agent shall notify the
Revolving Credit Lenders of any such additional L/C Issuer.

 

(l)  Continuing Agreement.  Prior to the issuance or renewal of any
Letter of Credit for which JPMorgan Chase Bank will act as L/C Issuer, the
Company shall have executed and delivered to JPMorgan Chase Bank the Continuing
Agreement.

 

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

 

59

 

(b)  Borrowing Procedures.  Each Swing Line Borrowing shall be made upon
the Company’s notice to the Swing Line Lender and the Administrative Agent,
which may be given by telephone.  Each
such notice must be received by the Swing Line Lender and the Administrative
Agent not later than 2:00 p.m. on the requested borrowing date, and shall
specify (i) the amount to be borrowed, which shall be a minimum of
$250,000, and (ii) the requested borrowing date, which shall be a Business
Day.  Each such telephonic notice must be
confirmed promptly by delivery to the Swing Line Lender and the Administrative
Agent of a written Swing Line Loan Notice, appropriately completed and signed
by a Responsible Officer of the Company. 
Promptly after receipt by the Swing Line Lender of any telephonic Swing
Line Loan Notice, the Swing Line Lender will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has also
received such Swing Line Loan Notice and, if not, the Swing Line Lender will
notify the Administrative Agent (by telephone or in writing) of the contents
thereof.  Unless (A) the making of
such Swing Line Loan would not be permitted pursuant to the proviso to the
first sentence of Section 2.04(a) or (B) one or more of the
applicable conditions specified in Section 4.02 is not then satisfied,
then, subject to the terms and conditions hereof, the Swing Line Lender will,
not later than 4:00 p.m. on the borrowing date specified in such Swing
Line Loan Notice, make the amount of its Swing Line Loan available to the
Company.

 

(c)  Refinancing of Swing Line Loans.  (i)  In order to reimburse any such
Swing Line Loans, the Company at any time may request that each Revolving
Credit Lender make a Revolving Credit Loan (which shall be a Base Rate Loan) in
an amount equal to such Lender’s Pro Rata Share of the amount of Swing Line
Loans then outstanding.  Such request
shall be made in accordance with the requirements of Section 2.02, without
regard to the minimum and multiples specified therein for the principal amount
of Base Rate Loans, but subject to the unutilized portion of the aggregate
Revolving Credit Commitments and the conditions set forth in Section 4.02.  Each Revolving Credit Lender shall make an
amount equal to its Pro Rata Share of the amount specified in such Committed
Loan Notice available to the Administrative Agent in immediately available
funds for the account of the Swing Line Lender at the Administrative Agent’s
Office not later than 1:00 p.m. on the day specified in such Committed
Loan Notice.  The Administrative Agent
shall remit the funds so received to the Swing Line Lender.

 

(ii)  If
an Event of Default has occurred and is continuing, or if for any reason any
Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing in
accordance with Section 2.04(c)(i), then upon notice by the Administrative
Agent to the Revolving Credit Lenders each of the Revolving Credit Lenders
shall fund its risk participation in the relevant Swing Line Loan by making an
amount equal to its Pro Rata Share of the amount of such Swing Line Loan
available to the Administrative Agent in immediately available funds for the
account of the Swing Line Lender at the Administrative Agent’s Office not later
than 1:00 p.m. on the day such Event of Default occurs or the day
specified in such Committed Loan Notice, as the case may be.  The Administrative Agent shall remit the
funds so received to the Swing Line Lender.

 

(iii)  If
any Revolving Credit Lender fails to make available to the Administrative Agent
for the account of the Swing Line Lender any amount required to be paid by such
Lender pursuant to the foregoing provisions of this Section 2.04(c) by
the time specified in Section 2.04(c)(i), the Swing Line Lender shall be
entitled to recover from such Lender (acting through the Administrative Agent),
on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the Swing Line Lender at a rate per annum equal to the Federal Funds Rate
from time to time in effect.  A
certificate of the Swing Line Lender submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (iii) shall
be conclusive absent manifest error.

 

60

 

(iv)  Each
Revolving Credit Lender’s obligation to make Revolving Credit Loans or to
purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the Company or any
other Person for any reason whatsoever, (B) the occurrence or continuance
of a Default, or (C) any other occurrence, event or condition, whether or
not similar to any of the foregoing; provided
that each Revolving Credit Lender’s obligation to make Revolving Credit Loans
pursuant to this Section 2.04(c) is subject to the conditions set
forth in Section 4.02.  No such
funding of risk participations shall relieve or otherwise impair the obligation
of the Company to repay Swing Line Loans, together with interest as provided
herein.

 

(d)  Repayment of Participations.  (i)  At any time after any
Revolving Credit Lender has purchased and funded a risk participation in a
Swing Line Loan, if the Swing Line Lender receives any payment on account of
such Swing Line Loan, the Swing Line Lender will distribute to such Lender its
Pro Rata Share of such payment (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s risk
participation was funded) in the same funds as those received by the Swing Line
Lender.

 

(ii)  If
any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in Section 10.06
(including pursuant to any settlement entered into by the Swing Line Lender in
its discretion), each Revolving Credit Lender shall pay to the Swing Line
Lender its Pro Rata Share thereof on demand of the Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is
returned, at a rate per annum equal to the Federal Funds Rate.  The Administrative Agent will make such
demand upon the request of the Swing Line Lender.

 

(e)  Interest for Account of Swing Line Lender.  The Swing Line Lender shall be responsible
for invoicing the Company for interest on the Swing Line Loans.  Until each Revolving Credit Lender funds its
Base Rate Loan or risk participation pursuant to this Section 2.04 to
refinance such Lender’s Pro Rata Share of any Swing Line Loan, interest in
respect of such Pro Rata Share shall be solely for the account of the Swing
Line Lender.

 

(f)  Payments Directly to Swing Line Lender.  The Company shall make all payments of
principal and interest in respect of the Swing Line Loans directly to the Swing
Line Lender.

 

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

 

61

 

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

 

(ii)  The
Company may, upon notice to the Swing Line Lender (with a copy to the
Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty; provided that (1) such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the date of the prepayment, and (2) any such prepayment
shall be in a minimum principal amount of $250,000 or a whole multiple of
$25,000 in excess thereof or, if less, the entire principal amount thereof then
outstanding.  Each such notice shall
specify the date and amount of such prepayment. 
If such notice is given by the Company, the Company shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein.

 

(iii)  Notwithstanding
anything to the contrary contained in this Agreement, the Company may rescind
any notice of prepayment under Section 2.05(a)(i) or 2.05(a)(ii) if
such prepayment would have resulted from a refinancing of all or any portion of
the Facilities, which refinancing shall not be consummated or shall otherwise
be delayed.

 

(b)  Mandatory. 
(i)  Within twenty (20) days after financial statements are
required to be delivered pursuant to Section 6.01(a), the Company shall
cause to be prepaid an aggregate Dollar Amount of Term Loans in an amount equal
to (A) the ECF Percentage of Excess Cash Flow, if any, for the fiscal year
covered by such financial statements (commencing with the fiscal year ended June 30,
2008) minus (B) the sum of (i) all voluntary prepayments of
Term Loans during such fiscal year and (ii) all voluntary prepayments of
Revolving Credit Loans during such fiscal year to the extent the Revolving
Credit Commitments are permanently reduced by the amount of such payments.

 

(ii)  
(A)  If (x) Holdings, the Company or any Restricted Subsidiary
Disposes of any property or assets (other than any Disposition of any property
or assets permitted by Section 7.05(a), (b), (c), (d), (e), (f), (g), (h),
(i) or (m)) or (y) any Casualty Event occurs, which in the aggregate
results in the realization or receipt by Holdings, the Company or such
Restricted Subsidiary of Net Cash Proceeds, the Company shall cause to be
prepaid on or prior to the date which is ten (10) Business Days after the
date of the realization or receipt of such Net Cash Proceeds an aggregate
Dollar Amount of Term Loans in an amount equal to 100% of all Net Cash Proceeds
received; provided that no such
prepayment shall be required pursuant to this Section 2.05(b)(ii)(A) with
respect to such portion of such Net Cash Proceeds that the Company shall have,
on or prior to such date, given written notice to the Administrative Agent of
its intent to reinvest in accordance with Section 2.05(b)(ii)(B);

 

(B)  With respect to any Net Cash Proceeds realized or
received with respect to any Disposition (other than any Disposition
specifically excluded from the application of Section 2.05(b)(ii)(A)) or
any Casualty Event, at the option of the Company the Company may reinvest all
or any portion of such Net Cash Proceeds in assets useful for the Company’s or
a Restricted Subsidiary’s business (provided that such reinvestment is 

 

62

 

permitted
by Section 7.02) within (x) twelve (12) months following receipt of
such Net Cash Proceeds or (y) if the Company or a Restricted Subsidiary
enters into a legally binding commitment to reinvest such Net Cash Proceeds
within twelve (12) months following receipt thereof, within twelve (12) months
following the date of such commitment; provided
that an amount equal to any such Net Cash Proceeds shall be applied within five
(5) Business Days after such Net Cash Proceeds cannot be so reinvested or
the Company reasonably determines that such Net Cash Proceeds are no longer
intended to be so reinvested to the prepayment of the Term Loans as set forth
in this Section 2.05.

 

(iii)  If
Holdings, the Company or any Restricted Subsidiary incurs or issues any
Indebtedness not expressly permitted to be incurred or issued pursuant to Section 7.03
(without prejudice to the restrictions therein), the Company shall cause to be
prepaid an aggregate Dollar Amount of Term Loans in an amount equal to 100% of
all Net Cash Proceeds received therefrom on or prior to the date which is five (5) Business
Days after the receipt of such Net Cash Proceeds.  If any Overseas Borrower incurs or issues any
Indebtedness pursuant to Section 2.14(b), the Company or such Overseas
Borrower shall cause to be prepaid an aggregate Dollar Amount of U.S. Term
Loans in an amount equal to 100% of the Net Cash Proceeds received therefrom on
the date of the receipt of such Net Cash Proceeds.

 

(iv)  If
for any reason the aggregate Revolving Credit Exposures at any time exceeds the
aggregate Revolving Credit Commitments then in effect, the Company shall
promptly prepay or cause to be promptly prepaid Revolving Credit Loans and
Swing Line Loans and/or Cash Collateralize the L/C Obligations in an aggregate
amount equal to such excess; provided
that the Company shall not be required to Cash Collateralize the L/C
Obligations pursuant to this Section 2.05(b)(iv) unless after the
prepayment in full of the Revolving Credit Loans and Swing Line Loans such
aggregate Outstanding Amount exceeds the aggregate Revolving Credit Commitments
then in effect.  If the Company is
required to provide an amount of Cash Collateral in respect of L/C Obligations
pursuant to this clause (iv), such amount plus
any accrued interest or realized profits with respect to such amount shall be
returned to the Company as and to the extent that, after giving effect to such
return, the Company would remain in compliance with this clause (iv) and
no Event of Default shall have occurred and be continuing.

 

(v)  Each
prepayment of Term Loans (x) pursuant to clause (i) of this Section 2.05(b) shall
be applied to repayments thereof required pursuant to Section 2.07 in the
order selected by the Company and (y) pursuant to clauses (ii) and (iii) of
this Section 2.05(b) shall be applied first in direct order of maturity to repayments thereof
required pursuant to Section 2.07 in the 24-month period following the
date such prepayment becomes payable and second
ratably to the remaining repayments of Term Loans required pursuant to Section 2.07;
and each such prepayment shall be paid to the Lenders in accordance with their
respective Pro Rata Shares.

 

(vi)  The
Company shall notify the Administrative Agent in writing of any mandatory
prepayment of Term Loans required to be made pursuant to clauses (i) through
(iii) of this Section 2.05(b) at least three (3) Business
Days prior to the date of such prepayment. 
Each such notice shall specify the date of such prepayment and provide a
reasonably detailed calculation of the amount of such prepayment.  The Administrative Agent will promptly notify
each Appropriate Lender of the contents of the Company’s prepayment notice and
of such Appropriate Lender’s Pro Rata Share of the prepayment.

 

(c)  All
prepayments under this Section 2.05 shall be made together with, in the
case of any such prepayment of a Eurocurrency Rate Loan on a date other than
the last day of an Interest 

 

63

 

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

 

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

 

(b)  Mandatory. 
The U.S. Term Commitment of each U.S. Term Lender shall be automatically
and permanently reduced to $0 upon the making of such U.S. Term Lender’s U.S.
Term Loans pursuant to Section 2.01(a). 
The Euro Term Commitment of each Euro Term Lender shall be automatically
and permanently reduced to $0 upon the making of such Euro Term Lender’s Euro
Term Loans pursuant to Section 2.01(c). 
In addition, if any Existing Notes remain outstanding on the Closing
Date (in respect of which a Defeasance has not been consummated, or in respect
of which funds have not been placed in escrow for the redemption or repayment
thereof in a manner reasonably satisfactory to the Administrative Agent, as of
the Closing Date), the Term Commitment of each Term Lender shall be
automatically and permanently reduced (effective prior to the borrowing of Term
Loans on the Closing Date) by the amount of such Term Lender’s Pro Rata Share
of the amount that would have been used to purchase such Existing Notes if they
had been tendered and purchased on the Closing Date pursuant to the Existing
Note Indenture.

 

(c)  Application of Commitment Reductions; Payment of Fees.  The Administrative Agent will promptly notify
the Lenders of any termination or reduction of unused portions of the Letter of
Credit Sublimit, or the Swing Line Sublimit or the unused Commitments of any Class under
this Section 2.06.  Upon any
reduction of unused Commitments of any Class, the Commitment of each Lender of
such Class shall be reduced by such Lender’s Pro Rata Share of the amount
by which such Commitments are reduced (other than the termination of the
Commitment of any Lender as provided in Section 3.07).  All commitment fees accrued until the
effective date of any 

 

64

 

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

 

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

 

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

 

(c)  Revolving Credit Loans.  The Company shall repay to the Administrative
Agent for the ratable account of the Revolving Credit Lenders on the Maturity
Date for the Revolving Credit Facility the aggregate principal amount of all of
its Revolving Credit Loans outstanding on such date.

 

(d)  Swing Line Loans.  The Company shall repay its Swing Line Loans
on the Maturity Date for the Revolving Credit Facility; provided that on each date that a
Revolving Credit Loan is borrowed, the Company shall repay all Swing Line Loans
then outstanding.

 

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

 

(b)  Each
Borrower shall pay interest on past due amounts owed by it hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws. 
Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.

 

(c)  Interest
on each Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in
accordance with the terms hereof before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law.

 

65

 

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

 

(a)  Commitment Fee.  The Company shall pay to the Administrative
Agent for the account of each Revolving Credit Lender in accordance with its
Pro Rata Share, a commitment fee equal to the Applicable Rate with respect to
commitment fees times the average daily amount by which the aggregate Revolving
Credit Commitment exceeds the sum of (A) the Outstanding Amount of
Revolving Credit Loans (excluding any Swing Line Loans) and (B) the
Outstanding Amount of L/C Obligations; provided
that any commitment fee accrued with respect to any of the Commitments of a
Defaulting Lender during the period prior to the time such Lender became a
Defaulting Lender and unpaid at such time shall not be payable by the Company
so long as such Lender shall be a Defaulting Lender except to the extent that
such commitment fee shall otherwise have been due and payable by the Company
prior to such time; and provided further
that no commitment fee shall accrue on any of the Commitments of a Defaulting
Lender so long as such Lender shall be a Defaulting Lender.  The commitment fee shall accrue at all times
from the Closing Date until the Maturity Date for the Revolving Credit Facility
or such earlier date as the Revolving Credit Commitments shall be terminated hereunder,
including at any time during which one or more of the conditions in Article IV
is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with
the first such date to occur after the Closing Date, and on the Maturity Date
for the Revolving Credit Facility.  The
commitment fee shall be calculated quarterly in arrears, and if there is any
change in the Applicable Rate during any quarter, the average daily amount
shall be computed and multiplied by the Applicable Rate separately for each
period during such quarter that such Applicable Rate was in effect.

 

(b)  Other Fees.  The Company shall pay to the Agents such fees
as shall have been separately agreed upon in writing in the amounts and at the
times so specified.  Such fees shall be
fully earned when paid and shall not be refundable for any reason whatsoever
(except as expressly agreed between the Company and the applicable Agent).

 

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

 

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

 

66

 

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

 

(b)  In
addition to the accounts and records referred to in Section 2.11(a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records and, in the case of the Administrative Agent,
entries in the Register, evidencing the purchases and sales by such Lender of
participations in Letters of Credit and Swing Line Loans.  In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.

 

(c)  Entries
made in good faith by the Administrative Agent in the Register pursuant to
Sections 2.11(a) and (b), and by each Lender in its account or accounts
pursuant to Sections 2.11(a) and (b), shall be prima facie evidence of the amount of principal and interest
due and payable or to become due and payable from the Borrowers to, in the case
of the Register, each Lender and, in the case of such account or accounts, such
Lender, under this Agreement and the other Loan Documents, absent manifest
error; provided that the failure
of the Administrative Agent or such Lender to make an entry, or any finding
that an entry is incorrect, in the Register or such account or accounts shall
not limit or otherwise affect the obligations of the Borrowers under this
Agreement and the other Loan Documents.

 

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

 

67

 

(b)  If
any payment to be made by any Borrower shall come due on a day other than a
Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be; provided that, if
such extension would cause payment of interest on or principal of Eurocurrency
Rate Loans to be made in the next succeeding calendar month, such payment shall
be made on the immediately preceding Business Day.

 

(c)  Unless
any Borrower or any Lender has notified the Administrative Agent, prior to the
time any payment is required to be made by it to the Administrative Agent
hereunder, that such Borrower or such Lender, as the case may be, will not make
such payment, the Administrative Agent may assume that such Borrower or such
Lender, as the case may be, has timely made such payment and may (but shall not
be so required to), in reliance thereon, make available a corresponding amount
to the Person entitled thereto.  If and
to the extent that such payment was not in fact made to the Administrative
Agent in Same Day Funds, then:

 

(i)  if
any Borrower failed to make such payment, each Lender shall forthwith on demand
repay to the Administrative Agent the portion of such assumed payment that was
made available to such Lender in Same Day Funds, together with interest thereon
in respect of each day from and including the date such amount was made
available by the Administrative Agent to such Lender to the date such amount is
repaid to the Administrative Agent in Same Day Funds at the applicable
Overnight Rate from time to time in effect; and

 

(ii)  if
any Lender failed to make such payment, such Lender shall forthwith on demand
pay to the Administrative Agent the amount thereof in Same Day Funds, together
with interest thereon for the period from the date such amount was made
available by the Administrative Agent to the relevant Borrower to the date such
amount is recovered by the Administrative Agent (the “Compensation Period”) at a rate per annum
equal to the applicable Overnight Rate from time to time in effect.  When such Lender makes payment to the
Administrative Agent (together with all accrued interest thereon), then such
payment amount (excluding the amount of any interest which may have accrued and
been paid in respect of such late payment) shall constitute such Lender’s Loan
included in the applicable Borrowing.  If
such Lender does not pay such amount forthwith upon the Administrative Agent’s
demand therefor, the Administrative Agent may make a demand therefor upon the
relevant Borrower, and the relevant Borrower shall pay such amount to the
Administrative Agent, together with interest thereon for the Compensation
Period at a rate per annum equal to the rate of interest applicable to the
applicable Borrowing.  Nothing herein
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment or to prejudice any rights which the Administrative Agent or any
Borrower may have against any Lender as a result of any default by such Lender
hereunder.

 

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

 

(d)  If
any Lender makes available to the Administrative Agent funds for any Loan to be
made by such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to the relevant Borrower by the
Administrative Agent because the conditions to the applicable Credit Extension
set forth in Article IV are not satisfied or waived in accordance with the
terms hereof, the Administrative Agent shall return such funds (in like funds
as received from such Lender) to such Lender, without interest.

 

68

 

(e)  The
obligations of the Lenders hereunder to make Loans and to fund participations
in Letters of Credit and Swing Line Loans are several and not joint.  The failure of any Lender to make any Loan or
to fund any such participation on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan or purchase its participation.

 

(f)  Nothing
herein shall be deemed to obligate any Lender to obtain the funds for any Loan
in any particular place or manner or to constitute a representation by any
Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.

 

(g)  Whenever
any payment received by the Administrative Agent under this Agreement or any of
the other Loan Documents is insufficient to pay in full all amounts due and
payable to the Administrative Agent and the Lenders under or in respect of this
Agreement and the other Loan Documents on any date, such payment shall be distributed
by the Administrative Agent and applied by the Administrative Agent and the
Lenders in the order of priority set forth in Section 8.04.  If the Administrative Agent receives funds
for application to the Obligations of the Loan Parties under or in respect of
the Loan Documents under circumstances for which the Loan Documents do not
specify the manner in which such funds are to be applied, the Administrative
Agent may, but at the direction of Required Lenders shall, elect to distribute
such funds to each of the Lenders in accordance with such Lender’s Pro Rata
Share of the sum of (a) the Outstanding Amount of all Loans outstanding at
such time and (b) the Outstanding Amount of all L/C Obligations
outstanding at such time, in repayment or prepayment of such of the outstanding
Loans or other Obligations then owing to such Lender.

 

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

 

69

 

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

 

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

 

70

 

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

 

(b)  The
Company may from time to time designate any Foreign Subsidiary organized under
the Laws of Australia, Canada or the United Kingdom as an additional Overseas
Borrower for purposes of this Agreement by delivering written notice thereof to
the Administrative Agent duly executed on behalf of such Foreign Subsidiary and
the Company.  Any such Overseas Borrower
organized under the laws of Australia may, on any one date after the Closing
Date, by notice to the Administrative Agent (whereupon the Administrative Agent
shall promptly deliver a copy to each of the Lenders), request a tranche of
term loans denominated in Australian Dollars, any such Overseas Borrower
organized under the laws of Canada may, on any one date after the Closing Date,
by notice to the Administrative Agent (whereupon the Administrative Agent shall
promptly deliver a copy to each of the Lenders), request a tranche of term
loans denominated in Canadian Dollars, and any such Overseas Borrower organized
under the laws of the United 

 

71

 

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

 

72

 

(c)  This
Section 2.14 shall supersede any provisions in Section 2.13 or 10.01
to the contrary.

 

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

 

(b)  Each
Lender will promptly notify the Company, the relevant Overseas Borrower and the
Administrative Agent of any event or circumstance of which it has knowledge
that will entitle such Lender to compensation pursuant to this Section 2.15.  If any Lender requests compensation under
this Section 2.15, then such Lender will, if requested by the Company, use
commercially reasonable efforts to designate another Lending Office for any
Loan affected by such event; provided
that such efforts are made on terms that, in the reasonable judgment of such Lender,
cause such Lender and its Lending Office(s) to suffer no material
economic, legal or regulatory disadvantage.

 

ARTICLE III

TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

 

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

 

73

 

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

 

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

 

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

 

(d)  No
Borrower shall be required pursuant to this Section 3.01 to pay any
additional amount to, or to indemnify, any Lender or Agent, as the case may be,
to the extent that such Lender or such Agent becomes subject to Taxes
subsequent to the Closing Date (or, if later, the date such Lender or Agent
becomes a party to this Agreement) as a result of a change in the place of
organization of such Lender or Agent or a change in the lending office of such
Lender, except 

 

74

 

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

 

(e)  Notwithstanding
anything else herein to the contrary, if a Lender or an Agent is subject to
withholding tax imposed by any jurisdiction in which any Borrower is formed or
organized at a rate in excess of zero percent at the time such Lender or such
Agent, as the case may be, first becomes a party to this Agreement (or, if
later, the date such Lender or Agent makes an Incremental Overseas Term Loan to
any Borrower), withholding tax imposed by such jurisdiction at such rate shall
be considered excluded from Taxes unless and until such Lender or Agent, as the
case may be, provides the appropriate forms required or prescribed by
applicable Law certifying that a lesser rate applies, whereupon withholding tax
at such lesser rate only shall be considered excluded from Taxes for periods
governed by such forms; provided
that, if at the date of the Assignment and Assumption pursuant to which a
Lender becomes a party to this Agreement, the Lender assignor was entitled to
payments under clause (a) of this Section 3.01 in respect of
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes)
withholding tax, if any, applicable with respect to the Lender assignee on such
date.

 

(f)  If
any Lender or Agent determines, in its reasonable discretion, that it has
received a refund in respect of any Taxes or Other Taxes as to which
indemnification or additional amounts have been paid to it by any Borrower
pursuant to this Section 3.01, it shall promptly remit such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
any Borrower under this Section 3.01 with respect to the Taxes or Other
Taxes giving rise to such refund plus any interest included in such refund by
the relevant taxing authority attributable thereto) to such Borrower, net of
all out-of-pocket expenses of the Lender or Agent, as the case may be and
without interest (other than any interest paid by the relevant taxing authority
with respect to such refund); provided
that such Borrower, upon the request of the Lender or Agent, as the case may
be, agrees promptly to return such refund to such party in the event such party
is required to repay such refund to the relevant taxing authority.  Such Lender or Agent, as the case may be,
shall, at such Borrower’s request, provide such Borrower with a copy of any
notice of assessment or other evidence of the requirement to repay such refund
received from the relevant taxing authority (provided
that such Lender or Agent may delete any information therein that such Lender
or Agent deems confidential).  Nothing
herein contained shall interfere with the right of a Lender or Agent to arrange
its tax affairs in whatever manner it thinks fit nor oblige any Lender or Agent
to claim any tax refund or to make available its tax returns or disclose any
information relating to its tax affairs or any computations in respect thereof
or require any Lender or Agent to do anything that would prejudice its ability to
benefit from any other refunds, credits, reliefs, remissions or repayments to
which it may be entitled.

 

(g)  Each
Lender agrees that, upon the occurrence of any event giving rise to the
operation of Section 3.01(a) or (c) with respect to such Lender
it will, if requested by the Company, use commercially reasonable efforts to
designate another Lending Office for any Loan or Letter of Credit affected by
such event; provided that such
efforts are made on terms that, in the sole judgment exercised in good faith of
such Lender, cause such Lender and its Lending Office(s) to suffer no
economic, legal or regulatory disadvantage, and provided further that nothing in this Section 3.01(g) shall
affect or postpone any of the Obligations of any Borrower or the rights of such
Lender pursuant to Section 3.01(a) or (c).

 

75

 

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

 

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

 

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

 

76

 

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

 

(b)  If
any Lender determines (in good faith) that the introduction of any Law
regarding capital adequacy or any change therein or in the interpretation
thereof, in each case after the date hereof, or compliance by such Lender or
such Lender’s holding company therewith, has the effect of reducing the rate of
return on the capital of such Lender or such Lender’s holding company (or its
Lending Office) as a consequence of its obligations hereunder to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such introduction, change or compliance (taking into consideration its
policies with respect to capital adequacy, by an amount deemed by such Lender
to be material, then from time to time upon demand of such Lender setting forth
in reasonable detail the charge and the calculation of such reduced rate of
return (with a copy of such demand to the Administrative Agent given in
accordance with Section 3.06), the Company shall pay to such Lender such
additional amounts as will compensate such Lender or such Lender’s holding
company for such reduction within fifteen (15) days after receipt of such
demand.

 

(c)  The
Company shall pay to each Lender, (i) as long as such Lender shall be
required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits, additional interest on the
unpaid principal amount of each Eurocurrency Rate Loan equal to the actual
costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive in the
absence of manifest error), and (ii) as long as such Lender shall be
required to comply with any reserve ratio requirement or analogous requirement
of any other central banking or financial regulatory authority imposed in
respect of the maintenance of the Commitments or the funding of the
Eurocurrency Rate Loans, such additional costs (expressed as a percentage per
annum and rounded upwards, if necessary, to the nearest five decimal places)
equal to the actual costs allocated to such Commitment or Loan by such Lender
(as determined by such Lender in good faith, which determination shall be
conclusive absent manifest error) which in each case shall be due and payable
on each date on which interest is payable on such Loan, provided the Company
shall have received at least fifteen (15) days’ prior notice (with a copy to
the Administrative Agent, and which notice shall specify the Statutory Reserve
Rate, if any, applicable to such Lender) of such additional interest or cost
from such Lender.  If a Lender fails to
give notice fifteen (15) days prior to the relevant Interest Payment Date, such
additional interest or cost shall be due and payable fifteen (15) days from
receipt of such notice.

 

(d)  Failure
or delay on the part of any Lender to demand compensation pursuant to this Section 3.04
shall not constitute a waiver of such Lender’s right to demand such
compensation, provided that the
Company shall not be required to compensate a Lender pursuant to Section 3.04(a),
(b) or (c) for any such increased cost or reduction incurred more
than ninety (90) days prior to the date that such Lender demands, or notifies
the Company of its intention to demand, compensation therefor, provided further that, if the circumstance
giving rise to such increased cost or reduction is retroactive, then such
90-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

77

 

(e)  If
any Lender requests compensation under this Section 3.04, then such Lender
will, if requested by the Company, use commercially reasonable efforts to
designate another Lending Office for any Loan or Letter of Credit affected by
such event; provided that such
efforts are made on terms that, in the reasonable judgment of such Lender,
cause such Lender and its Lending Office(s) to suffer no material
economic, legal or regulatory disadvantage, and provided further that nothing in this Section 3.04(e) shall
affect or postpone any of the Obligations of any Borrower or the rights of such
Lender pursuant to Section 3.04(a), (b), (c) or (d) or any
rights of the Company pursuant to Section 3.07.

 

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

 

(a)  (i) any
continuation, conversion, payment or prepayment of any Eurocurrency Rate Loan
on a day other than the last day of the Interest Period for such Loan or (ii) the
CAM Exchange (in each case, whether voluntary, mandatory, automatic, by reason
of acceleration, or otherwise); or

 

(b)  any
failure by any Borrower (for a reason other than the failure of such Lender to
make a Loan) to prepay, borrow, continue or convert any Eurocurrency Rate Loan
on the date or in the amount notified by such Borrower;

 

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

 

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

 

(b)  With
respect to any Lender’s claim for compensation under Section 2.15, 3.01,
3.02, 3.03 or 3.04, no Borrower shall be required to compensate such Lender for
any amount incurred more than ninety (90) days prior to the date that such
Lender notifies the relevant Borrowers of the event that gives rise to such
claim; provided that, if the
circumstance giving rise to such claim is retroactive, then such 90-day period
referred to above shall be extended to include the period of retroactive effect
thereof.  If any Lender requests
compensation by the Company under Section 2.15 or 3.04, the Company may,
by notice to such Lender (with a copy to the Administrative Agent), suspend the
obligation of such Lender to make or continue from one Interest Period to
another Eurocurrency Rate Loans, or to convert Base Rate Loans into
Eurocurrency Rate Loans, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of Section 3.06(c) shall
be applicable); provided that
such suspension shall not affect the right of such Lender to receive the
compensation so requested.

 

(c)  If
the obligation of any Lender to make or continue from one Interest Period to
another any Eurocurrency Rate Loan, or to convert Base Rate Loans into
Eurocurrency Rate Loans shall be suspended pursuant to Section 3.06(b) hereof,
such Lender’s Eurocurrency Rate Loans shall be automatically converted into
Base Rate Loans on the last day(s) of the then current Interest Period(s) for
such Eurocurrency Rate Loans (or, in the case of an immediate conversion
required by Section 3.02, on such earlier date as required by Law) and,
unless and until such 

 

78

 

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

 

(i)  to
the extent that such Lender’s Eurocurrency Rate Loans have been so converted,
all payments and prepayments of principal that would otherwise be applied to
such Lender’s Eurocurrency Rate Loans shall be applied instead to its Base Rate
Loans; and

 

(ii)  all
Loans that would otherwise be made or continued from one Interest Period to
another by such Lender as Eurocurrency Rate Loans shall be made or continued
instead as Base Rate Loans, and all Base Rate Loans of such Lender that would
otherwise be converted into Eurocurrency Rate Loans shall remain as Base Rate
Loans.

 

(d)  If
any Lender gives notice to the Company (with a copy to the Agent) that the
circumstances specified in Section 2.15, 3.01, 3.02, 3.03 or 3.04 hereof
that gave rise to the conversion of such Lender’s Eurocurrency Rate Loans
pursuant to this Section 3.06 no longer exist (which such Lender agrees to
do promptly upon such circumstances ceasing to exist) at a time when
Eurocurrency Rate Loans made by other Lenders are outstanding, such Lender’s
Base Rate Loans shall be automatically converted, on the first day(s) of
the next succeeding Interest Period(s) for such outstanding Eurocurrency
Rate Loans, to the extent necessary so that, after giving effect thereto, all
Loans held by the Lenders holding Eurocurrency Rate Loans and by such Lender
are held pro rata (as to principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Commitments.

 

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

 

(b)  Any
Lender being replaced pursuant to Section 3.07(a) above shall (i) execute
and deliver an Assignment and Assumption with respect to such Lender’s
Commitment and outstanding Loans and participations in L/C Obligations and
Swing Line Loans, and (ii) deliver any Notes evidencing such Loans to the
Company or Administrative Agent. 
Pursuant to such Assignment and Assumption, (A) the assignee Lender
shall acquire all or a portion, as the case may be, of the assigning Lender’s
Commitment and outstanding Loans and participations in L/C Obligations and
Swing Line Loans, (B) all obligations of the Borrowers owing to the
assigning Lender relating to the Loans and participations so assigned shall be paid
in full by the assignee Lender to such assigning Lender concurrently with such
assignment and assumption and (C) upon such payment and, if so requested
by the assignee Lender, delivery to the assignee Lender of the appropriate Note
or Notes executed by the relevant Borrowers, the assignee Lender shall become a
Lender hereunder and the assigning Lender shall cease to constitute a Lender
hereunder with respect to such assigned Loans, Commitments and participations,
except with respect to indemnification provisions under this Agreement, which
shall survive as to such assigning Lender.

 

79

 

(c)  Notwithstanding
anything to the contrary contained above, any Lender that acts as an L/C Issuer
may not be replaced hereunder at any time that it has any Letter of Credit
outstanding hereunder unless arrangements reasonably satisfactory to such L/C
Issuer (including the furnishing of a back-up standby letter of credit in form
and substance, and issued by an issuer reasonably satisfactory to such L/C
Issuer or the depositing of cash collateral into a cash collateral account in
amounts and pursuant to arrangements reasonably satisfactory to such L/C
Issuer) have been made with respect to each such outstanding Letter of Credit
and the Lender that acts as the Administrative Agent may not be replaced
hereunder except in accordance with the terms of Section 9.09.

 

(d)  In
the event that (i) the Company or the Administrative Agent has requested
that the Lenders consent to a departure or waiver of any provisions of the Loan
Documents or agree to any amendment thereto, (ii) the consent, waiver or
amendment in question requires the agreement of all affected Lenders in
accordance with the terms of Section 10.01 or all the Lenders with respect
to a certain Class of the Loans and (iii) the Required Lenders have
agreed to such consent, waiver or amendment, then any Lender who does not agree
to such consent, waiver or amendment shall be deemed a “Non-Consenting Lender.”

 

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

 

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

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

 

(a)  The
Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party, each in form and substance reasonably satisfactory to the Administrative
Agent:

 

(i)  executed
counterparts of this Agreement;

 

(ii)  a
Note executed by the Company in favor of each Lender that has requested a Note
at least two Business Days in advance of the Closing Date;

 

(iii)  each
Collateral Document set forth on Schedule 1.01A, duly executed by each Loan
Party thereto, together with:

 

(A)  certificates,
if any, representing the Pledged Equity referred to therein accompanied by
undated stock powers executed in blank and instruments evidencing the Pledged
Debt indorsed in blank;

 

(B)  to
the extent required under the Collateral and Guarantee Requirement, an opinion
of local counsel for the Loan Parties in Iowa with respect to the
enforceability and perfection of the Mortgage with respect to the Mortgaged
Property in Iowa and any 

 

80

 

related
fixture filings in form and substance reasonably satisfactory to the
Administrative Agent;

 

(C)  evidence
that all other actions, recordings and filings that the Administrative Agent may
deem reasonably necessary to satisfy the Collateral and Guarantee Requirement
shall have been taken, completed or otherwise provided for in a manner
reasonably satisfactory to the Administrative Agent; and

 

(D)  a
completed Perfection Certificate dated the Closing Date and signed by the
associate general counsel or the chief legal officer of the Company, together
with all attachments contemplated thereby;

 

(iv)  such
certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may reasonably require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party or is to be a party on the
Closing Date;

 

(v)  opinion
from (u) Cravath, Swaine & Moore LLP, special New York counsel to
Holdings substantially in the form of Exhibit H-1, (v) local counsel
in each of Iowa and Washington as may be reasonably required by the
Administrative Agent, (w) Richards, Layton & Finger, special
Delaware counsel to the Loan Parties substantially in the form of Exhibit H-2,
and (x) Clifford H.R. DuPree, associate general counsel to the Company
substantially in the form of Exhibit H-3, (y) Karen E. Andrews,
general counsel to WRC Media substantially in the form of Exhibit H-4, and
(z) Randolph H. Elkins, general counsel to Direct Holdings substantially
in the form of Exhibit H-5;

 

(vi)  a
certificate signed by a Responsible Officer of Holdings certifying that (A) except
as set forth (x) in the Company Disclosure Letter (as defined in the
Purchase Agreement) or (y) in Reader’s Digest’s Annual Report on Form 10-K
for the fiscal year ended June 30, 2006, filed with the SEC on August 21,
2006, Reader’s Digest’s Current Reports on Forms 8-K filed with the SEC on October 4,
2006 and October 5, 2006, Reader’s Digest’s proxy statement on Schedule
14A filed with the SEC on September 29, 2006, Reader’s Digest’s
Registration Statement on Form S-8 filed with the SEC on August 21,
2006, and post-effective amendment thereto dated August 22, 2006, but
excluding in each case under this clause (y) any risk factor disclosures
or other cautionary, predictive and forward looking disclosures contained in
any such document under the heading “Risk Factors” or “Forward Looking
Statements” or under any other heading, from June 30, 2006 to November 16,
2006, there has been no state of facts, event, change, effect, development,
condition or occurrence that, individually or in the aggregate, has had or
could reasonably be expected to result in a Material Adverse Change, and (B) except
as set forth in the Company Disclosure Letter, since November 16, 2006,
there has been no event, change, effect, development, condition or occurrence
that, individually or in the aggregate, has had or could reasonably be expected
to result in a Material Adverse Change;

 

(vii)  a
certificate signed by a Responsible Officer of Holdings certifying that since June 30,
2006 there has been no event, change, effect, development, condition or
occurrence with respect to WRC Media, Direct Holdings or any of their
respective subsidiaries that, individually or in the aggregate, has had, or
would reasonably be expected to have a material adverse effect on the business,
operations, property or financial condition of Reader’s Digest, WRC Media,
Direct Holdings and their respective subsidiaries, taken as a whole.

 

81

 

(viii)  a
certificate (which shall be reasonably satisfactory to the Administrative
Agent) attesting to the Solvency of the Loan Parties (taken as a whole) after
giving effect to the Transaction, from the Treasurer of Holdings;

 

(ix)  except
as set forth in Section 6.17, evidence that all insurance (including title
insurance) required to be maintained pursuant to the Loan Documents has been
obtained and is in effect and that the Administrative Agent has been named as
loss payee or additional insured, as appropriate, under each insurance policy
with respect to such liability and property insurance as to which the
Administrative Agent shall have reasonably requested to be so named;

 

(x)  a
Committed Loan Notice or Letter of Credit Application, as applicable, relating
to the initial Credit Extension; and

 

(xi)  a
certificate signed by a Responsible Officer of the Company certifying
compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02.

 

(b)  All
fees and expenses required to be paid hereunder and invoiced before the Closing
Date shall have been paid in full in cash.

 

(c)  Prior
to or substantially contemporaneously with the initial Credit Extension, (i) the
Sponsor Equity Contributions shall have been funded in full in cash; and (ii) Acquisition
Co shall have received (as a common equity capital contribution or, if
otherwise, on terms and conditions reasonably satisfactory in all material
respects to the Administrative Agent) cash proceeds from the Equity
Contribution in an aggregate amount, when combined with (x) the aggregate
value of the Company Preferred Stock that is rolled over in connection with the
Transactions and (y) the value (which shall be calculated net of the fees
and expenses of the Company in connection with the WRC Acquisition and the DH
Acquisition in excess of $15,000,000) of the Equity Interests issued by
Holdings to the shareholders of WRC Media and Direct Holdings as consideration
for the WRC Acquisition and the DH Acquisition, respectively) is equal to at
least 29% of the total capitalization of the Company.

 

(d)  The
Acquisition and the Merger shall be consummated in accordance with the terms of
the Purchase Agreement without waiver or amendment of any material provisions
thereof (other than any such waivers or amendments as are not, taken as a
whole, materially adverse to the Lenders) unless consented to by the
Administrative Agent, which consent shall not be unreasonably withheld,
conditioned or delayed.

 

(e)  The
DH Acquisition shall be consummated in accordance with the terms of the DH
Acquisition Agreement without waiver or amendment of any material provisions
thereof (other than any such waivers or amendments as are not, taken as a
whole, materially adverse to the Lenders) unless consented to by the Administrative
Agent, which consent shall not be unreasonably withheld, conditioned or
delayed.  Holdings shall have contributed
all of the Equity Interests of Direct Holdings to the Company.

 

(f)  The
WRC Acquisition shall be consummated in accordance with the terms of the WRC
Acquisition Agreement without waiver or amendment of any material provisions
thereof (other than any such waivers or amendments as are not, taken as a
whole, materially adverse to the Lenders) unless consented to by the
Administrative Agent, which consent shall not be unreasonably withheld,
conditioned or delayed.  Holdings shall
have contributed all of the Equity Interests of WRC Media to the Company.

 

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(g)  Prior
to or substantially contemporaneously with the initial Credit Extensions, the
Company shall have received at least $600,000,000 in gross cash proceeds from
the issuance of the Senior Subordinated Notes.

 

(h)  Prior
to or substantially contemporaneously with the initial Credit Extensions,
Holdings shall have received at least $274,000,000 in gross cash proceeds from
the issuance of the Holdings Senior PIK Preferred.

 

(i)  Prior
to or substantially contemporaneously with the initial Credit Extensions,
Holdings shall have received at least $91,333,333.33 in gross cash proceeds
from the issuance of the Holdings Common Equity.

 

(j)  The
Administrative Agent shall have received evidence reasonably satisfactory to it
that all loans outstanding under the Existing Credit Agreement and the Existing
DH/WRC Debt Agreements and all accrued and unpaid interest, fees and other
amounts owing thereunder shall have been paid in full, all commitments to
extend credit thereunder shall have terminated, and all Liens securing
obligations thereunder shall have been released.  A Successful Consent Solicitation or a
Defeasance shall have been consummated. 
Except for (A) any Existing Notes not repurchased or redeemed on or
prior to the Closing Date, (B) Indebtedness listed on Schedule 7.03(b), (C) the
Company Preferred Stock, (D) the Loans and L/C Obligations, (E) the
Senior Subordinated Notes and (F) the Holdings PIK Preferred, Holdings,
the Company and its Subsidiaries shall have no Indebtedness or preferred Equity
Interests outstanding after giving effect to the Transaction.

 

(k)  The
Arrangers and the Lenders shall have received (i) the Audited Financial
Statements, (ii) the Unaudited Financial Statements and (iii) to the
extent made available by each of Reader’s Digest, Direct Holdings and WRC
Media, monthly financial data generated by each of Reader’s Digest’s, Direct
Holdings’, and WRC Media’s internal accounting systems for use by senior
management for each month ended after the latest fiscal quarter for which
Unaudited Financial Statements are delivered pursuant to clause (ii) above
and at least 30 days before the Closing Date.

 

(l)  The
Arrangers and the Lenders shall have received the Pro Forma Balance Sheet.

 

Notwithstanding anything in
this Agreement or any other Loan Document to the contrary, (I) the only
representations and warranties (and related defaults) made by the Loan Parties
relating to Reader’s Digest, its subsidiaries and their businesses the making
of which shall be a condition to availability of the Facilities on the Closing
Date shall be such of the representations made by Reader’s Digest in the
Purchase Agreement as are material to the interests of the Lenders, but only to
the extent that Holdings and Acquisition Co have the right to terminate their
obligations under the Purchase Agreement as a result of a breach of such
representations in the Purchase Agreement (determined without regard to whether
any notice is required to be delivered by Holdings or Acquisition Co), and (II) the
only other representations and warranties (and related defaults) made by the
Loan Parties the making of which shall be a condition to availability of the
Facilities on the Closing Date shall be the Specified Representations (as
defined below).  For purposes hereof, “Specified
Representations” means the representations and warranties set forth in
Sections 5.01(a), 5.01(b), 5.02, 5.04, 5.13, 5.16 and 5.18.

 

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

 

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

 

(a)  The
representations and warranties of the Company and each other Loan Party
contained in Article V or any other Loan Document shall be true and
correct in all material respects on and as of the date of such Credit
Extension; provided that, to the
extent that such representations and warranties specifically refer to an
earlier date, they shall be true and correct in all material respects as of
such earlier date; provided, further that,
any representation and warranty that is qualified as to “materiality,” “Material
Adverse Effect” or similar language shall be true and correct in all respects
on such respective dates.

 

(b)  No
Default shall have occurred and be continuing at the time of or immediately
after giving effect to such proposed Credit Extension.

 

(c)  The
Administrative Agent and, if applicable, the relevant L/C Issuer or the Swing
Line Lender shall have received a Request for Credit Extension in accordance
with the requirements hereof.

 

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

 

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

 

(a)  receipt
by the Administrative Agent of an opinion of counsel for such Overseas Borrower
reasonably acceptable to the Administrative Agent, covering such customary
matters relating to the transactions contemplated hereby as the Administrative
Agent may reasonably request;

 

(b)  receipt
by the Administrative Agent of all documents with respect to such Overseas
Borrower satisfying the requirements set forth in Section 4.01(a)(iv) with
respect thereto;

 

(c)  to
the extent required by the Collateral and Guarantee Requirement, all Overseas
Obligations shall have been (i) unconditionally guaranteed by each
required Guarantor and (ii) secured by a security interest in the required
Collateral with the priority required by the Collateral Documents, and the
Administrative Agent shall have received evidence that all other actions,
recordings and filings that the Administrative Agent may deem reasonably
necessary to satisfy the Collateral and Guarantee Requirement shall have been
taken, completed or otherwise provided for in a manner reasonably satisfactory
to the Administrative Agent;

 

(d)  receipt
by the Administrative Agent of a Note executed by such Overseas Borrower in
favor of each Lender that has requested a Note at least two Business Days in
advance of date of the relevant Credit Extension;

 

(e)  receipt
by the Administrative Agent of a certificate signed by a Responsible Officer of
the Company certifying compliance with the conditions set forth in paragraphs (a) and
(b) of Section 4.02; and

 

84

 

(f)  receipt
by the Administrative Agent of a certificate signed by a Responsible Officer of
such Overseas Borrower certifying that the representations and warranties set
forth in Sections 5.01, 5.02, 5.03 and 5.04 are true and correct in all
material respects as to such Overseas Borrower and any Loan Document to which
such Overseas Borrower is a party on and as of the date of such Credit
Extension; provided that any
representation and warranty that is qualified as to “materiality,” “Material
Adverse Effect” or similar language shall be true and correct in all respects
on such date.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

85

 

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

 

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

 

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

 

(ii)  The
unaudited pro  forma consolidated balance sheet of the Company and
its Subsidiaries as at December 31, 2006 (including the notes thereto)
(the “Pro Forma Balance Sheet”)
has been prepared giving effect (as if such events had occurred on such date)
to the Transaction, each material acquisition by Reader’s Digest, WRC Media,
Direct Holdings or any of their respective Subsidiaries consummated after June 30,
2006 (and, with respect to WRC Media, after December 31, 2005) and prior
to the Closing Date and all other transactions that would be required to be
given pro forma effect by Regulation S-X promulgated under the Exchange Act.  The Pro Forma Balance Sheet has been prepared
in good faith, based on assumptions believed by the Company to be reasonable as
of the date of delivery thereof, and presents fairly in all material respects
in accordance with GAAP the pro  forma financial position of the
Company and its Subsidiaries as at December 31, 2006 and their pro  forma
results of operations for the periods covered thereby, assuming that the events
specified in the preceding sentence had actually occurred at such date.

 

(b)  Since
June 30, 2006, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

 

(c)  The
forecasts of consolidated balance sheets, income statements and cash flow statements
of the Company and its Subsidiaries for each fiscal year through 2013, copies
of which have been furnished to the Administrative Agent prior to the Closing
Date, have been prepared in good faith on the basis of assumptions believed to
be reasonable at the time made, it being understood that forecasts are, by
their nature, inherently uncertain and actual results may vary from such
forecasts and that such variations may be material.

 

(d)  As
of the Closing Date, except as disclosed in any schedule to this Agreement,
neither the Company nor any Subsidiary has any Indebtedness or other
obligations or liabilities, direct or contingent (other than (i) the
Indebtedness, obligations and liabilities reflected on Schedule 5.05, (ii) obligations
arising under this Agreement, the Senior Subordinated Note 

 

86

 

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

 

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

 

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

 

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

 

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

 

(b)  Except
as specifically disclosed in Schedule 5.09 or except as could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, (i) none of the properties currently or, to the knowledge
of the Company, formerly owned, leased or operated by any Loan Party or any of
its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS
or any analogous foreign, state or local list or, to the knowledge of the
Company, is adjacent to any such property; and (ii) Hazardous Materials
have not been released, discharged or disposed of by any Person on any property
currently or, to the knowledge of the Company, formerly owned, leased or
operated by any Loan Party or any of its Subsidiaries and Hazardous Materials
have not otherwise been released, discharged or disposed of by any of the Loan
Parties and their Subsidiaries at any other location, in each case in a manner
that could reasonably be expected to result in Environmental Liability.

 

(c)  The
properties owned, leased or operated by the Company and the Subsidiaries do not
contain any Hazardous Materials in amounts or concentrations which (i) constitute
a violation of, (ii) require remedial action under, or (iii) could
give rise to liability under, Environmental 

 

87

 

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

 

(d)  Except
as specifically disclosed in Schedule 5.09, neither the Company nor any of
its Subsidiaries is undertaking, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or
response action relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law, except for such investigation or
assessment or remedial or response action that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

(e)  All
Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, by any Loan Party or any of its Subsidiaries, any
property currently or formerly owned or operated by any Loan Party or any of
its Subsidiaries have been disposed of in a manner not reasonably expected to
result, individually or in the aggregate, in a Material Adverse Effect.

 

(f)  Except
as would not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, none of the Loan Parties and their
Subsidiaries has contractually assumed any liability or obligation under or
relating to any Environmental Law.

 

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

 

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

 

(b)  (i) No
ERISA Event has occurred during the five year period prior to the date on which
this representation is made or deemed made with respect to any Pension Plan; (ii) neither
any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension
Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iii) neither any Loan Party nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; (iv) neither any Loan Party nor any ERISA Affiliate
has engaged in a transaction that could be subject to Sections 4069 or
4212(c) of ERISA; and (v) the present value of all benefit
liabilities under each Pension Plan does not exceed the aggregate current value
of the assets of such Pension Plan (based on those assumptions used to fund the
Pension Plans); except, with respect to each of the foregoing clauses of this Section 5.11(b),
as could not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.

 

88

 

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

 

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

 

(b)  None
of the Company, any Person Controlling the Company, or any Subsidiary is
required to be registered as an “investment company” under the Investment Company
Act of 1940.

 

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

 

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

 

89

 

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

 

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

 

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

 

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

 

(b)  Each
of the Mortgages is effective to create in favor of the Administrative Agent,
for the benefit of the Lenders, a legal, valid and enforceable (subject to the
effect of Debtor Relief Laws and subject to general principles of equity) Lien
on the Mortgaged Properties described therein and proceeds thereof, and when
the Mortgages are filed in the appropriate recording offices, each such
Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Mortgaged Properties
and the proceeds thereof, as security for the Obligations (as defined in the
relevant Mortgage), in each case prior and superior in right to any other
Person (except that the security interest created in such real property and the
Mortgaged Property may be subject to the Liens permitted by Section 7.01).

 

90

 

ARTICLE VI

AFFIRMATIVE COVENANTS

 

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

 

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

 

(a)  as
soon as available, but in any event within ninety (90) days (or, in the case of
the fiscal year ending June 30, 2007, one hundred twenty (120) days) after
the end of each fiscal year of the Company beginning with the fiscal year
ending June 30, 2007, a consolidated balance sheet of the Company and its
consolidated Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, stockholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all prepared in accordance with GAAP,
audited and accompanied by a report and opinion of an independent registered
public accounting firm of nationally recognized standing, which report and
opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit;

 

(b)  as
soon as available, but in any event within forty-five (45) days (or, in the
case of the fiscal quarter ending March 31, 2007, ninety (90) days) after
the end of each of the first three (3) fiscal quarters of each fiscal year
of the Company, an unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries (or, at the Company’s option, with respect to the
fiscal quarter of the Company ending March 31, 2007, of each of Reader’s
Digest and its consolidated Subsidiaries, WRC Media and its consolidated
Subsidiaries and Direct Holdings and its consolidated Subsidiaries) as at the
end of such fiscal quarter, and the related unaudited (i) consolidated
statements of income or operations for such fiscal quarter and for the portion
of the fiscal year then ended and (ii) consolidated statements of cash
flows for the portion of the fiscal year then ended, setting forth in each case
in comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year for the applicable entities and the corresponding portion
of the previous fiscal year for the applicable entities, all certified by a
Responsible Officer of the Company as fairly presenting in all material
respects the consolidated financial condition, results of operations,
stockholders’ equity and cash flows of the Company and its consolidated
Subsidiaries (or, at the Company’s option, with respect to the fiscal quarter
of the Company ending March 31, 2007 or the corresponding fiscal quarter ended
March 31, 2006, of each of Reader’s Digest and its consolidated
Subsidiaries, WRC Media and its consolidated Subsidiaries and Direct Holdings
and its consolidated Subsidiaries) in accordance with GAAP (other than the
comparative financial statements for the fiscal quarter ended March 31,
2006 and the fiscal year ended June 30, 2006), subject only to normal
year-end audit adjustments and the absence of footnotes;

 

(c)  as
soon as available, and in any event no later than ninety (90) days after the
end of each fiscal year of the Company beginning with the fiscal year ending June 30,
2007, a reasonably detailed consolidated budget for the following fiscal year
(including a projected consolidated balance sheet of the Company and its
consolidated Subsidiaries as of the end of the 

 

91

 

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

 

(d)  simultaneously
with the delivery of each set of consolidated financial statements referred to
in Sections 6.01(a) and 6.01(b) above, the related consolidating
financial statements reflecting the adjustments necessary to eliminate the
accounts of Unrestricted Subsidiaries (if any) from such consolidated financial
statements.

 

Notwithstanding the
foregoing, the obligations in paragraphs (a) and (b) of this Section 6.01
may be satisfied with respect to financial information of the Company and the
Restricted Subsidiaries by furnishing (A) the applicable financial
statements of Holdings (or any direct or indirect parent of Holdings) or (B) the
Company’s or Holdings’ (or any direct or indirect parent thereof), as applicable,
Form 10-K or 10-Q, as applicable, filed with the SEC; provided that, with respect to each of
clauses (A) and (B), (i) to the extent such information relates to
Holdings (or a parent thereof), such information is accompanied by
consolidating information that explains in reasonable detail the differences
between the information relating to Holdings (or such parent), on the one hand,
and the information relating to the Company and the Restricted Subsidiaries on
a standalone basis, on the other hand and (ii) to the extent such
information is in lieu of information required to be provided under Section 6.01(a),
such materials are accompanied by a report and opinion of an independent
registered public accounting firm of nationally recognized standing, which report
and opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit.

 

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

 

(a)  simultaneously
with the delivery of the financial statements referred to in Section 6.01(a),
a certificate of its independent registered public accounting firm certifying
such financial statements and stating that in making the examination necessary
therefor no knowledge was obtained of any Event of Default under Section 7.10
or, if any such Event of Default shall exist, stating the nature and status of
such event (which certificate may be limited to the extent required by such
firm’s general accounting and auditing rules, policies or guidelines);

 

(b)  simultaneously
with the delivery of the financial statements referred to in Section 6.01(a) and
(b), a duly completed Compliance Certificate signed by a Responsible Officer of
the Company and, if such Compliance Certificate demonstrates an Event of
Default of any covenant under Section 7.10, any of the Equity Investors
may deliver, together with such Compliance Certificate or at any time prior to
the end of the applicable Cure Period, notice of their intent to cure (a “Notice of Intent to Cure”) such Event of
Default pursuant to Section 8.05; provided
that the delivery of a Notice of Intent to Cure shall in no way affect or alter
the occurrence, existence or continuation of any such Event of Default or the
rights, benefits, powers and remedies of the Administrative Agent and the
Lenders under any Loan Document;

 

(c)  promptly
after the same are publicly available, copies of all annual, quarterly and
current reports and registration statements which the Company files with the
SEC or with any Governmental Authority that may be substituted therefor (other
than amendments to any registration statement (to the extent such registration
statement, in the form it became effective, is delivered), exhibits to any
registration statement and, if applicable, any registration statement on 

 

92

 

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

 

(d)  promptly
after the furnishing thereof, copies of any material requests or material
notices received by any Loan Party (other than in the ordinary course of
business) or material statements or material reports furnished to any holder of
debt securities of any Loan Party or of any of its Subsidiaries pursuant to the
terms of the Senior Subordinated Note Indenture or any other Junior Financing
Documentation in a principal amount greater than the Threshold Amount or to any
holder of preferred equity securities of any Loan Party and not otherwise
required to be furnished to the Lenders pursuant to any other clause of this Section 6.02;

 

(e)  together
with the delivery of each Compliance Certificate pursuant to Section 6.02(b) required
to be delivered concurrently with the delivery of financial statements referred
to in Section 6.01(a), (i) a certificate of a Responsible Officer of
the Company (x) setting forth the information required pursuant to the
Perfection Certificate or confirming that there has been no change in such
information since the date of the Perfection Certificate delivered on the
Closing Date or the date of the most recent certificate delivered pursuant to
this Section and (y) identifying, based on Collateral owned, and Laws
in effect, as of the date of such certificate, all Uniform Commercial Code
financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations, including all refilings,
rerecordings and reregistrations, containing a description of the Collateral
that will be required to be filed of record within the 18 months following the
date of such certificate, in each governmental, municipal or other appropriate
office in each jurisdiction identified pursuant to clause (x) above to the
extent necessary and required under the Collateral Documents to protect and
perfect the security interests under the Collateral Documents for a period of
not less than 18 months after the date of such certificate (except as noted
therein with respect to any continuation statements to be filed within such
period), (ii) a reasonably detailed calculation of Excess Cash Flow for
such fiscal year, (iii) a description of any change in the status of a
Subsidiary as a Restricted or an Unrestricted Subsidiary as of the date of
delivery of such Compliance Certificate and (iv) a description of any
change in the status of any Subsidiary as a Foreign Immaterial Subsidiary as of
the date of delivery of such Compliance Certificate; and

 

(f)  promptly,
such additional information regarding the business, legal, financial or
corporate affairs of any Loan Party or any Subsidiary, or compliance with the
terms of the Loan Documents, as the Administrative Agent or any Lender through
the Administrative Agent may from time to time reasonably request.

 

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

 

93

 

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

 

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

 

(a)  of
the occurrence of any continuing Default; and

 

(b)  of
any dispute, litigation, investigation or proceeding between any Loan Party or
any Subsidiary and any Governmental Authority or other Person that could
reasonably be expected to have a Material Adverse Effect.

 

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

 

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

 

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

 

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

 

94

 

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

 

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

 

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

 

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

 

(a)  upon
the formation or acquisition of any new direct or indirect Restricted
Subsidiary (in each case, other than an Excluded Subsidiary) by any Loan Party
or the designation in accordance with Section 6.15 of any existing direct
or indirect Subsidiary as a Restricted Subsidiary (other than an Excluded
Subsidiary):

 

(i)  within
(x) thirty (30) days after the formation, acquisition or designation of
any such Domestic Subsidiary or such longer period as may be reasonably
acceptable to the Administrative Agent and (y) ninety (90) days after the
formation, acquisition or designation of any such Foreign Subsidiary or such
longer period as may be reasonably acceptable to the Administrative Agent:

 

95

 

(A)  cause
each such Restricted Subsidiary that is required to become a Guarantor under
the Collateral and Guarantee Requirement or becomes a Guarantor to furnish to
the Administrative Agent a description of the Material Real Property owned by
such Restricted Subsidiary, in detail reasonably satisfactory to the
Administrative Agent;

 

(B)  cause
(x) each such Restricted Subsidiary that is required to become a Guarantor
pursuant to the Collateral and Guarantee Requirement or becomes a Guarantor to
duly execute and deliver to the Administrative Agent Mortgages, Security
Agreement Supplements and other security agreements and documents and to
execute, deliver, file and record any such other documents, statements,
assignments, instruments, agreements or other papers and take all other actions
reasonably requested by the Administrative Agent in order to create a perfected
security interest with the priority required by the Collateral Documents in all
of its assets required to constitute Collateral under the Loan Documents
(including, with respect to Mortgages, the documents listed in Section 6.12(b)),
as reasonably requested by and in form and substance reasonably satisfactory to
the Administrative Agent (consistent with the Mortgages, Guarantee and Security
Agreement and other security agreements in effect on the Closing Date), and (y) each
direct parent of each such Restricted Subsidiary (if such parent is a Borrower
or is required to be a Guarantor pursuant to the Collateral and Guarantee
Requirement or becomes a Guarantor) to duly execute and deliver to the
Administrative Agent such Security Agreement Supplements and other security
agreements and to execute, deliver, file and record any such other documents,
statements, assignments, instruments, agreements or other papers and take all
other actions reasonably requested by the Administrative Agent in order to
create a perfected security interest with the priority required by the
Collateral Documents in any uncertificated Equity Interests of such Restricted
Subsidiary that are required to constitute Collateral under the Loan Documents,
as reasonably requested by the Administrative Agent and in form and substance
reasonably satisfactory to the Administrative Agent (consistent with the
Guarantee and Security Agreement in effect on the Closing Date);

 

(C)  (x) cause
each such Restricted Subsidiary that is required to become a Guarantor pursuant
to the Collateral and Guarantee Requirement or becomes a Guarantor to deliver
any and all certificates representing Equity Interests (to the extent
certificated) that are required to be pledged pursuant to the Collateral and
Guarantee Requirement, accompanied by undated stock powers or other appropriate
instruments of transfer executed in blank and any instruments evidencing the intercompany
Indebtedness held by such Restricted Subsidiary and required to be pledged
pursuant to the Collateral Documents, indorsed in blank to the Administrative
Agent and (y) cause each direct parent of such Restricted Subsidiary (if
such parent is a Borrower or is required to be a Guarantor pursuant to the
Collateral and Guarantee Requirement or becomes a Guarantor) to deliver any and
all certificates representing the outstanding Equity Interests (to the extent
certificated) of such Restricted Subsidiary that are required to be pledged
pursuant to the Collateral and Guarantee Requirement, accompanied by undated
stock powers or other appropriate instruments of transfer executed in blank and
any instruments evidencing the intercompany Indebtedness issued by such
Restricted Subsidiary and required to be pledged in 

 

96

 

accordance
with the Collateral Documents, indorsed in blank to the Administrative Agent;

 

(D)  take
and cause such Restricted Subsidiary and each direct or indirect parent of such
Restricted Subsidiary to take whatever action (including the recording of
Mortgages, the filing of Uniform Commercial Code financing statements, delivery
of stock and membership interest certificates, delivery of promissory notes
duly endorsed in favor of the Administrative Agent, and the execution,
delivery, filing and recording of any such other documents, statements,
assignments, instruments, agreements or other papers) may be reasonably
requested by the Administrative Agent to vest in the Administrative Agent (or
in any representative of the Administrative Agent designated by it) valid Liens
required by the Collateral and Guarantee Requirement, enforceable against all
third parties in accordance with their terms, except as such enforceability may
be limited by Debtor Relief Laws and by general principles of equity;

 

(E)  cause
each such Restricted Subsidiary that is required to become a Guarantor under
the Collateral and Guarantee Requirement to Guarantee the Obligations; and

 

(F)  cause
each such Restricted Subsidiary to deliver to the Administrative Agent copies
of its Organization Documents,

 

(ii)  within
thirty (30) days (with respect to any Domestic Subsidiary) or ninety (90) days
(with respect to any Foreign Subsidiary) after the request therefor by the
Administrative Agent (or such longer period as may be reasonably acceptable to
the Administrative Agent), deliver to the Administrative Agent a signed copy of
an opinion, addressed to the Administrative Agent, the other Agents and the
Lenders, of counsel for the Loan Parties reasonably acceptable to the
Administrative Agent as to such matters set forth in this Section 6.10(a) as
the Administrative Agent may reasonably request, and

 

(iii)  as
promptly as practicable after the request therefor by the Administrative Agent,
deliver to the Administrative Agent, with respect to each parcel of Material
Real Property that is owned by such Restricted Subsidiary, any existing title
reports, existing surveys or existing environmental assessment reports; and

 

(b)  after
the Closing Date, concurrently with the acquisition of any Material Real
Property by any Loan Party and such Material Real Property shall not already be
subject to a perfected Lien pursuant to the Collateral and Guarantee
Requirement, the Company shall give notice thereof to the Administrative Agent
and promptly thereafter shall cause such assets to be subjected to a Lien to
the extent and at such times as shall be required by the Collateral and
Guarantee Requirement and the Collateral Documents, as the case may be, and
will take, or cause the relevant Loan Party to take, such actions and at such
times as shall be reasonably requested by the Administrative Agent to grant and
perfect or record such Lien, including, as applicable, the actions referred to
in Section 6.12(b).

 

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

 

97

 

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

 

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

 

(b)  In
the case of any Material Real Property referred to in Section 6.10(b),
provide the Administrative Agent with Mortgages with respect to such Material
Real Property within sixty (60) days of the acquisition of such real property
(or such longer period as may be reasonably acceptable to the Administrative
Agent) together with:

 

(i)  evidence
that counterparts of any such Mortgage has been duly executed, acknowledged and
delivered and is in form suitable for filing or recording in all filing or
recording offices that the Administrative Agent may deem reasonably necessary
or desirable in order to create a valid and subsisting perfected Lien on the
property and/or rights described therein in favor of the Administrative Agent
for the benefit of the Secured Parties and that all filing and recording taxes
and fees have been paid or otherwise provided for in a manner reasonably
satisfactory to the Administrative Agent;

 

(ii)  fully
paid American Land Title Association Lender’s Extended Coverage title insurance
policies or the equivalent or other form available in each applicable
jurisdiction (the “Mortgage Policies”)
in form and substance, with endorsements and in amount, reasonably acceptable
to the Administrative Agent (not to exceed the value of the real properties
covered thereby), issued, coinsured and reinsured by title insurers reasonably
acceptable to the Administrative Agent, insuring the Mortgages to be valid
subsisting Liens on the property described therein, free and clear of all
defects and encumbrances except for minor defects in title that do not
materially interfere with the Loan Party’s ability to conduct business and
subject to Liens permitted by Section 7.01, and providing for such other
affirmative insurance (including endorsements for future advances under the
Loan Documents) and such coinsurance and direct access reinsurance as the
Administrative Agent may reasonably request;

 

(iii)  opinions
of local counsel for the Loan Parties in states in which the real properties
are located, with respect to the enforceability and perfection of any such
Mortgage and any related fixture filings in form and substance reasonably
satisfactory to the Administrative Agent; and

 

(iv)  such
other evidence that all other actions that the Administrative Agent may
reasonably deem necessary or desirable in order to create valid and subsisting
Liens on the property described in each such Mortgage has been taken.

 

98

 

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

 

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

 

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

 

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

 

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

 

(b)  Within
90 days following the Closing Date (or such longer period as may be reasonably
acceptable to the Administrative Agent), (i) the German Borrower will
enter into, and cause each of its Overseas Guarantors to enter into (and the
Company shall cause the direct parent entity of the German Borrower to enter
into, if such direct parent entity is a Foreign Subsidiary), 

 

99

 

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

 

(c)  Within
30 days following the Closing Date (or such longer period as may be reasonably
acceptable to the Administrative Agent), the Company will enter into a pledge
agreement under the laws of the United Kingdom in form and substance reasonably
satisfactory to the Administrative Agent and provide legal opinions reasonably
satisfactory to the Administrative Agent with respect to the pledge of the
outstanding Equity Interests (limited, with respect to outstanding voting
Equity Interests, to 65%) in The Reader’s Digest Association Limited.

 

(d)  Within
60 days following the Closing Date (or such longer period as may be reasonably
acceptable to the Administrative Agent), deliver to the Administrative Agent
any and all certificates representing Equity Interests of Das Beste aus Reader’s
Digest AG, accompanied by undated stock powers or other appropriate instruments
of transfer executed in blank, in each case to the extent required to satisfy
the Collateral and Guarantee Requirement under clause (d) thereof.

 

ARTICLE VII

NEGATIVE COVENANTS

 

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

 

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

 

(a)  Liens
pursuant to any Loan Document;

 

(b)  Liens
existing on the date hereof and listed on Schedule 7.01(b) and any
modifications, replacements, renewals or extensions thereof; provided that (i) the Lien does not
extend to any additional property other than (A) after-acquired property
that is affixed or incorporated into the property covered by such Lien or
financed by Indebtedness permitted under Section 7.03, and (B) proceeds
and products thereof, and (ii) the renewal, extension or refinancing of
the obligations secured or benefited by such Liens is permitted by Section 7.03;

 

(c)  Liens
for taxes, assessments or governmental charges which are not overdue for a
period of more than thirty (30) days or which are being contested in good faith
and by appropriate 

 

100

 

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

 

(d)  statutory
Liens of landlords, carriers, warehousemen, mechanics, materialmen, repairmen,
workmen, suppliers, construction contractors or other like Liens arising in the
ordinary course of business which secure amounts not overdue for a period of
more than thirty (30) days or if more than thirty (30) days overdue, are
unfiled and no other action has been taken to enforce such Lien or which are
being contested in good faith and by appropriate proceedings diligently
conducted, if reserves with respect thereto are maintained on the books of the
applicable Person to the extent required by and in accordance with GAAP;

 

(e)  (i) Liens,
pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation and (ii) Liens, pledges and deposits in the ordinary course of
business securing liability for premiums or reimbursement or indemnification
obligations of (including obligations in respect of letters of credit or bank
guarantees for the benefit of) insurance carriers providing insurance to
Holdings, the Company or any Restricted Subsidiary;

 

(f)  Liens
or deposits (including deposits made to satisfy statutory or other legal
obligations in connection with sweepstakes or similar contests) to secure the
performance of bids, trade contracts, governmental contracts, tenders,
statutory bonds and leases (other than Indebtedness for borrowed money and
Capitalized Leases), statutory obligations, surety, stay, customs and appeal
bonds, performance bonds and other obligations of a like nature (including
those to secure health, safety and environmental obligations) incurred in the
ordinary course of business;

 

(g)  easements,
rights-of-way, restrictions (including zoning restrictions), covenants,
licenses, encroachments, protrusions and other similar encumbrances and minor title
defects affecting real property which, in the aggregate, do not in any case
materially interfere with the ordinary conduct of the business of the Company
or any Subsidiary;

 

(h)  Liens
securing judgments, decrees, attachments or awards for the payment of money not
constituting an Event of Default under Section 8.01(h);

 

(i)  Liens
securing Indebtedness permitted under Section 7.03(e); provided that (i) such Liens attach
concurrently with or within two hundred and seventy (270) days after the
acquisition, repair, replacement, construction or improvement (as applicable)
of the property subject to such Liens, (ii) such Liens do not at any time
encumber any property except for accessions to such property other than the
property financed by such Indebtedness and the proceeds and the products
thereof and (iii) with respect to Capitalized Leases, such Liens do not at
any time extend to or cover any assets (except for accessions to such assets)
other than the assets subject to such Capitalized Leases; provided further that individual
financings of equipment provided by one lender may be cross collateralized to
other financings of equipment provided by such lender;

 

(j)  leases,
licenses, subleases or sublicenses granted to others in the ordinary course of
business which do not (i) interfere in any material respect with the
business of the Company or any Subsidiary or (ii) secure
any Indebtedness;

 

101

 

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

 

(l)  Liens
(i) of a collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection, (ii) attaching to
commodity trading accounts or other commodities brokerage accounts incurred in
the ordinary course of business; and (iii) in favor of a banking
institution arising as a matter of law encumbering deposits (including the
right of set-off);

 

(m)  Liens
(i) on cash advances in favor of the seller of any property to be acquired
in an Investment permitted pursuant to Sections 7.02(f), (i) and (n) to
be applied against the purchase price for such Investment, and (ii) consisting
of an agreement to Dispose of any property in a Disposition permitted under Section 7.05,
in each case, solely to the extent such Investment or Disposition, as the case
may be, would have been permitted on the date of the creation of such Lien;

 

(n)  Liens
on property or Equity Interests of any Foreign Subsidiary (other than a
Borrower) (i) that is not a Loan Party and (ii) which property or
Equity Interests do not constitute Collateral, which Liens secure Indebtedness
of such Foreign Subsidiary permitted under Section 7.03;

 

(o)  Liens
securing Indebtedness permitted under Section 7.03(d) (i) of the
Company or a Restricted Subsidiary in favor of a Loan Party and (ii) of
any Restricted Subsidiary that is not a Loan Party in favor of any other
Restricted Subsidiary that is not a Loan Party;

 

(p)  Liens
existing on property at the time of its acquisition or existing on the property
of any Person at the time such Person becomes a Restricted Subsidiary (other
than by designation as a Restricted Subsidiary pursuant to Section 6.15),
in each case after the date hereof (other than Liens on the Equity Interests of
any Person that becomes a Restricted Subsidiary); provided that (i) such Lien was not created in
contemplation of such acquisition or such Person becoming a Restricted
Subsidiary, (ii) such Lien does not extend to or cover any other assets or
property (other than the proceeds or products thereof and other than
improvements and after-acquired property subjected to a Lien securing
Indebtedness and other obligations incurred prior to such time and which
Indebtedness and other obligations are permitted hereunder that require,
pursuant to their terms at such time, a pledge of after-acquired property, it
being understood that such requirement shall not be permitted to apply to any
property to which such requirement would not have applied but for such
acquisition), and (iii) the Indebtedness secured thereby is permitted
under Section 7.03(e), (g), (h) or (k);

 

(q)  any
interest or title of a lessor under leases entered into by the Company or any
of the Restricted Subsidiaries in the ordinary course of business;

 

(r)  Liens
arising out of conditional sale, title retention, consignment or similar
arrangements for sale of goods entered into by the Company or any of the
Restricted Subsidiaries in the ordinary course of business permitted by this
Agreement;

 

(s)  Liens
deemed to exist in connection with Investments in repurchase agreements under Section 7.02;

 

102

 

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

 

(u)  Liens
that are contractual rights of set-off or, in the case of clause (i) or (ii) below,
other bankers’ Liens (i) relating to Cash Management Obligations or to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness, (ii) relating to pooled deposit or sweep
accounts of Holdings, the Company or any Restricted Subsidiary to permit
satisfaction of overdraft or similar obligations incurred in the ordinary
course of business of Holdings, the Company and the Restricted Subsidiaries or (iii) relating
to purchase orders and other agreements entered into with customers of the
Company or any Restricted Subsidiary in the ordinary course of business;

 

(v)  Liens
solely on any cash earnest money deposits made by the Company or any of the
Restricted Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;

 

(w)  (i) Liens
placed upon the Equity Interests of any Restricted Subsidiary acquired pursuant
to a Permitted Acquisition to secure Indebtedness incurred pursuant to Section 7.03(g) in
connection with such Permitted Acquisition and (ii) Liens placed upon the
assets of such Restricted Subsidiary and any of its Subsidiaries to secure a
Guarantee by such Restricted Subsidiary and its Subsidiaries of any such
Indebtedness incurred pursuant to Section 7.03(g);

 

(x)  ground
leases in respect of real property on which facilities owned or leased by the
Company or any of its Subsidiaries are located and other Liens affecting the
interest of any landlord (and any underlying landlord) of any real property
leased by the Company or any Restricted Subsidiary;

 

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

 

(z)  other
Liens securing obligations, including Indebtedness, outstanding in an aggregate
principal amount not to exceed $100,000,000.

 

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

 

(a)  Investments
by the Company or a Restricted Subsidiary in cash and assets that were Cash
Equivalents when such Investment was made;

 

(b)  loans
or advances to officers, directors and employees of Holdings, the Company and
the Restricted Subsidiaries (i) for reasonable and customary
business-related travel, entertainment, relocation and analogous ordinary
business purposes, (ii) in connection with such Person’s purchase of
Equity Interests of Holdings (or any direct or indirect parent thereof) (provided that the amount of such loans and
advances shall be contributed to the Company in cash as common equity) and (iii) for
purposes not described in the foregoing clauses (i) and (ii), in an
aggregate principal amount outstanding not to exceed $5,000,000;

 

(c)  Investments
(i) by Holdings, the Company or any Restricted Subsidiary in the Company
or any Subsidiary that is a Loan Party, (ii) by any Restricted Subsidiary
that is not a Loan Party in any other such Restricted Subsidiary that is also
not a Loan Party, and (iii) by the

 

103

 

Company or any Restricted
Subsidiary (A) in any Restricted Subsidiary; provided that the aggregate amount of such Investments in
Restricted Subsidiaries that are not Loan Parties (together with the aggregate
consideration paid in respect of Permitted Acquisitions of Persons that do not
become Loan Parties pursuant to Section 7.02(i)(B)) shall not exceed (x) $350,000,000
for the period from the Closing Date to the first anniversary of the Closing
Date, (y) $400,000,000 for the period from the Closing Date to the second
anniversary of the Closing Date and (z) $500,000,000 for the period from
the Closing Date to the Maturity Date with respect to the Term Loans (in each
case, net of any return representing a return of capital in respect of any such
Investment), (B) in any Foreign Subsidiary that is a Loan Party,
consisting of the contribution of Equity Interests of any other Foreign
Subsidiary held directly by the Company or such Restricted Subsidiary in
exchange for Indebtedness, Equity Interests or a combination thereof of the
Foreign Subsidiary to which such contribution is made, (C) in any Foreign
Subsidiary, constituting an exchange of Equity Interests of such Foreign
Subsidiary for Indebtedness of such Foreign Subsidiary or (D) constituting
Guarantees of Indebtedness or other monetary obligations of Foreign
Subsidiaries owing to any Loan Party; provided
that any Indebtedness incurred by a Loan Party pursuant to Section 7.03(h)(i)(B) to
finance a Permitted Acquisition and loaned, advanced or contributed to a
Restricted Subsidiary that is not a Loan Party to consummate such Permitted
Acquisition (which, but for the operation of this proviso, would have been
treated as an Investment by such Loan Party pursuant to this clause (c) and
a subsequent Investment by such Restricted Subsidiary that is not a Loan Party
pursuant to Section 7.02(i)) shall be treated as a single Investment by
such Restricted Subsidiary that is not a Loan Party pursuant to Section 7.02(i);

 

(d)  Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors and other credits to
suppliers in the ordinary course of business;

 

(e)  Investments
(i) resulting from the creation of a Lien permitted under Section 7.01,
(ii) resulting from the incurrence of Indebtedness permitted under Section 7.03,
(iii) made to effect Dispositions permitted under Section 7.04 or Section 7.05
(other than Section 7.05(e)) or (iv) made to effect Restricted
Payments permitted under Section 7.06;

 

(f)  (i) Investments
existing or contemplated on the date hereof and set forth on Schedule 7.02(f) and
any modification, replacement, renewal, reinvestment or extension thereof and (ii) Investments
existing on the date hereof by the Company or any Restricted Subsidiary in the
Company or any other Restricted Subsidiary and any modification, renewal or
extension thereof; provided that
the amount of the original Investment is not increased except by the terms of
such Investment or as otherwise permitted by this Section 7.02;

 

(g)  Investments
in Swap Contracts permitted under Section 7.03;

 

(h)  promissory
notes and other non-cash consideration received in connection with Dispositions
permitted by Section 7.05;

 

(i)  the
purchase or other acquisition of property and assets or businesses of any
Person or of assets constituting a business unit, a line of business or
division of such Person, or Equity Interests in a Person that, upon the
consummation thereof, will be a Subsidiary of the Company (including as a
result of a merger or consolidation); provided
that, with respect to each purchase or other acquisition made pursuant to this Section 7.02(i) (each,
a “Permitted Acquisition”):

 

104

 

(A)  subject
to clause (B) below, each applicable Loan Party and any such newly created
or acquired Subsidiary (and, to the extent required under the Collateral and
Guarantee Requirement, the Subsidiaries of such created or acquired Subsidiary)
shall be a Guarantor and shall have complied with the requirements of and
granted the security interests required by Section 6.10 within the times
specified therein;

 

(B)  the
aggregate amount of consideration (cash and non-cash (other than Qualified
Equity Interests of Holdings and the Net Cash Proceeds of Permitted Equity
Issuances after the Closing Date Not Otherwise Applied), including (i) the
fair market value (on the date of such Permitted Acquisition) of all Equity
Interests issued or transferred to the sellers thereof and (ii) all
indemnities, earnouts and other contingent payment obligations to, and the
aggregate amounts paid or to be paid under noncompete, consulting and other
affiliated agreements with, the sellers thereof, all write-downs of property
and reserves for liabilities with respect thereto and all assumptions of debt,
liabilities and other obligations in connection therewith; provided that any such liability or future
payment pursuant to clause (ii) above that is subject to a contingency
shall be considered consideration for a Permitted Acquisition for purposes of
this clause (B) only to the extent of the amount of such liability or
payment, if any, required under GAAP to be reflected on the face of a
consolidated balance sheet of the Company or the reserve, if any, required
under GAAP to be established in respect thereof by the Company or any of its
Restricted Subsidiaries, in each case at the time such Permitted Acquisition is
consummated) paid in respect of acquisitions of Persons that do not become Loan
Parties (together with the aggregate amount of all Investments in Restricted
Subsidiaries that are not Loan Parties pursuant to Section 7.02(c)(iii))
shall not exceed (x) $350,000,000 for the period from the Closing Date to
the first anniversary of the Closing Date, (y) $400,000,000 for the period
from the Closing Date to the second anniversary of the Closing Date and (z) $500,000,000
for the period from the Closing Date to the Maturity Date with respect to the
Term Loans (in each case, net of any return representing a return of capital in
respect of any such Investment);

 

(C)  
(1) immediately before and immediately after giving Pro Forma Effect to
any such purchase or other acquisition (including any Indebtedness incurred
pursuant thereto as permitted under Sections 7.03(e), (g) and (h)), no
Event of Default shall have occurred and be continuing and (2) immediately
after giving effect to such purchase or other acquisition, the Company and the
Restricted Subsidiaries shall be in Pro Forma Compliance with all of the covenants
set forth in Section 7.10, such compliance to be determined on the basis
of the financial information most recently delivered to the Administrative
Agent and the Lenders pursuant to Section 6.01(a) or (b) as
though such purchase or other acquisition had been consummated as of the first
day of the fiscal period covered thereby and evidenced by a certificate from
the Chief Financial Officer of the Company demonstrating such compliance
calculation in reasonable detail; and

 

(D)  the
Company shall have delivered to the Administrative Agent, on behalf of the
Lenders, no later than five (5) Business Days after the date on which any
such purchase or other acquisition is consummated, a certificate of a
Responsible Officer, in form and substance reasonably satisfactory to the
Administrative Agent, certifying that all of the requirements set forth in this
clause (i) have been satisfied or will be satisfied on or prior to the
consummation of such purchase or other acquisition;

 

(j)  the
Transaction;

 

105

 

(k)  Investments
in the ordinary course of business consisting of Article 3 endorsements
for collection or deposit and Article 4 customary trade arrangements with
customers consistent with past practices;

 

(l)  Investments
(including debt obligations and Equity Interests) received in connection with
the bankruptcy or reorganization of suppliers and customers or in settlement of
delinquent obligations of, or other disputes with, customers and suppliers
arising in the ordinary course of business or upon the foreclosure with respect
to any secured Investment or other transfer of title with respect to any
secured Investment;

 

(m)  loans
and advances to Holdings (or any direct or indirect parent thereof) in lieu of,
and not in excess of the amount of (after giving effect to any other loans,
advances or Restricted Payments in respect thereof), Restricted Payments to the
extent permitted to be made to Holdings (or such parent) in accordance with
Sections 7.06(f) or (g);

 

(n)  Investments
that do not exceed the sum of (i) $200,000,000 plus (ii) the
aggregate amount of the Net Cash Proceeds of Permitted Equity Issuances after
the Closing Date (other than Permitted Equity Issuances made pursuant to Section 8.05)
that have been contributed to the Company as common equity and Not Otherwise
Applied plus (iii) if, as of the last day of the immediately
preceding Test Period (after giving Pro Forma Effect to such Investments) the
Total Leverage Ratio is less than 4.00:1.00, the amount of Cumulative Excess
Cash Flow that is Not Otherwise Applied;

 

(o)  advances
of payroll payments to employees and advances to authors in the ordinary course
of business;

 

(p)  Investments
to the extent that payment for such Investments is made solely with Qualified
Equity Interests of Holdings;

 

(q)  existing
Investments of a Restricted Subsidiary acquired after the Closing Date or of a
corporation merged into the Company or merged or consolidated with a Restricted
Subsidiary in accordance with Section 7.04 after the Closing Date to the
extent that such Investments were not made in contemplation of or in connection
with such acquisition, merger or consolidation and were in existence on the
date of such acquisition, merger or consolidation;

 

(r)  Guarantees
by Holdings, the Company or any Restricted Subsidiary of leases (other than
Capitalized Leases) or of other obligations that do not constitute
Indebtedness, in each case entered into in the ordinary course of business;

 

(s)  lease,
utility and other similar deposits in the ordinary course of business; and

 

(t)  loans
by any Restricted Subsidiary to any other Restricted Subsidiary of the proceeds
of Incremental Overseas Term Loans provided that such proceeds are ultimately
received by the Company and applied in accordance with Section 2.05(b)(iii);

 

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

 

106

 

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

 

(a)  Indebtedness
of Holdings, the Company and any of its Subsidiaries under the Loan Documents;

 

(b)  (i)(x) Indebtedness
outstanding on the date hereof and listed on Schedule 7.03(b) and (y) any
Permitted Refinancing thereof (to the extent (A) such Permitted
Refinancing is incurred by the Person who is the obligor of the Indebtedness
subject to such Permitted Refinancing, (B) such Permitted Refinancing, if
incurred by a Person who is not a Loan Party, is in respect of Indebtedness
originally incurred by a Person who is not a Loan Party, or (C) such
incurrence is otherwise permitted under this Section 7.03) and (ii) intercompany
Indebtedness outstanding on the Closing Date;

 

(c)  Guarantees
by Holdings, the Company and the Restricted Subsidiaries in respect of
Indebtedness otherwise permitted hereunder of the Company or any Restricted
Subsidiary to the extent constituting an Investment permitted under Section 7.02;
provided that (A) no Guarantee
by any Restricted Subsidiary of the Senior Subordinated Notes or any other
Junior Financing shall be permitted unless such Restricted Subsidiary shall
have also provided a Guarantee of the Obligations substantially on the terms
set forth in the Guarantee and Security Agreement, (B) if the Indebtedness
being Guaranteed is subordinated to the Obligations, such Guarantee shall be
subordinated to the Guarantee of the Obligations on terms at least as favorable
to the Lenders (in the reasonable good faith determination of the Company) as
those contained in the subordination of such Indebtedness and (C) a Loan
Party may not Guarantee Indebtedness of a Restricted Subsidiary that is not a
Loan Party unless such Loan Party could have incurred such Indebtedness or such
Guarantee is subordinated to the Obligations on the terms set forth in Section 5.1(b) of
the Guarantee and Security Agreement;

 

(d)  Indebtedness
of the Company or any Restricted Subsidiary owing to the Company or any other
Restricted Subsidiary to the extent constituting an Investment permitted by Section 7.02;
provided that, all such
Indebtedness of any Loan Party owed to any Person that is not a Loan Party
shall be subject to the subordination terms set forth in Section 5.1(b) of
the Guarantee and Security Agreement;

 

(e)  (i) Attributable
Indebtedness and other Indebtedness (including Capitalized Leases) financing
the acquisition, construction, repair, replacement or improvement of fixed or
capital assets; provided that
such Indebtedness is incurred concurrently with or within two hundred and
seventy (270) days after the applicable acquisition, construction, repair,
replacement or improvement, and (ii) any Permitted Refinancing of any
Indebtedness set forth in the immediately preceding clause (i); provided that the aggregate principal
amount of all Indebtedness permitted under this Section 7.03(e) shall
not exceed $50,000,000 at any time outstanding;

 

(f)  Indebtedness
in respect of Swap Contracts incurred in the ordinary course of business and
not for speculative purposes;

 

(g)  Indebtedness
of the Company or any Restricted Subsidiary (i) assumed in connection with
any Permitted Acquisition; provided
that such Indebtedness is not incurred in contemplation of such Permitted
Acquisition or (ii) incurred to finance a Permitted Acquisition, in each
case, that is secured only by the assets or business (including any Equity
Interests) acquired in the applicable Permitted Acquisition and so long as both
immediately prior and after giving effect thereto, (A) no Event of Default
shall exist or result therefrom, (B) the Company and the

 

107

 

Restricted Subsidiaries will
be in Pro Forma Compliance  with
the covenants set forth in Section 7.10, such compliance to be determined
on the basis of the financial information most recently delivered to the
Administrative Agent and the Lenders pursuant to Section 6.01(a) or (b) as
though such Indebtedness had been assumed or incurred as of the first day of
the fiscal period covered thereby and evidenced by a certificate from the Chief
Financial Officer of the Company demonstrating such compliance calculation in
reasonable detail, (C) the aggregate principal amount of such Indebtedness
and all Indebtedness resulting from any Permitted Refinancing thereof at any
time outstanding pursuant to this paragraph (g) (together with the
aggregate principal amount of Indebtedness incurred pursuant to Section 7.03(h)(y))
does not exceed $150,000,000, and (D) the aggregate principal amount of Indebtedness
pursuant to this clause (g) and clause (h) below assumed by
Restricted Subsidiaries that are not Loan Parties in connection with or
incurred by Restricted Subsidiaries that are not Loan Parties to finance
Permitted Acquisitions of Persons that do not become Loan Parties and all
Indebtedness resulting from any Permitted Refinancing thereof shall not exceed (I) with
respect to any such Permitted Acquisition, 65% of the aggregate amount of
consideration paid in respect thereof pursuant to Section 7.02(i)(B), and (II) with
respect to all such Permitted Acquisitions, (a) $175,000,000 for the
period from the Closing Date to the first anniversary of the Closing Date, (b) $200,000,000
for the period from the Closing Date to the second anniversary of the Closing
Date and (c) $250,000,000 for the period from the Closing Date to the
Maturity Date with respect to the Term Loans;

 

(h)  (i) Indebtedness
of the Company and the Restricted Subsidiaries (A) assumed in connection
with any Permitted Acquisition; provided
that such Indebtedness is not incurred in contemplation of such Permitted
Acquisition, or (B) incurred to finance a Permitted Acquisition and (ii) any
Permitted Refinancing of the foregoing; provided,
in each case that such Indebtedness and all Indebtedness resulting from any
Permitted Refinancing thereof (t) is unsecured, (u) both immediately
prior and after giving effect thereto, (1) no Event of Default shall exist
or result therefrom and (2) the Company and the Restricted Subsidiaries
will be in Pro Forma Compliance with the covenants set forth in Section 7.10,
such compliance to be determined on the basis of the financial information most
recently delivered to the Administrative Agent and the Lenders pursuant to Section 6.01(a) or
(b) as though such Indebtedness had been assumed or incurred as of the
first day of the fiscal period covered thereby and evidenced by a certificate
from the Chief Financial Officer of the Company demonstrating such compliance
calculation in reasonable detail, (v) subject to clause (y) below,
matures after, and does not require any scheduled amortization or other
scheduled payments of principal prior to, the Maturity Date of the Term Loans
(it being understood that such Indebtedness may have mandatory prepayment,
repurchase or redemptions provisions satisfying the requirement of clause (w) hereof),
(w) subject to clause (y) below, has terms and conditions (other than
interest rate and other pricing terms, redemption and prepayment premiums and
subordination terms) which, when taken as a whole, are not materially less
favorable to the Lenders (in the reasonable good faith determination of the
Company) than the terms and conditions of the Senior Subordinated Note
Indenture as of the Closing Date; provided
that the Company shall deliver to the Administrative Agent, at least five
Business Days prior to the incurrence of such Indebtedness, a certificate of a
Responsible Officer, together with a reasonably detailed description of the
material terms and conditions of such Indebtedness or drafts of the
documentation relating thereto, stating that the Company has determined in good
faith that such terms and conditions satisfy the foregoing requirement; (x) subject
to clause (y) below, with respect to such Indebtedness described in the immediately
preceding clause (B), is incurred by the Company or a Subsidiary that is a Loan
Party; (y) the aggregate principal amount of such Indebtedness incurred
pursuant to clause (B) and all Indebtedness resulting from any Permitted
Refinancing thereof, in each case which Indebtedness or Refinancing
Indebtedness would

 

108

 

otherwise not be permitted
by clauses (v), (w) or (x) above, at any time outstanding pursuant to
this paragraph (h) (together with the aggregate principal amount of
Indebtedness incurred pursuant to Section 7.03(g) and all
Indebtedness resulting from any Permitted Refinancing thereof) does not exceed
$150,000,000, and (z) the aggregate principal amount of Indebtedness
pursuant to clause (g) above and this clause (h) assumed by
Restricted Subsidiaries that are not Loan Parties in connection with or
incurred by Restricted Subsidiaries that are not Loan Parties to finance
Permitted Acquisitions of Persons that do not become Loan Parties and all
Indebtedness resulting from any Permitted Refinancing thereof shall not exceed (I) with
respect to any such Permitted Acquisition, 65% of the aggregate amount of
consideration paid in respect thereof pursuant to Section 7.02(i)(B), and (II) with
respect to all such Permitted Acquisitions, (a) $175,000,000 for the
period from the Closing Date to the first anniversary of the Closing Date, (b) $200,000,000
for the period from the Closing Date to the second anniversary of the Closing
Date and (c) $250,000,000 for the period from the Closing Date to the
Maturity Date with respect to the Term Loans;

 

(i)  Indebtedness
representing deferred compensation to employees of the Company and the
Restricted Subsidiaries incurred in the ordinary course of business;

 

(j)  Indebtedness
consisting of promissory notes issued by any Loan Party to current or former
officers, directors and employees, their respective estates, spouses or former
spouses to finance the purchase or redemption of Equity Interests of Holdings
permitted by Section 7.06;

 

(k)  Indebtedness
incurred by the Company or the Restricted Subsidiaries in a Permitted
Acquisition, any other Investment expressly permitted hereunder or any
Disposition, in each case constituting indemnification obligations or obligations
in respect of purchase price or other similar adjustments;

 

(l)  Indebtedness
consisting of (i) obligations of Holdings, the Company or the Restricted
Subsidiaries under deferred compensation or other similar arrangements incurred
by such Person in connection with the Transaction and Permitted Acquisitions or
any other Investment expressly permitted hereunder or (ii) unsecured
Indebtedness at any time outstanding that is owed to the seller of a business
in a Permitted Acquisition to the extent constituting consideration for such
Permitted Acquisition, provided
that (x) such Indebtedness shall not mature or amortize any principal
prior to the date that is 91 days after the Maturity Date with respect to the
Term Loans, (y) unless, as of the last day of the immediately preceding
Test Period (after giving Pro Forma Effect to the incurrence of such
Indebtedness) the Total Leverage Ratio is less than 4.00:1.00, the aggregate
amount of such Indebtedness shall not exceed $25,000,000 outstanding at any
time and (z) such Indebtedness shall not be incurred in contemplation of
the transfer by such seller to one or more financial institutions;

 

(m)  Cash
Management Obligations and other Indebtedness in respect of netting services,
overdraft protections and similar arrangements in each case in connection with
deposit accounts incurred in the ordinary course of business in connection with
cash management activities;

 

(n)  Indebtedness
in an aggregate principal amount not to exceed $200,000,000 at any time
outstanding;

 

(o)  Indebtedness
consisting of (a) the financing of insurance premiums with the providers
of such insurance or their affiliates or (b) take-or-pay obligations
contained in supply arrangements, in each case, in the ordinary course of
business;

 

109

 

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

 

(q)  obligations
in respect of performance, bid, appeal and surety bonds and performance and
completion guarantees and similar obligations provided by the Company or any of
the Restricted Subsidiaries or obligations in respect of letters of credit,
bank guarantees or similar instruments related thereto, in each case in the
ordinary course of business or consistent with past practice;

 

(r)  Indebtedness
supported by a Letter of Credit, in a principal amount not to exceed the face
amount of such Letter of Credit;

 

(s)  any
Existing Notes not tendered and purchased on the Closing Date pursuant to the
Existing Note Indenture;

 

(t)  Indebtedness
in respect of the Senior Subordinated Notes and any Permitted Refinancing
thereof;

 

(u)  Foreign
Jurisdiction Deposits;

 

(v)  Indebtedness
of Holdings represented by the obligations of Holdings to make payments with
respect to the cancellation or repurchase of its common stock or stock options
or warrants in respect of its common stock granted to management investors; provided that any payments with respect to
such obligations shall be subject to Section 7.06;

 

(w)  to
the extent constituting Indebtedness, judgments, decrees, attachments or awards
not constituting an Event of Default under Section 8.01(h);

 

(x)  to
the extent constituting Indebtedness, Indebtedness in respect of the Holdings
PIK Preferred;

 

(y)  Indebtedness
resulting from an Investment permitted by clauses (e)(i), (m) or (p) of
Section 7.02; and

 

(z)  all
premiums (if any), interest (including post-petition interest), fees, expenses,
charges and additional or contingent interest on obligations described in clauses
(a) through (y) above.

 

SECTION 7.04.  Fundamental
Changes.  Merge, dissolve, liquidate,
consolidate with or into another Person, or Dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except that:

 

(a)  any
Restricted Subsidiary may merge with (i) the Company; provided that the Company shall be the
continuing or surviving Person, or (ii) any one or more other Restricted Subsidiaries;
provided that when any Restricted
Subsidiary that is a Borrower or a Loan Party is

 

110

 

merging with another
Restricted Subsidiary, a Borrower or a Loan Party shall be the continuing or
surviving Person;

 

(b)  (i) any
Subsidiary (other than a Borrower) that is not a Loan Party may merge or
consolidate with or into any other Subsidiary (other than a Borrower) that is
not a Loan Party, (ii) any Overseas Guarantor may merge or consolidate
with or into the applicable Overseas Borrower, provided that the Overseas
Borrower shall be the continuing or surviving Person, and (iii) any
Subsidiary (other than a Borrower) may liquidate or dissolve or change its
legal form if the Company determines in good faith that such action is in the
best interests of the Company and its Subsidiaries and is not materially
disadvantageous to the Lenders;

 

(c)  any
Restricted Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Company or to another
Restricted Subsidiary; provided
that if the transferor in such a transaction is a Guarantor or a Borrower, then
either (i) the transferee must either be the Company or a U.S. Guarantor, (ii) in
the case of a transfer by an Overseas Guarantor, the transferee must be the
applicable Overseas Borrower or another Overseas Guarantor of such Overseas
Borrower, or (iii) to the extent constituting an Investment, such
Investment must be a permitted Investment in or Indebtedness of a Restricted
Subsidiary which is not a Loan Party in accordance with Sections 7.02 and 7.03,
respectively;

 

(d)  so
long as no Event of Default exists or would result therefrom, the Company may
merge with any other Person; provided
that (i) the Company shall be the continuing or surviving corporation or (ii) if
the Person formed by or surviving any such merger or consolidation is not the
Company (any such Person, the “Successor
Company”), (A) the Successor Company shall be an entity
organized or existing under the laws of the United States, any state thereof,
the District of Columbia or any territory thereof, (B) the Successor
Company shall expressly assume all the obligations of the Company under this
Agreement and the other Loan Documents to which the Company is a party pursuant
to a supplement hereto or thereto in form reasonably satisfactory to the
Administrative Agent, (C) each U.S. Guarantor, unless it is the other
party to such merger or consolidation, shall have by a supplement to the
Guarantee and Security Agreement confirmed that its obligations thereunder
shall apply to the Successor Company’s obligations under this Agreement, (D) each
mortgagor of a Mortgaged Property, unless it is the other party to such merger
or consolidation, shall have by an amendment to or restatement of the
applicable Mortgage confirmed that its obligations thereunder shall apply to
the Successor Company’s obligations under this Agreement, and (E) the
Company shall have delivered to the Administrative Agent an officer’s certificate
and an opinion of counsel, each stating that such merger or consolidation and
such supplement to this Agreement or any Collateral Document comply with this
Agreement; provided, further,
that if the foregoing are satisfied, the Successor Company will succeed to, and
be substituted for, the Company under this Agreement;

 

(e)  any
Restricted Subsidiary may merge with any other Person in order to effect an
Investment permitted pursuant to Section 7.02; provided that the continuing or surviving Person shall be a
Restricted Subsidiary, which together with each of its Restricted Subsidiaries,
shall have complied with the requirements of Section 6.10;

 

(f)  the
Company and the Restricted Subsidiaries may consummate the Acquisitions and
Merger and any Permitted Acquisition; and

 

(g)  a
merger, dissolution, liquidation, consolidation or Disposition, the purpose of
which is to effect a Disposition permitted pursuant to Section 7.05.

 

111

 

SECTION 7.05.  Dispositions.  Make any Disposition or enter into any
agreement to make any Disposition, except:

 

(a)  Dispositions
of obsolete or worn out property, whether now owned or hereafter acquired, in
the ordinary course of business and Dispositions of property no longer used or
useful in the conduct of the business of the Company and the Restricted
Subsidiaries;

 

(b)  Dispositions
of inventory and immaterial assets in the ordinary course of business;

 

(c)  Dispositions
of property to the extent that (i) such property is exchanged for credit
against the purchase price of similar replacement property or (ii) the
proceeds of such Disposition are promptly applied to the purchase price of such
replacement property;

 

(d)  Dispositions
of property (i) to the Company or to a Restricted Subsidiary; provided that if the transferor of such
property is a Guarantor or the Company, the transferee thereof must either be
the Company or a Guarantor, or in the case of a transfer by an Overseas
Guarantor, the applicable Overseas Borrower, (ii) to the extent such
transaction constitutes an Investment permitted under Section 7.02, or (iii) consisting
of Equity Interests of Foreign Subsidiaries to other Foreign Subsidiaries;

 

(e)  Dispositions
permitted by Sections 7.04 and 7.06 and Liens permitted by Section 7.01;

 

(f)  Dispositions
of cash and Cash Equivalents;

 

(g)  Dispositions
of accounts receivable in connection with the collection or compromise thereof;

 

(h)  
leases, subleases, licenses or sublicenses (including the provision of software
under an open source license), in each case in the ordinary course of business
and which do not materially interfere with the business of Holdings, the
Company and the Restricted Subsidiaries;

 

(i)  transfers
of property to the extent subject to Casualty Events;

 

(j)  Dispositions
of property not otherwise permitted under this Section 7.05; provided that (i) at the time of such
Disposition (other than any such Disposition made pursuant to a legally binding
commitment entered into at a time when no Event of Default exists), no Event of
Default shall exist or would result from such Disposition, (ii) the
aggregate book value of all property Disposed of in reliance on this clause (j) shall
not exceed $300,000,000 in the aggregate and (iii) with respect to any
Disposition pursuant to this clause (j) for a purchase price in excess of
$25,000,000, the Company or a Restricted Subsidiary shall receive not less than
75% of such consideration in the form of cash or Cash Equivalents (in each
case, free and clear of all Liens at the time received, other than
nonconsensual Liens permitted by Section 7.01 and Liens permitted by Section 7.01(s) and
clauses (i) and (ii) of Section 7.01(u)); provided, however,
that for the purposes of this clause (iii), each of the following shall be
deemed to be cash:  (A) any
liabilities (as shown on the Company’s or such Restricted Subsidiary’s most
recent balance sheet provided hereunder or in the footnotes thereto) of the
Company or such Restricted Subsidiary, other than liabilities that are by their
terms subordinated to the payment in cash of the Obligations, that are assumed
by the transferee with respect to the applicable Disposition and for which the
Company and all of the Restricted Subsidiaries shall have been validly released
by all applicable creditors in writing and (B) any securities received by
the Company or such Restricted Subsidiary from

 

112

 

such transferee that are
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received) within 180 days following the closing of the applicable
Disposition;

 

(k)  Dispositions
listed on Schedule 7.05(k);

 

(l)  Dispositions
of Investments in joint ventures to the extent required by, or made pursuant to
customary buy/sell arrangements between, the joint venture parties set forth in
joint venture arrangements and similar binding arrangements; and

 

(m)  the
Disposition for consideration not in excess of €15,000,000 of the building
owned by Verlag Das Beste GmbH located at Augustenstrasse 1, Stuttgart 70178.

 

provided that any Disposition of any
property pursuant to this Section 7.05(j), (k) and (m) shall be
for no less than the fair market value of such property at the time of such
Disposition.  To the extent any Collateral
is Disposed of as expressly permitted by this Section 7.05 to any Person
other than Holdings, the Company or any Restricted Subsidiary, such Collateral
shall be sold free and clear of the Liens created by the Loan Documents without
further action by the Administrative Agent, and the Administrative Agent shall
be authorized to take any actions deemed appropriate in order to effect the
foregoing.

 

SECTION 7.06.  Restricted
Payments.  Declare or
make, directly or indirectly, any Restricted Payment, except:

 

(a)  each
Restricted Subsidiary may make Restricted Payments to the Company and to other
Restricted Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly owned Restricted Subsidiary, to the Company and any other Restricted
Subsidiary and to each other owner of Equity Interests of such Restricted
Subsidiary based on their relative ownership interests of the relevant class of
Equity Interests);

 

(b)  Holdings,
the Company and each Restricted Subsidiary may declare and make dividend payments
or other distributions to the extent payable in the Equity Interests (other
than Disqualified Equity Interests not otherwise permitted by Section 7.03
or such dividend payments or distributions that would cause a Change of
Control) of such Person;

 

(c)  Restricted
Payments made to consummate the Transaction;

 

(d)  to
the extent constituting Restricted Payments, Holdings, the Company and the
Restricted Subsidiaries may enter into and consummate transactions expressly
permitted by any provision of Section 7.04 or 7.08;

 

(e)  repurchases
of Equity Interests in Holdings, the Company or any Restricted Subsidiary
deemed to occur upon exercise of stock options or warrants if such Equity
Interests represent a portion of the exercise price of such options or warrants;

 

(f)  Holdings
may pay (or make Restricted Payments to allow any direct or indirect parent
thereof to pay) for the repurchase, retirement or other acquisition or
retirement for value of Equity Interests of Holdings (or of any such parent of
Holdings) by any future, present or former employee or director of Holdings (or
any direct or indirect parent of Holdings) or any of its Subsidiaries pursuant
to any employee or director equity plan, employee or director stock option plan
or any other employee or director benefit plan or any agreement (including any
stock subscription or shareholder agreement) with any employee or director of
Holdings or any of its

 

113

 

Subsidiaries; provided that the aggregate amount of
payments under this clause (f) shall not exceed $16,000,000 in any fiscal
year of the Company;

 

(g)  the
Company and its Restricted Subsidiaries may make Restricted Payments to
Holdings:

 

(i)  the
proceeds of which will be used to pay (or to make Restricted Payments to allow
any direct or indirect parent of Holdings to pay) the tax liability to each
relevant jurisdiction in respect of consolidated, combined, unitary or
affiliated returns for the relevant jurisdiction of Holdings (or such parent) attributable
to Holdings, the Company or its Subsidiaries;

 

(ii)  consisting
of Permitted Holdings Distributions plus an additional amount of $500,000 per
fiscal year (which amount shall be available only to pay Holdings Operating
Expenses);

 

(iii)  the
proceeds of which shall be used by Holdings to make Restricted Payments
permitted by Section 7.06(c), (d) or (f);

 

(iv)  to
finance any Investment permitted to be made pursuant to Section 7.02; provided that (A) such Restricted
Payment shall be made substantially concurrently with the closing of such
Investment and (B) Holdings shall, immediately following the closing
thereof, cause (1) all property acquired (whether assets or Equity
Interests) to be contributed to the Company or its Restricted Subsidiaries or (2) the
merger (to the extent permitted in Section 7.04) of the Person formed or
acquired into the Company or its Restricted Subsidiaries in order to consummate
such Permitted Acquisition, in each case, in accordance with the requirements
of Section 6.10;

 

(h)  so
long as immediately before and after giving effect to any such Restricted
Payment, no Default shall have occurred and be continuing or would result
therefrom, the Company may make additional Restricted Payments to Holdings the
proceeds of which may be utilized by Holdings to make additional Restricted
Payments, in an aggregate amount not to exceed the sum of (i) $100,000,000
plus (ii) the aggregate amount of the Net Cash Proceeds of
Permitted Equity Issuances after the Closing Date (other than Permitted Equity
Issuances made pursuant to Section 8.05) that have been contributed to the
Company as common equity and Not Otherwise Applied plus (iii) if,
as of the last day of the immediately preceding Test Period (after giving Pro
Forma Effect to such Restricted Payment) the Total Leverage Ratio is less than
4.00:1.00, the amount of Cumulative Excess Cash Flow that is Not Otherwise
Applied;

 

(i)  so
long as immediately before and after giving effect to any such Restricted
Payment, no Default shall have occurred and be continuing or would result
therefrom, the Company may make additional Restricted Payments in cash to
Holdings the proceeds of which may be utilized by Holdings to make additional
Restricted Payments in cash if, as of the last day of the immediately preceding
Test Period (after giving Pro Forma Effect to such Restricted Payment) the
Total Leverage Ratio is less than 4.00:1.00;

 

(j)  Holdings
may declare and pay dividend payments or other distributions in respect of (i) Holdings
Senior PIK Preferred to the extent payable in additional shares of Holdings
Senior PIK Preferred or accrued and added to the liquidation preference thereof
and (ii) Holdings Junior PIK Preferred to the extent payable in additional
shares of Holdings Junior PIK Preferred or accrued and added to the liquidation
preference thereof; and

 

114

 

(k)  the
Company may (i) declare and pay regular quarterly dividends required
pursuant to the terms of the Company Preferred Stock and (ii) to the
extent any holder of Company Preferred Stock exercises appraisal rights in
respect of its shares of Company Preferred Stock as a result of the
Transaction, pay amounts required to be paid with respect thereto.

 

SECTION 7.07.  Change
in Nature of Business. 
Engage to any material extent in a line of business substantially
different from those lines of business conducted by the Company and the
Restricted Subsidiaries on the date hereof or any business reasonably related,
ancillary or complementary thereto.

 

SECTION 7.08.  Transactions
with Affiliates.  Enter into
any transaction of any kind with any Affiliate of the Company, whether or not
in the ordinary course of business, other than (a) transactions among Loan
Parties or any Restricted Subsidiary or any entity that becomes a Restricted
Subsidiary as a result of such transaction, (b) on terms substantially as
favorable to Holdings, the Company or such Restricted Subsidiary (in the
reasonable good faith determination of the Company) as would be obtainable by
Holdings, the Company or such Restricted Subsidiary at the time in a comparable
arm’s-length transaction with a Person other than an Affiliate, (c) the
Transaction and the payment of fees and expenses related to the Transaction, (d) the
issuance of Qualified Equity Interests of Holdings and the granting of
registration or other customary rights in connection therewith, (e) so
long as immediately before and after giving effect thereto, no Event of Default
shall have occurred and be continuing or would result therefrom, the payment of
management fees to the Sponsors in an aggregate amount in any fiscal quarter
not to exceed $1,875,000, (f) reimbursement of out-of-pocket costs and
expenses to the Sponsors and their Affiliates, (g) loans, Investments,
Restricted Payments and other transactions to the extent otherwise permitted
under this Article VII, (h) employment, incentive, benefit and
severance arrangements between Holdings, the Company and the Restricted
Subsidiaries and their respective officers and employees in the ordinary course
of business, (i) payments by Holdings (and any direct or indirect parent
thereof), the Company and the Restricted Subsidiaries pursuant to the tax
sharing agreements among Holdings (and any such parent thereof), the Company and
the Restricted Subsidiaries on customary terms to the extent attributable to
the ownership or operation of the Company and the Restricted Subsidiaries, (j) customary
compensation and benefits and reimbursement of reasonable out-of-pocket costs
to, and indemnities provided on behalf of, directors, officers and employees of
Holdings, the Company and the Restricted Subsidiaries in the ordinary course of
business to the extent attributable to the ownership or operation of Holdings,
the Company and the Restricted Subsidiaries, (k) transactions pursuant to
permitted agreements in existence on the Closing Date and set forth on Schedule
7.08 or any amendment thereto to the extent such an amendment is not adverse to
the Lenders in any material respect, (l) dividends, redemptions and
repurchases permitted under Section 7.06, (m) customary payments by
Holdings, the Company and any Restricted Subsidiaries to the Sponsors or their
Affiliates made for any financial advisory, financing, underwriting or
placement services or in respect of other investment banking activities
(including in connection with acquisitions or divestitures) up to 5.0% of the
value of transactions with respect to which such services are provided, (n) the
existence of, and the performance by Holdings, the Company or any Restricted
Subsidiary of its obligations under the terms of, any limited liability company
agreement, limited partnership or other organizational document or
securityholders agreement (including any registration rights agreement or purchase
agreement related thereto) to which it is a party on the Closing Date and which
has been disclosed to the Lenders as in effect on the Closing Date, and similar
organizational agreements (including any registration rights agreements or
purchase agreements related thereto) it may enter into thereafter, provided that the existence of, or the
performance by Holdings, the Company or any Restricted Subsidiary of
obligations under, any amendment to any such existing agreement or any such
similar agreement (including any

 

115

 

registration
rights agreements or purchase agreements related thereto) entered into after
the Closing Date shall only be permitted by this Section 7.08(n) to
the extent not more adverse to the interest of the Lenders in any material
respect when taken as a whole (in the reasonable good faith determination of
the Company) than any of such documents and agreements as in effect on the
Closing Date, and (o) transactions with landlords, customers, clients,
suppliers, authors, joint venture partners or purchasers or sellers of goods
and services, in each case in the ordinary course of business and not otherwise
prohibited by this Agreement.

 

SECTION 7.09.  Burdensome
Agreements.  Enter into
or permit to exist any Contractual Obligation (other than this Agreement or any
other Loan Document) that limits the ability of any Restricted Subsidiary of
the Company that is not a U.S. Guarantor to make Restricted Payments to the
Company or any U.S. Guarantor; provided
that the foregoing shall not apply to Contractual Obligations which (i)(x) exist
on the date hereof and (to the extent not otherwise permitted by this Section 7.09)
are listed on Schedule 7.09 hereto or (y) are set forth in any agreement
evidencing any permitted amendment, renewal, extension or refinancing of any
Contractual Obligation permitted by clause (x) so long as such amendment,
renewal, extension or refinancing is not materially more restrictive (in the
reasonable good faith determination of the Company) than such Contractual
Obligation, (ii) are binding on a Restricted Subsidiary at the time such
Restricted Subsidiary first becomes a Restricted Subsidiary of the Company, so
long as such Contractual Obligations were not entered into solely in
contemplation of such Person becoming a Restricted Subsidiary of the Company,
or are imposed by any permitted amendment, renewal, extension or refinancing of
any such Contractual Obligation so long as the terms of any such amendment,
renewal, extension or refinancing, taken as a whole, are not materially more
restrictive (in the reasonable good faith determination of the Company) than
such Contractual Obligation; provided
further that this clause (ii) shall not apply to Contractual
Obligations that are binding on a Person that becomes a Restricted Subsidiary
pursuant to Section 6.15, (iii) represent Indebtedness of a
Restricted Subsidiary of the Company which is not a Loan Party which is
permitted by Section 7.03, (iv) arise in connection with any Disposition
permitted by Section 7.05, (v) are customary provisions in joint
venture agreements and other similar agreements applicable to joint ventures
permitted under Section 7.02 and applicable solely to such joint venture
entered into in the ordinary course of business, (vi) are customary
restrictions in leases, subleases, licenses or asset sale agreements otherwise
permitted hereby so long as such restrictions relate to the assets subject
thereto, (vii) comprise restrictions imposed by any agreement relating to
secured Indebtedness permitted pursuant to 7.03(g) to the extent that such
restrictions apply only to the Restricted Subsidiaries incurring or
guaranteeing such Indebtedness, (viii) are customary provisions
restricting subletting or assignment of any lease governing a leasehold
interest of the Company or any Restricted Subsidiary, (ix) are customary
provisions restricting assignment of any agreement entered into in the ordinary
course of business, (x) are restrictions on cash or other deposits or net
worth imposed by customers under contracts entered into in the ordinary course
of business, and (xi) comprise restrictions imposed by a Lien permitted by Section 7.01
restricting the transfer of the property subject thereto.

 

SECTION 7.10.  Financial
Covenant.  Permit the
Total Leverage Ratio as of the last day of any Test Period (beginning with the
Test Period ending on March 31, 2008) to be greater than the ratio set
forth below opposite the last day of such Test Period:

 

	
  Year

  	
   

  	
  March 31

  	
   

  	
  June 30

  	
   

  	
  September 30

  	
   

  	
  December 31

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
  8.75:1.00

  	
   

  	
  8.75:1.00

  	
   

  	
  8.75:1.00

  	
   

  	
  8.75:1.00

  	
   

  
	
  2009

  	
   

  	
  8.75:1.00

  	
   

  	
  8.00:1.00

  	
   

  	
  8.00:1.00

  	
   

  	
  8.00:1.00

  	
   

  
	
  2010

  	
   

  	
  8.00:1.00

  	
   

  	
  6.50:1.00

  	
   

  	
  6.50:1.00

  	
   

  	
  6.50:1.00

  	
   

  

 

116

 

	
  Year

  	
   

  	
  March 31

  	
   

  	
  June 30

  	
   

  	
  September 30

  	
   

  	
  December 31

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
  6.50:1.00

  	
   

  	
  5.75:1.00

  	
   

  	
  5.75:1.00

  	
   

  	
  5.75:1.00

  	
   

  
	
  2012

  	
   

  	
  5.75:1.00

  	
   

  	
  5.00:1.00

  	
   

  	
  5.00:1.00

  	
   

  	
  5.00:1.00

  	
   

  
	
  2013

  	
   

  	
  5.00:1.00

  	
   

  	
  5.00:1.00

  	
   

  	
  5.00:1.00

  	
   

  	
  5.00:1.00

  	
   

  

 

SECTION 7.11.  Accounting
Changes.  Make any change in fiscal
year; provided, however, that (i) each
of WRC Media and its Subsidiaries may change its fiscal year to June 30
and (ii) each of the Company and its Subsidiaries may, upon written notice
to the Administrative Agent, change its fiscal year to a calendar year or to
any other fiscal year reasonably acceptable to the Administrative Agent, in
which case, the Company and the Administrative Agent will, and are hereby
authorized by the Lenders to, make any adjustments to this Agreement that are
necessary to reflect such change in fiscal year.

 

SECTION 7.12.  Prepayments,
Etc. of Indebtedness.  (a)  Prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner (it being understood that payments of regularly scheduled
interest shall be permitted) the Senior Subordinated Notes, any other
Indebtedness that is required to be subordinated to the Obligations pursuant to
the terms of the Loan Documents (collectively, “Junior Financing”) or the Holdings PIK Preferred or make any
payment in violation of any subordination terms of any Junior Financing
Documentation, except (i) the refinancing thereof with the Net Cash
Proceeds of any Indebtedness (to the extent such Indebtedness constitutes a
Permitted Refinancing), to the extent not required to prepay any Loans or
Facility pursuant to Section 2.05(b), (ii) the conversion of any
Junior Financing to Equity Interests (other than Disqualified Equity Interests)
of Holdings or any of its direct or indirect parents, (iii) the prepayment
of Indebtedness of the Company or any Restricted Subsidiary to the Company or
any Restricted Subsidiary to the extent permitted by the Collateral Documents,
and (iv) so long as immediately before and after giving effect thereto, no
Default shall have occurred and be continuing or would result therefrom,
prepayments, redemptions, purchases, defeasances and other payments in respect
of Junior Financings or the Holdings PIK Preferred prior to their scheduled
maturity in an aggregate amount not to exceed the sum of (x) $100,000,000 plus
(y) the aggregate amount of the Net Cash Proceeds of Permitted Equity
Issuances after the Closing Date (other than Permitted Equity Issuances made
pursuant to Section 8.05) that (other than with respect to any prepayment,
redemption, purchase, defeasance or other payment of the Holdings PIK
Preferred) have been contributed to the Company as common equity and Not
Otherwise Applied plus (z) if, as of the last day of the
immediately preceding Test Period (after giving Pro Forma Effect to such
prepayment, redemption, purchase, defeasance or other payment) the Total
Leverage Ratio is less than 4.00:1.00, the amount of Cumulative Excess Cash
Flow that is Not Otherwise Applied.

 

(b)  Amend,
modify or change in any manner materially adverse to the interests of the
Lenders (i) any term or condition of any Junior Financing Documentation, (ii) any
term or condition of the Company Preferred Stock or (iii) any Organization
Document of Holdings, the Company or any Restricted Subsidiary, in any case
without the consent of the Administrative Agent.

 

SECTION 7.13.  Holding
Company.  In the case of Holdings,
conduct, transact or otherwise engage in any business or operations other than
those incidental to (i) its ownership of the Equity Interests in, and its
management of, the Company, (ii) the maintenance of its legal existence
and its compliance with applicable Laws, (iii) the performance of the Loan
Documents, the documents in respect of the Holdings PIK Preferred, the Purchase
Agreement, the DH

 

117

 

Acquisition
Agreement, the WRC Acquisition Agreement and the other agreements contemplated
by the Purchase Agreement, the DH Acquisition Agreement or the WRC Acquisition
Agreement, (iv) any public offering of its common stock or any other
issuance of its Equity Interests not prohibited by Article VII, and (v) the
issuance, acquisition or maintenance of any Indebtedness or Investments, or the
making of any Restricted Payments, that Holdings is expressly permitted to
enter into or consummate under this Article VII; provided that, notwithstanding the
foregoing, Holdings shall not own, lease, manage, acquire or otherwise operate
any properties or assets (other than the ownership of Equity Interests in, and
its management of, the Company, cash and Cash Equivalents and de minimis
amounts of other assets incidental to the conduct of its business) or incur any
material consensual liabilities (other than liabilities related to its
existence and permitted business and activities specified above).

 

SECTION 7.14.  Capital
Expenditures.  (a)  
Commencing with the fiscal year ending June 30, 2008, make any Capital
Expenditure except for Capital Expenditures not exceeding, in the aggregate for
the Company and the Restricted Subsidiaries during each fiscal year set forth
below, the amount set forth opposite such fiscal year:

 

	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2009

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2011

  	
   

  	
  $

  	
  45,000,000

  	
   

  
	
  2012

  	
   

  	
  $

  	
  45,000,000

  	
   

  
	
  2013

  	
   

  	
  $

  	
  45,000,000

  	
   

  
	
  2014

  	
   

  	
  $

  	
  45,000,000

  	
   

  

 

;
provided that the amount of
Capital Expenditures permitted to be made in respect of any fiscal year shall
be increased (i) after the consummation of any Permitted Acquisition in an
amount equal to 10% of the pro forma aggregate consolidated revenues of the
Acquired Entity or Business so acquired during the fiscal year of such Acquired
Entity or Business beginning after such Permitted Acquisition and (ii) by
an amount equal to the sum of (x) the aggregate amount of the Net Cash
Proceeds of Permitted Equity Issuances after the Closing Date (other than
Permitted Equity Issuances made pursuant to Section 8.05) that have been
contributed to the Company as common equity and Not Otherwise Applied plus
(y) if, as of the last day of the immediately preceding Test Period (after
giving Pro Forma Effect to such Capital Expenditure) the Total Leverage Ratio
is less than 4.00:1.00, the amount of Cumulative Excess Cash Flow that is Not
Otherwise Applied.

 

(b)  Notwithstanding
anything to the contrary contained in clause (a) above, to the extent that
the aggregate amount of Capital Expenditures made by the Company and the
Restricted Subsidiaries in any fiscal year pursuant to Section 7.14(a) is
less than the maximum amount of Capital Expenditures permitted by Section 7.14(a) with
respect to such fiscal year (without taking into consideration any amounts
available pursuant to clause (ii) of the proviso thereto), the amount of
such difference (the “Rollover Amount”)  may be carried forward and used to make
Capital Expenditures in the next succeeding fiscal year; provided that Capital Expenditures in any
fiscal year shall be counted against the base amount set forth in Section 7.14(a) (without
taking into consideration any amounts available pursuant to clause (ii) of
the proviso thereto) with respect to such fiscal year prior to being counted
against any Rollover Amount available with respect to such fiscal year.

 

118

 

ARTICLE VIII

 

EVENTS OF DEFAULT AND REMEDIES

 

SECTION 8.01.  Events
of Default.  Any of the
following shall constitute an Event of Default:

 

(a)  Non-Payment.  Any Borrower or any other Loan Party fails to
pay (i) when and as required to be paid herein, any amount of principal of
any Loan, or (ii) within five (5) Business Days after the same
becomes due, any interest or any other amount (including Cash Collateral)
payable hereunder or with respect to any other Loan Document; or

 

(b)  Specific Covenants.  (i) Any Group Member fails to perform or
observe (or to cause the performance or observance of) any term, covenant or
agreement contained in any of Sections 6.03(a), 6.05(a) (solely with
respect to the existence of Holdings and the Company), 6.17 or Article VII
or (ii) Holdings fails to observe any term, covenant or agreement
contained in Section 7.13; provided
that any Event of Default under Section 7.10 is subject to cure as
contemplated by Section 8.05; or

 

(c)  Other Defaults.  Any Group Member fails to perform or observe
(or to cause the performance or observance of) any other covenant or agreement
(not specified in Section 8.01(a) or (b) above) contained in any
Loan Document on its part to be performed or observed and such failure
continues for thirty (30) days after written notice thereof by the
Administrative Agent to the Company; or

 

(d)  Representations and Warranties.  Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Company or any
other Loan Party herein, in any other Loan Document, or in any document
required to be delivered in connection herewith or therewith shall be incorrect
or misleading in any material respect when made or deemed made; or

 

(e)  Cross-Default.  Any Loan Party or any Restricted Subsidiary (A) fails
to make any payment beyond the applicable grace period with respect thereto, if
any (whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) in respect of any Indebtedness (other than Indebtedness
hereunder) having an aggregate principal amount of not less than the Threshold
Amount, or (B) fails to observe or perform any other agreement or
condition contained in any instrument or agreement evidencing or governing any
such Indebtedness, or any other “default” (or like term) occurs, the effect of
which failure or other “default” is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due (automatically or otherwise) prior to
its stated maturity; provided
that this clause (e)(B) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness, if such sale or transfer is permitted
hereunder and under the documents providing for such Indebtedness; or

 

(f)  Insolvency Proceedings, Etc.  Any Loan Party or any of the Restricted
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator, administrator, administrative receiver
or similar officer for it or for all or any material part of its property; or
any receiver,

 

119

 

trustee, custodian,
conservator, liquidator, rehabilitator, administrator, administrative receiver
or similar officer is appointed without the application or consent of such
Person and the appointment continues undischarged or unstayed for sixty (60)
calendar days; or any proceeding under any Debtor Relief Law relating to any
such Person or to all or any material part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for
sixty (60) calendar days, or an order for relief approving or ordering any of
the foregoing is entered in any such proceeding; or

 

(g)  Inability to Pay Debts; Attachment.  (i) Any Loan Party or any Restricted
Subsidiary becomes generally unable or admits in writing its inability
generally or fails generally to pay its debts in excess of the Threshold Amount
as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of the Loan Parties, taken as a whole, and is not released, vacated or
fully bonded within sixty (60) days after its issue or levy; or

 

(h)  Judgments. 
There is entered against any Loan Party or any Restricted Subsidiary a
final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent due and payable and not covered
by independent third-party insurance as to which the insurer has been notified
of such judgment or order and has not disputed coverage) and such judgment or
order shall not have been satisfied, vacated, discharged or stayed or bonded
pending an appeal for a  period of sixty
(60) consecutive days; or

 

(i)  ERISA.  (i) An ERISA Event occurs with respect to
a Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of any Loan Party under Title IV of ERISA in an
aggregate amount which could reasonably be expected to result in a Material
Adverse Effect, (ii) any Loan Party or any ERISA Affiliate fails to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of
ERISA under a Multiemployer Plan in an aggregate amount which could reasonably
be expected to result in a Material Adverse Effect, (iii) any Loan Party
or any of its Subsidiaries or ERISA Affiliates shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Pension Plan which could reasonably be expected to
result in a Material Adverse Effect, or (iv) any other event or condition
shall occur or exist with respect to a Pension Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect; or

 

(j)  Invalidity of Collateral Documents.  Any material provision of any Collateral
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder (including as a result of a
transaction permitted under Section 7.04 or 7.05) or as a result of acts
or omissions by the Administrative Agent or any Lender or the satisfaction in
full of all the Obligations, ceases to be in full force and effect; or any Loan
Party contests in writing the validity or enforceability of any provision of
any Collateral Document; or any Loan Party denies in writing that it has any or
further liability or obligation under any Collateral Document (other than as a
result of repayment in full of the Obligations and termination of the Aggregate
Commitments), or purports in writing to revoke or rescind any Collateral
Document; or

 

(k)  Change of Control.  There occurs any Change of Control; or

 

(l)  Liens on Collateral.  Any Collateral Document shall for any reason
(other than pursuant to the terms thereof including as a result of a
transaction permitted under Section 7.04 or 7.05) cease to create a valid
and perfected lien, with the priority required by the Collateral

 

120

 

Documents, (or other
security purported to be created on the applicable Collateral) on and security
interest in any material portion of the Collateral purported to be covered
thereby, subject to Liens permitted under Section 7.01, or any Loan Party
or Affiliate thereof shall so assert in writing, except to the extent that any
such loss of perfection or priority results from the failure of the
Administrative Agent to maintain possession of certificates actually delivered
to it representing securities pledged under the Collateral Documents or to file
Uniform Commercial Code continuation statements and except as to Collateral
consisting of real property to the extent that such losses are covered by a
lender’s title insurance policy and such insurer has not disputed coverage; or

 

(m)  Junior Financing Documentation.  Any of the Obligations of the Loan Parties
under the Loan Documents for any reason shall cease to be “Senior Indebtedness”
(or any comparable term) or “Senior Secured Financing” (or any comparable term)
under, and as defined in the Senior Subordinated Note Indenture or in any other
Junior Financing Documentation.

 

SECTION 8.02.  Remedies
Upon Event of Default.  If
any Event of Default occurs and is continuing, the Administrative Agent may
and, at the request of the Required Lenders, shall take any or all of the
following actions:

 

(a)  declare
the commitment of each Lender to make Loans and any obligation of the L/C
Issuers to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;

 

(b)  declare
the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any
other Loan Document to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrowers;

 

(c)  require
that the Company Cash Collateralize the L/C Obligations (in an amount equal to
the then Outstanding Amount thereof); and

 

(d)  exercise
on behalf of itself and the Lenders all rights and remedies available to it and
the Lenders under the Loan Documents or applicable Law;

 

provided that upon the occurrence of
an actual or deemed entry of an order for relief with respect to the Company
under the Bankruptcy Code of the United States, the obligation of each Lender
to make Loans and any obligation of the L/C Issuers to make L/C Credit
Extensions shall automatically terminate, the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Company to Cash
Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any
Lender.

 

SECTION 8.03.  Exclusion
of Immaterial Subsidiaries.  Solely for the purpose of determining whether
a Default has occurred under clause (f) or (g) of Section 8.01,
any reference in any such clause to any Restricted Subsidiary or Loan Party
shall be deemed not to include any Restricted Subsidiary affected by any event
or circumstances referred to in any such clause that did not, as of the last
day of the most recent completed fiscal quarter of the Company, have assets
with a value in excess of 5% of the consolidated total assets of the Company
and the Restricted Subsidiaries and did not, as of the four quarter period
ending on the last day of such fiscal quarter, have revenues exceeding 5% of
the total revenues of the Company and the Restricted Subsidiaries (it being
agreed that all Restricted Subsidiaries affected by any event or circumstance
referred to

 

121

 

in
any such clause shall be considered together, as a single consolidated
Restricted Subsidiary, for purposes of determining whether the condition
specified above is satisfied).

 

SECTION 8.04.  Application
of Funds.  After the
exercise of remedies provided for in Section 8.02 (or after the Loans have
automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the
proviso to Section 8.02), any amounts received on account of the
Obligations shall be applied by the Administrative Agent in the following
order:

 

First, to payment of that portion
of the Obligations constituting fees, indemnities, expenses and other amounts
(other than principal and interest, but including Attorney Costs payable under Section 10.04
and amounts payable under Article III) payable to the Administrative Agent
in its capacity as such;

 

Second, to payment of that portion
of the Obligations constituting fees, indemnities and other amounts (other than
principal and interest) payable to the Lenders (including Attorney Costs
payable under Section 10.04 and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second payable to them;

 

Third, to payment of that portion
of the Obligations constituting accrued and unpaid interest on the Loans and
L/C Borrowings, ratably among the holders of such Obligations in proportion to
the respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion
of the Obligations constituting unpaid principal of the Loans and L/C
Borrowings, the termination value under Secured Hedge Obligations and Cash
Management Obligations and to Cash Collateralize the portion of the L/C
Obligations comprised of the aggregate undrawn amount of Letters of Credit,
ratably among the holders of such Obligations in proportion to the respective
amounts described in this clause Fourth
held by them;

 

Fifth, to the payment of all
other Obligations of the Loan Parties that are due and payable to the
Administrative Agent and the other Secured Parties on such date, ratably based
upon the respective aggregate amounts of all such Obligations owing to the
Administrative Agent and the other Secured Parties on such date; and

 

Last, the balance, if any, after
all of the Obligations have been paid in full, to the Company or as otherwise
required by Law.

 

Subject
to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy
drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash
Collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the
order set forth above and, if no Obligations remain outstanding, to the
Company.

 

Notwithstanding
anything to the contrary in this Agreement, amounts received from any Foreign
Subsidiary on account of the Obligations of any Foreign Subsidiary shall be
applied solely to the payment of Obligations of Foreign Subsidiaries.

 

122

 

SECTION 8.05.  Company’s Right to Cure.  (a)   Notwithstanding
anything to the contrary contained in Section 8.01, in the event that
Holdings and the Company fail to comply with the requirements of Section 7.10
at the end of any fiscal quarter, at any time during the period beginning with
the first day of such fiscal quarter and ending on the expiration of the
twentieth (20th) day after the date on which financial statements
are required to be delivered with respect to the applicable fiscal quarter
hereunder (the “Cure Period”),
Holdings shall have the right to engage in a Permitted Equity Issuance for cash
or otherwise receive cash contributions to the capital of Holdings (which, or
the cash proceeds of which, shall be contributed to the Company prior to the
end of the Cure Period), and upon receipt by the Company of such amount in cash
(the “Cure Amount”) to the extent
Not Otherwise Applied, (i) to the extent the Cure Amount is applied to
prepay Term Loans on or prior to the last day of the Cure Period, such
prepayment shall be deemed to have occurred prior to the end of such fiscal
quarter and (ii) the Cure Amount shall be added to Consolidated EBITDA for
purposes of determining compliance with Section 7.10 for the last fiscal
quarter of the four fiscal quarter period for which such failure to comply
would have otherwise occurred (and future four fiscal quarter periods which
include such fiscal quarter).  If, after
giving effect to the foregoing recalculation, the Company shall then be in
compliance with the requirements of Section 7.10, the Company shall be
deemed to have satisfied the requirements of Section 7.10 as of the
relevant date of determination with the same effect as though there had been no
failure to comply therewith at such date, and the applicable breach or default
of Section 7.10 that would have otherwise occurred but for the prepayment
of the Term Loans pursuant to clause (i) above and/or the receipt by the
Company of the Cure Amount and the addition thereof to Consolidated EBITDA
pursuant to clause (ii) above shall be deemed not to have occurred for the
purposes of the Loan Documents.  The
parties hereby acknowledge that, other than as set forth in clause (i) above,
this Section 8.05(a) may not be relied on for purposes of calculating
any financial ratios other than as applicable to Section 7.10 and shall
not result in any adjustment to any amounts other than the amount of the
Consolidated EBITDA as referred to in this Section 8.05(a).

 

(b)  Notwithstanding
anything herein to the contrary, (i) in each period of four fiscal
quarters, there shall be at least two (2) fiscal quarters in which no cure
set forth in Section 8.05(a) is made and (ii) the Cure Amount
shall be no greater than the amount required for purposes of complying with Section 7.10
for the most recently completed four fiscal quarter period.

 

SECTION 8.06.  CAM Exchange.  On
the CAM Exchange Date, (i) the Commitments shall automatically and without
further act be terminated in accordance with Section 8.02, (ii) the
Lenders shall automatically and without further act be deemed to have exchanged
interests in the Designated Obligations such that, in lieu of the interests of
each Lender in the Designated Obligations under each Tranche in which it shall
participate as of such date, such Lender shall own an interest equal to such
Lender’s CAM Percentage in the Designated Obligations under each of the
Tranches and (iii) simultaneously with the deemed exchange of interests
pursuant to clause (ii) above, the interests in the Designated
Obligations to be received in such deemed exchange shall, automatically and
with no further action required, be converted into the Dollar Amount,
determined using the Exchange Rate calculated as of such date, of such amount
and on and after such date all amounts accruing and owed to the Lenders in
respect of such Designated Obligations shall accrue and be payable in Dollars
at the rate otherwise applicable hereunder. 
Each Lender, each person acquiring a participation from any Lender as
contemplated by Section 10.07 and each Borrower hereby consents and agrees
to the CAM Exchange.  Each of the
Borrowers and the Lenders agrees from time to time to execute and deliver to
the Administrative Agent all such promissory notes and other instruments and
documents as the Administrative Agent shall reasonably request to evidence and
confirm the respective interests and obligations of the Lenders after giving
effect to the CAM Exchange, and each Lender agrees to surrender any

 

123

 

promissory
notes originally received by it in connection with its Loans hereunder to the
Administrative Agent against delivery of any promissory notes so executed and
delivered; provided that the
failure of any Borrower to execute or deliver or of any Lender to accept any
such promissory note, instrument or document shall not affect the validity or
effectiveness of the CAM Exchange.

 

As
a result of the CAM Exchange, on and after the CAM Exchange Date, each payment
received by the Administrative Agent pursuant to any Loan Document in respect
of the Designated Obligations shall be distributed to the Lenders pro rata in
accordance with their respective CAM Percentages (to be redetermined as of each
such date of payment or distribution to the extent required by the next
paragraph below).

 

In
the event that, on or after the CAM Exchange Date, the aggregate amount of the
Designated Obligations shall change as a result of the making of a disbursement
under a Letter of Credit by an L/C Issuer that is not reimbursed by the
Company, then (i) each Revolving Lender shall, in accordance with Section 2.03(c),
promptly make its L/C Advance in respect of such Unreimbursed Amount (without
giving effect to the CAM Exchange), (ii) the Administrative Agent shall
redetermine the CAM Percentages after giving effect to such disbursement and
the making of such L/C Advances and the Lenders shall automatically and without
further act be deemed to have exchanged interests in the Designated Obligations
such that each Lender shall own an interest equal to such Lender’s CAM
Percentage in the Designated Obligations under each of the Tranches (and the
interests in the Designated Obligations to be received in such deemed exchange
shall, automatically and with no further action required, be converted into the
Dollar Amount of such amount in accordance with the first sentence of this Section 8.06),
and (iii) in the event distributions shall have been made in accordance
with clause (i) of the preceding paragraph, the Lenders shall make such payments
to one another as shall be necessary in order that the amounts received by them
shall be equal to the amounts they would have received had each such
disbursement and L/C Advance been outstanding on the CAM Exchange Date.  Each such redetermination shall be binding on
each of the Lenders and their successors and assigns and shall be conclusive,
absent manifest error.

 

ARTICLE IX

ADMINISTRATIVE AGENT AND OTHER AGENTS

 

Section 9.01.  Appointment
and Authorization of Agents.  (a)  Each Lender hereby irrevocably
appoints, designates and authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall have no duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. 
Without limiting the generality of the foregoing sentence, the use of
the term “agent” herein and in the other Loan Documents with reference to any
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable Law.  Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

 

124

 

(b)  Each
L/C Issuer shall act on behalf of the Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and each such L/C
Issuer shall have all of the benefits and immunities (i) provided to the
Agents in this Article IX with respect to any acts taken or omissions
suffered by such L/C Issuer in connection with Letters of Credit issued by it
or proposed to be issued by it and the applications and agreements for letters
of credit pertaining to such Letters of Credit as fully as if the term “Agent”
as used in this Article IX and in the definition of “Agent-Related Person”
included such L/C Issuer with respect to such acts or omissions, and (ii) as
additionally provided herein with respect to such L/C Issuer.

 

(c)  The
Administrative Agent shall also act as the “collateral agent” under the Loan
Documents, and each of the Lenders (in its capacities as a Lender, Swing Line
Lender (if applicable), L/C Issuer (if applicable) and a potential Hedge Bank)
hereby irrevocably appoints and authorizes the Administrative Agent to act as
the agent of (and to hold any security interest created by the Collateral
Documents for and on behalf of or on trust for) such Lender for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Secured Obligations, together with
such powers and discretion as are reasonably incidental thereto.  In this connection, the Administrative Agent,
as “collateral agent” (and any co-agents, sub-agents and attorneys-in-fact
appointed by the Administrative Agent pursuant to Section 9.02 for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents, or for exercising any rights
and remedies thereunder at the direction of the Administrative Agent), shall be
entitled to the benefits of all provisions of this Article IX (including, Section 9.07,
as though such co-agents, sub-agents and attorneys-in-fact were the “collateral
agent” under the Loan Documents) as if set forth in full herein with respect
thereto.

 

Section 9.02.  Delegation
of Duties.  The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document (including for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents or of exercising any rights and
remedies thereunder) by or through agents, employees or attorneys-in-fact
including for the purpose of any Borrowings or payments in Alternative
Currencies, such sub-agents as shall be deemed necessary by the Administrative
Agent and shall be entitled to advice of counsel and other consultants or
experts concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or sub-agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct (as determined in the final non-appealable judgment of a court of
competent jurisdiction).

 

Section 9.03.  Liability
of Agents.  No Agent-Related Person shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct,
as determined by the final judgment of a court of competent jurisdiction, in
connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by any Loan Party or any officer
thereof, contained herein or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
the perfection or priority of any Lien or security interest created or
purported to be created under the Collateral Documents, or for any failure of
any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder.  No
Agent-Related Person shall be under any obligation to any Lender or participant

 

125

 

to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party or
any Affiliate thereof.

 

Section 9.04.  Reliance
by Agents.  (a)  Each Agent shall be entitled
to rely, and shall be fully protected in relying, upon any writing,
communication, signature, resolution, representation, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, electronic mail message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to any Loan Party), independent accountants and
other experts selected by such Agent. 
Each Agent shall be fully justified in failing or refusing to take any
action under any Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.  Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Lenders (or such greater number of Lenders as may be expressly required hereby
in any instance) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.

 

(b)  For
purposes of determining compliance with the conditions specified in Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

Section 9.05.  Notice
of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Company referring to this Agreement, describing such Default and stating that
such notice is a “notice of default.” 
The Administrative Agent will notify the Lenders of its receipt of any
such notice.  The Administrative Agent
shall take such action with respect to any Event of Default as may be directed
by the Required Lenders in accordance with Article VIII; provided that
unless and until the Administrative Agent has received any such direction, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable or in the best interest of the Lenders.

 

Section 9.06.  Credit
Decision; Disclosure of Information by Agents.  Each Lender acknowledges that
no Agent-Related Person has made any representation or warranty to it, and that
no act by any Agent hereafter taken, including any consent to and acceptance of
any assignment or review of the affairs of any Loan Party or any Affiliate
thereof, shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their possession.  Each Lender represents to each Agent that it
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan
Parties and their

 

126

 

respective
Subsidiaries, and all applicable bank or other regulatory Laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company and the other Loan Parties
hereunder.  Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Company and the other Loan Parties.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by any Agent
herein, such Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of any
of the Loan Parties or any of their respective Affiliates which may come into
the possession of any Agent-Related Person.

 

Section 9.07.  Indemnification
of Agents.  Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand each
Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan
Party and without limiting the obligation of any Loan Party to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided
that no Lender shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Liabilities resulting from such
Agent-Related Person’s own gross negligence or willful misconduct, as
determined by the final non-appealable judgment of a court of competent
jurisdiction; provided that no action taken in accordance with the directions
of the Required Lenders (or such other number or percentage of the Lenders as
shall be required by the Loan Documents) shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section 9.07; and provided, further,
that to the extent the indemnification of the L/C Issuer is required hereunder,
such obligation shall be limited solely to the Revolving Credit Lenders.  In the case of any investigation, litigation
or proceeding giving rise to any Indemnified Liabilities, this Section 9.07
applies whether any such investigation, litigation or proceeding is brought by
any Lender or any other Person.  Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Administrative Agent is not
reimbursed for such expenses by or on behalf of the Company.  The undertaking in this Section 9.07
shall survive termination of the Aggregate Commitments, the payment of all
other Obligations and the resignation of the Administrative Agent.

 

Section 9.08.  Agents
in their Individual Capacities.  JPMorgan Chase Bank and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire Equity Interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with each of the Loan
Parties and their respective Affiliates as though JPMorgan Chase Bank were not
the Administrative Agent or an L/C Issuer hereunder and without notice to or
consent of the Lenders.  The Lenders
acknowledge that, pursuant to such activities, JPMorganChase Bank or its Affiliates
may receive information regarding any Loan Party or its Affiliates (including
information that may be subject to confidentiality obligations in favor of such
Loan Party or such Affiliate) and acknowledge that the Administrative Agent
shall be under no obligation to provide such information to them.  With respect to its Loans,JPMorgan

 

127

 

Chase
Bank shall have the same rights and powers under this Agreement as any other
Lender and may exercise such rights and powers as though it were not the
Administrative Agent or an L/C Issuer, and the terms “Lender” and “Lenders”
include JPMorgan Chase Bank in its individual capacity.

 

SECTION 9.09.  Successor Agents.  The
Administrative Agent may resign as the Administrative Agent upon thirty (30)
days’ notice to the Lenders and the Company. 
If the Administrative Agent resigns under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent shall be consented to by the Company at all times other
than during the existence of an Event of Default under Section 8.01(f) or
(g) (which consent of the Company shall not be unreasonably withheld or
delayed).  If no successor agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and the Company, a successor agent, which shall be a Lender or a bank with an
office in New York, New York or an Affiliate of such Lender or bank, and which
successor agent shall be consented to by the Company at all times other than
during the existence of an Event of Default under Section 8.01(f) or (g) (which
consent of the Company shall not be unreasonably withheld).  Upon the acceptance of its appointment as
successor agent hereunder, the Person acting as such successor agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term “Administrative Agent,” shall mean such successor
administrative agent and/or supplemental administrative agent, as the case may
be, and the retiring Administrative Agent’s appointment, powers and duties as
the Administrative Agent shall be terminated. 
After the retiring Administrative Agent’s resignation hereunder as the
Administrative Agent, the provisions of this Article IX and Sections 10.04
and 10.05 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Administrative Agent under this Agreement.  If no successor agent has accepted
appointment as the Administrative Agent by the date which is thirty (30) days
following the retiring Administrative Agent’s notice of resignation, the
retiring Administrative Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. 
Upon the acceptance of any appointment as the Administrative Agent
hereunder by a successor and upon the execution and filing or recording of such
financing statements, or amendments thereto, and such amendments or supplements
to the Mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to (a) continue
the perfection of the Liens granted or purported to be granted by the
Collateral Documents or (b) otherwise ensure that the Collateral and
Guarantee Requirement is satisfied, the Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Documents.  After the retiring
Administrative Agent’s resignation hereunder as the Administrative Agent, the
provisions of this Article IX shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Administrative Agent.

 

Section 9.10.  Administrative
Agent May File Proofs of Claim.  In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to any Loan
Party, the Administrative Agent (irrespective of whether the principal of any
Loan or L/C Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on any Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

 

128

 

(a)  to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and
their respective agents and counsel and all other amounts due the Lenders and
the Administrative Agent under Sections 2.03(h) and (i), 2.09 and 10.04)
allowed in such judicial proceeding; and

 

(b)  to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

 

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Agents and
their respective agents and counsel, and any other amounts due the Administrative
Agent under Sections 2.09 and 10.04.

 

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

Section 9.11.  Collateral
and Guarantee Matters.  The Lenders irrevocably agree:

 

(a)  that
any Lien on any property granted to or held by the Administrative Agent under
any Loan Document shall be automatically released (i) upon termination of
the Aggregate Commitments and payment in full of all Obligations (other than (x) obligations
under Secured Hedge Agreements, (y) Cash Management Obligations and (z) contingent
reimbursement and indemnification obligations not yet accrued and payable) and
the expiration or termination of all Letters of Credit, (ii) at the time
the property subject to such Lien is transferred or to be transferred as part
of or in connection with any transfer permitted hereunder or under any other
Loan Document to any Person other than Holdings, the Company or any of its
Domestic Subsidiaries that are Restricted Subsidiaries, (iii) subject to Section 10.01,
if the release of such Lien is approved, authorized or ratified in writing by
the Required Lenders (or such greater number of Lenders as may be required
pursuant to Section 10.01), (iv) if the property subject to such Lien
is owned by a Guarantor, upon release of such Guarantor from its obligations
under its Guarantee under the Guarantee and Security Agreement pursuant to
clause (c) below, or (v) at the time such property subject to such
Lien becomes a Specified Asset (as defined in the Guarantee and Security
Agreement) described in clause (b) of the definition thereof (taking into
account the proviso thereto);

 

(b)  (i) to
release or subordinate any Lien on any property granted to or held by the
Administrative Agent under any Loan Document to the holder of any Lien on such
property that is permitted by Section 7.01(i) and (ii) that the
Administrative Agent is authorized (but not required) to release or subordinate
any Lien on any property granted to or held by the Administrative Agent under
any Loan Document to the holder of any Lien on such property that is permitted
by any other clause of Section 7.01; and

 

129

 

(c)  that
any Guarantor shall be automatically released from its obligations under the
Guarantee and Security Agreement if such Person ceases to be a Restricted
Subsidiary as a result of a transaction or designation permitted hereunder; provided that no such release shall occur
if such Guarantor continues to be a guarantor in respect of any Junior
Financing.

 

Upon
request by the Administrative Agent at any time, the Required Lenders (or such
greater number of Lenders as may be required pursuant to Section 10.01)
will confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under the Guarantee and Security
Agreement pursuant to this Section 9.11. 
In each case as specified in this Section 9.11, the Administrative
Agent will (and each Lender irrevocably authorizes the Administrative Agent
to), at the Company’s expense, execute and deliver to the applicable Loan Party
such documents as such Loan Party may reasonably request to evidence the
release or subordination of such item of Collateral from the assignment and
security interest granted under the Collateral Documents, or to evidence the
release of such Guarantor from its obligations under the Guarantee and Security
Agreement, in each case in accordance with the terms of the Loan Documents and
this Section 9.11.

 

Section 9.12.  Other
Agents; Arrangers and Managers.  None of the Lenders or other Persons
identified on the facing page or signature pages of this Agreement as
a “co-syndication agent,” “documentation agent”, “joint bookrunner” or “co-lead
arranger” shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as
such.  Without limiting the foregoing,
none of the Lenders or other Persons so identified shall have or be deemed to
have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders or other Persons so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder.

 

Section 9.13.  Appointment
of Supplemental Administrative Agents.  (a)  It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any Law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee
in such jurisdiction.  It is recognized
that in case of litigation under this Agreement or any of the other Loan
Documents, and in particular in case of the enforcement of any of the Loan
Documents, or in case the Administrative Agent deems that by reason of any
present or future Law of any jurisdiction it may not exercise any of the
rights, powers or remedies granted herein or in any of the other Loan Documents
or take any other action which may be desirable or necessary in connection
therewith, the Administrative Agent is hereby authorized to appoint an
additional individual or institution selected by the Administrative Agent in its
sole discretion as a separate trustee, co-trustee, administrative agent,
collateral agent, administrative sub-agent or administrative co-agent (any such
additional individual or institution being referred to herein individually as a
“Supplemental Administrative Agent”
and collectively as “Supplemental
Administrative Agents”).

 

(b)  In
the event that the Administrative Agent appoints a Supplemental Administrative
Agent with respect to any Collateral, (i) each and every right, power,
privilege or duty expressed or intended by this Agreement or any of the other
Loan Documents to be exercised by or vested in or conveyed to the
Administrative Agent with respect to such Collateral shall be exercisable by
and vest in such Supplemental Administrative Agent to the extent, and only to
the extent, necessary to enable such Supplemental Administrative Agent to
exercise such rights, powers and privileges with respect to such Collateral and
to perform such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to

 

130

 

the exercise or performance
thereof by such Supplemental Administrative Agent shall run to and be
enforceable by either the Administrative Agent or such Supplemental
Administrative Agent, and (ii) the provisions of this Article IX and
of Sections 10.04 and 10.05 that refer to the Administrative Agent shall inure
to the benefit of such Supplemental Administrative Agent and all references
therein to the Administrative Agent shall be deemed to be references to the
Administrative Agent and/or such Supplemental Administrative Agent, as the
context may require.

 

(c)  Should
any instrument in writing from the Company, Holdings or any other Loan Party be
required by any Supplemental Administrative Agent so appointed by the
Administrative Agent for more fully and certainly vesting in and confirming to
him or it such rights, powers, privileges and duties, the Company or Holdings,
as applicable, shall, or shall cause such Loan Party to, execute, acknowledge
and deliver any and all such instruments promptly upon request by the
Administrative Agent.  In case any
Supplemental Administrative Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Administrative Agent, to the extent permitted
by Law, shall vest in and be exercised by the Administrative Agent until the
appointment of a new Supplemental Administrative Agent.

 

ARTICLE X

MISCELLANEOUS

 

SECTION 10.01.  Amendments, Etc. 
Except as otherwise set forth in this Agreement or any other Loan
Document, no amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure by the Company or any
other Loan Party therefrom, shall be effective unless in writing signed by the
Required Lenders and the Company or the applicable Loan Party, as the case may
be, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided that, no such amendment, waiver
or consent shall:

 

(a)  extend
or increase the Commitment of any Lender without the written consent of each
Lender directly affected thereby (it being understood that a waiver of any
condition precedent set forth in Section 4.02 or the waiver of any
Default, mandatory prepayment or mandatory reduction of the Commitments shall
not constitute an extension or increase of any Commitment of any Lender);

 

(b)  postpone
any date scheduled for, or reduce or forgive the amount of, any payment of
principal or interest under Section 2.07 or 2.08 without the written
consent of each Lender directly affected thereby, it being understood that the
waiver of (or amendment to the terms of) any mandatory prepayment of the Term
Loans shall not constitute a postponement of any date scheduled for the payment
of principal or interest;

 

(c)  reduce
or forgive the principal of, or the rate of interest specified herein on, any
Loan or L/C Borrowing or (subject to clause (iii) of the second proviso to
this Section 10.01) any fees (including fees set forth in Section 2.09
or other amounts payable hereunder or under any other Loan Document), or
extend, postpone or waive the date upon which any fees are to be paid, without
the written consent of each Lender directly affected thereby, it being
understood that any change to the definition of Total Leverage Ratio or in the
component definitions thereof shall not constitute a reduction in the rate; provided that, only the consent of the
Required Lenders shall be

 

131

 

necessary to amend the
definition of “Default Rate” or to waive any obligation of the Borrowers to pay
interest at the Default Rate;

 

(d)  change
any provision of this Section 10.01, the definition of “Required Lenders”
or “Pro Rata Share”, Section 2.06(c), the third sentence of Section 2.12(a),
Section 2.13, Section 8.04 or Section 10.07(a)(x) without
the written consent of each Lender affected thereby;

 

(e)  other
than in a transaction permitted under Section 7.05, release all or
substantially all of the Collateral in any transaction or series of related
transactions, without the written consent of each Lender; or

 

(f)  other
than in connection with a transaction permitted under Section 7.04 or
7.05, release all or substantially all of the aggregate value of the
Guarantees, without the written consent of each Lender;

 

and
provided further that (i) no
amendment, waiver or consent shall, unless in writing and signed by each L/C
Issuer in addition to the Lenders required above, affect the rights or duties
of an L/C Issuer under this Agreement or any Letter of Credit Application
relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment,
waiver or consent shall, unless in writing and signed by the Administrative
Agent in addition to the Lenders required above, affect the rights or duties
of, or any fees or other amounts payable to, the Administrative Agent under
this Agreement or any other Loan Document; (iv) Section 10.07(h) may
not be amended, waived or otherwise modified without the consent of each
Granting Lender all or any part of whose Loans are being funded by an SPC at
the time of such amendment, waiver or other modification; and (v) the
consent of Lenders holding more than 50% of any Class of Commitments shall
be required with respect to any amendment that by its terms adversely affects
the rights of such Class in respect of payments hereunder in a manner
different than such amendment affects other Classes.  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitment of such
Lender may not be increased or extended without the consent of such Lender (it
being understood that any Commitments or Loans held or deemed held by any
Defaulting Lender shall be excluded for a vote of the Lenders hereunder
requiring any consent of the Lenders).

 

Notwithstanding
the foregoing, this Agreement may be amended (or amended and restated) with the
written consent of the Required Lenders, the Administrative Agent and the
Company (a) to add one or more additional credit facilities to this
Agreement and to permit the extensions of credit from time to time outstanding
thereunder and the accrued interest and fees in respect thereof to share
ratably in the benefits of this Agreement and the other Loan Documents with the
U.S. Term Loans, the Euro Term Loans and the Revolving Credit Loans and the
accrued interest and fees in respect thereof and (b) to include
appropriately the Lenders holding such credit facilities in any determination
of the Required Lenders.

 

In
addition, notwithstanding the foregoing, this Agreement may be amended with the
written consent of the Administrative Agent, the Company and the Lenders (and,
in the case of any amendment with respect to Euro Replacement Term Loans (as
defined below), the German Borrower) providing the relevant U.S. Replacement
Term Loans or Euro Replacement Term Loans (as defined below) to permit the
refinancing of all outstanding U.S. Term Loans (“U.S. Refinanced Term Loans”) or Euro Term Loans (the “Euro Refinanced Term Loans”) with a

 

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replacement
U.S. term loan tranche denominated in Dollars (“U.S. Replacement Term Loans”) or Euro term loan tranche
denominated in Euros (“Euro Replacement Term
Loans”), respectively, hereunder; provided
that (a) the aggregate principal amount of such U.S. Replacement Term
Loans or Euro Replacement Term Loans shall not exceed the aggregate principal
amount of such U.S. Refinanced Term Loans or Euro Refinanced Term Loans,
respectively, (b) the Applicable Rate for such U.S. Replacement Term Loans
or Euro Replacement Term Loans shall not be higher than the Applicable Rate for
such U.S. Refinanced Term Loans or Euro Refinanced Term Loans, respectively, (c) the
Weighted Average Life to Maturity of such U.S. Replacement Term Loans or Euro
Replacement Term Loans shall not be shorter than the Weighted Average Life to
Maturity of such U.S. Refinanced Term Loans or Euro Refinanced Term Loans,
respectively, at the time of such refinancing (except to the extent of nominal
amortization for periods where amortization has been eliminated as a result of
prepayment of the applicable Term Loans) and (d) all other terms
applicable to such U.S. Replacement Term Loans or Euro Replacement Term Loans
shall be substantially identical to, or less favorable to the Lenders providing
such U.S. Replacement Term Loans or Euro Replacement Term Loans than, those
applicable to such U.S. Refinanced Term Loans or Euro Refinanced Term Loans,
respectively, except to the extent necessary to provide for covenants and other
terms applicable to any period after the latest final maturity of the Term
Loans in effect immediately prior to such refinancing.

 

Notwithstanding
anything to the contrary contained in Section 10.01, guarantees,
collateral security documents and related documents executed by Foreign
Subsidiaries in connection with this Agreement may be in a form reasonably
determined by the Administrative Agent and may be, together with this
Agreement, amended and waived with the consent of the Administrative Agent at
the request of the Company without the need to obtain the consent of any other
Lender if such amendment or waiver is delivered in order (i) to comply
with local Law or advice of local counsel, (ii) to cure ambiguities or
defects or (iii) to cause such guarantee, collateral security document or
other document to be consistent with this Agreement and the other Loan
Documents.

 

Section 10.02.  Notices
and Other Communications; Facsimile Copies.  (a)  General. 
Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder or under any other Loan Document shall be
in writing (including by facsimile transmission).  All such written notices shall be mailed,
faxed or delivered to the applicable address, facsimile number or electronic
mail address, and all notices and other communications expressly permitted
hereunder to be given by telephone shall be made to the applicable telephone
number, as follows:

 

(i)  if
to any Borrower, the Administrative Agent, an L/C Issuer or the Swing Line
Lender, to the address, facsimile number, electronic mail address or telephone
number specified for such Person on Schedule 10.02 or to such other address,
facsimile number, electronic mail address or telephone number as shall be
designated by such party in a notice to the other parties; and

 

(ii)  if
to any other Lender, to the address, facsimile number, electronic mail address
or telephone number specified in its Administrative Questionnaire or to such
other address, facsimile number, electronic mail address or telephone number as
shall be designated by such party in a notice to the Company, the
Administrative Agent, the L/C Issuers and the Swing Line Lender.

 

133

 

All
such notices and other communications shall be deemed to be given or made, if
given or made during the recipient’s normal business hours (and if not, shall
be deemed to be given or made on the next succeeding Business Day), upon the
earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, when signed for by or on behalf of the
relevant party hereto; (B) if delivered by mail, four (4) Business
Days after deposit in the mails, postage prepaid; (C) if delivered by
facsimile, when sent and receipt has been confirmed by telephone; and (D) if
delivered by electronic mail (which form of delivery is subject to the
provisions of Section 10.02(d)), when delivered; provided that notices and other
communications to the Administrative Agent, the L/C Issuers and the Swing Line
Lender pursuant to Article II shall not be effective until actually
received by such Person.  In no event
shall a voice mail message be effective as a notice, communication or
confirmation hereunder.

 

(b)  Effectiveness of Facsimile Documents and Signatures.  Loan Documents may be transmitted and/or
signed by facsimile or “PDF” (subject to Section 10.02(d).  The effectiveness of any such documents and
signatures shall, subject to applicable Law, have the same force and effect as
manually signed originals and shall be binding on all Loan Parties, the Agents
and the Lenders.

 

(c)  Reliance by Agents and Lenders.  The Administrative Agent and the Lenders
shall be entitled to rely and act upon any notices (including telephonic
Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on
behalf of any Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof.  The Borrowers shall indemnify each
Agent-Related Person and each Lender from all losses, liabilities and related
reasonable out-of-pocket costs and expenses resulting from the reliance by such
Person on each notice purportedly given by or on behalf of the Borrowers in the
absence of gross negligence or willful misconduct.  All telephonic notices to the Administrative
Agent may be recorded by the Administrative Agent, and each of the parties
hereto hereby consents to such recording.

 

(d)  Electronic Communications.  Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures approved
by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender pursuant to
Articles II and III, if such Lender has notified the Administrative Agent that
it is incapable of receiving notices thereunder by electronic
communication.  The Administrative Agent
or the Company may, in their discretion, agree to accept notices and other
communications to them hereunder by electronic communications pursuant to
procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.  Unless the
Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgment), provided
that if such notice or other communication is not sent during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been sent at the opening of business on the next Business Day for the
recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

 

134

 

(e)  Designation by Overseas Borrowers.  Each Overseas Borrower hereby designates the
Company as its representative and agent on its behalf for the purposes of
giving and receiving all notices (other than Committed Loan Notices) and any
other documentation required to be delivered to it pursuant to this Agreement
and any other Loan Document by the Administrative Agent or any Lender.  The Company hereby accepts such
appointment.  The Agents and the Lenders
may regard any notice (other than Committed Loan Notices) or other
communication pursuant to any Loan Document from the Company as a notice or
communication from all Borrowers, and may give any notice or communication
required or permitted to be given to any Overseas Borrower or Overseas
Borrowers hereunder to the Company on behalf of such Overseas Borrower or
Overseas Borrowers.  Each Overseas
Borrower agrees that each notice, election, representation and warranty,
covenant, agreement and undertaking made on its behalf by the Company shall be
deemed for all purposes to have been made by such Overseas Borrower and shall
be binding upon and enforceable against such Overseas Borrower to the same
extent as if the same had been made directly by such Overseas Borrower.

 

Section 10.03.  No
Waiver; Cumulative Remedies.  No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder or under any other
Loan Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege.  The rights, remedies,
powers and privileges herein provided, and provided under each other Loan
Document, are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by Law.

 

Section 10.04.  Attorney
Costs, Expenses and Taxes.  The Company agrees (a) if the Closing
Date occurs, to pay or reimburse the Administrative Agent, the Syndication
Agent, the Co-Documentation Agents and the Arrangers for all reasonable
out-of-pocket costs and expenses incurred in connection with the preparation,
negotiation, syndication and execution of this Agreement and the other Loan
Documents, and any amendment, waiver, consent or other modification of the
provisions hereof and thereof (whether or not the transactions contemplated
thereby are consummated), and the consummation and administration of the
transactions contemplated hereby and thereby, including all Attorney Costs of
Simpson Thacher & Bartlett LLP and, if necessary, one local counsel in
each applicable jurisdiction, and (b) to pay or reimburse the
Administrative Agent, the Syndication Agent, the Co-Documentation Agents, the
Arrangers and each Lender for all reasonable out-of-pocket costs and expenses
incurred in connection with the enforcement of any rights or remedies under
this Agreement or the other Loan Documents (including all such costs and
expenses incurred during any legal proceeding, including any proceeding under
any Debtor Relief Law, and including all Attorney Costs of one counsel to the
Administrative Agent and the Lenders and, if necessary, one local counsel in
each applicable jurisdiction).  The
foregoing costs and expenses shall include all reasonable search, filing,
recording and title insurance charges and fees and taxes related thereto, and
other reasonable out-of-pocket expenses incurred by any Agent.  The agreements in this Section 10.04
shall survive the termination of the Aggregate Commitments and repayment of all
other Obligations.  All amounts due under
this Section 10.04 shall be paid within ten (10) Business Days of
receipt by the Company of an invoice relating thereto setting forth such expenses
in reasonable detail.  If any Loan Party
fails to pay when due any costs, expenses or other amounts payable by it
hereunder or under any Loan Document, such amount may be paid on behalf of such
Loan Party by the Administrative Agent in its sole discretion.

 

Section 10.05.  Indemnification
by the Company.  Whether or not the transactions contemplated
hereby are consummated, the Company shall indemnify and hold harmless each

 

135

 

Agent-Related
Person, each Lender and their respective Affiliates, directors, officers,
employees, counsel, agents, trustees, investment advisors and attorneys-in-fact
(collectively the “Indemnitees”)
from and against any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments and suits and related reasonable
out-of-pocket expenses (including Attorney Costs) of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted against
any such Indemnitee in any way relating to or arising out of or in connection
with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or
instrument delivered in connection with the transactions contemplated thereby
or the consummation of the transactions contemplated thereby, (b) any
Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by an L/C Issuer to honor a demand for payment
under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit), or (c) to
the extent relating to or arising from any of the foregoing, any actual or
alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by the Company, any Subsidiary or any
other Loan Party, or any Environmental Liability related in any way to the
Company, any Subsidiary or any other Loan Party, or (d) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory (including
any investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”), in all cases,
whether or not caused by or arising, in whole or in part, out of the negligence
of the Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits or
expenses are found in a final non-appealable judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of such Indemnitee, any Affiliate of such Indemnitee or any officer, director,
employee, advisor, representative or agent of such Indemnitee or any such Affiliate.  No Indemnitee shall be liable to any Group
Member for any damages arising from the use by others of any information or
other materials obtained through IntraLinks or other similar information
transmission systems in connection with this Agreement.  No Indemnitee shall be liable (whether direct
or indirect, in contract, tort or otherwise) to any Group Member (other than
the Lenders’ contractual liability for breach under this Agreement) except to
the extent such liability is found in a non-appealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnitee, any Affiliate of such Indemnitee or any officer,
director, employee, advisor, representative or agent of such Indemnitee or any
such Affiliate.  No Indemnitee shall have
any liability to any Group Member, nor any Group Member to any Indemnitee, for
any special, punitive, indirect or consequential damages (including, without
limitation, loss of profits, business or anticipated savings) relating to this
Agreement or any other Loan Document or arising out of its activities in
connection herewith or therewith (whether before or after the Closing
Date).  All amounts due under this Section 10.05
shall be paid within ten (10) Business Days after demand therefor;
provided, however, that such Indemnitee shall promptly refund any amount
received under this Section 10.05 to the extent that there is a final
judicial or arbitral determination that such Indemnitee was not entitled to
indemnification or contribution rights with respect to such payment pursuant to
the express terms of this Section 10.05. 
The agreements in this Section 10.05 shall survive the resignation
of the Administrative Agent, the replacement of any Lender, the termination of
the Aggregate Commitments and the repayment, satisfaction or discharge of all
the other Obligations.

 

Section 10.06.  Payments
Set Aside.  To the extent that any payment by or on
behalf of the Company is made to any Agent or any Lender, or any Agent or any
Lender exercises its

 

136

 

right
of setoff, and such payment or the proceeds of such setoff or any part thereof
is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by such
Agent or such Lender in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any proceeding under any Debtor Relief Law
or otherwise, then (a) to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such setoff
had not occurred, and (b) each Lender severally agrees to pay to the
Administrative Agent upon demand its applicable share of any amount so
recovered from or repaid by any Agent, plus interest thereon from the date of
such demand to the date such payment is made at a rate per annum equal to the
applicable Overnight Rate from time to time in effect.

 

Section 10.07.  Successors
and Assigns.  (a)  The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that (x) neither
Holdings nor any Borrower may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender and (y) no
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee, (ii) by way of
participation in accordance with the provisions of Section 10.07(e), (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of Sections 10.07(g) or 10.07(i) or (iv) to an SPC in
accordance with the provisions of Section 10.07(h) (and any other
attempted assignment or transfer by any party hereto shall be null and
void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in Section 10.07(e) and, to the
extent expressly contemplated hereby, the Indemnitees) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(b)  (i)  Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more assignees (“Assignees”)
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans (including for purposes of
this Section 10.07(b), participations in L/C Obligations and in Swing Line
Loans) at the time owing to it) with the prior written consent (such consent
not to be unreasonably withheld or delayed) of:

 

(A)  the
Company, provided that no consent
of the Company shall be required for an assignment to a Lender, an Affiliate of
a Lender, an Approved Fund or, if an Event of Default under Section 8.01(a),
(f) or (g) has occurred and is continuing, any Assignee;

 

(B)  the
Administrative Agent, provided
that no consent of the Administrative Agent shall be required for an assignment
of all or any portion of a Term Loan to a Lender, an Affiliate of a Lender or
an Approved Fund;

 

(C)  each
L/C Issuer at the time of such assignment, provided
that no consent of the L/C Issuers shall be required for any assignment of a
Term Loan; and

 

(D)  the
Swing Line Lender; provided that
no consent of the Swing Line Lender shall be required for any assignment of a
Term Loan.

 

(ii)  Assignments
shall be subject to the following additional conditions:

 

137

 

(A)  except
in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning
Lender’s Commitment or Loans of any Class, the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 (in
the case of each Revolving Credit Facility), or $1,000,000 (in the case of a
Term Loan) and in increments of $1,000,000 in excess thereof unless each of the
Company and the Administrative Agent otherwise consents, provided that such amounts shall be
aggregated in respect of each Lender and its Affiliates or Approved Funds, if
any;

 

(B)  the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Assumption, together with a processing and recordation fee of
$3,500; and

 

(C)  the
Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent (1) an Administrative Questionnaire in which the assignee designates
one or more Credit Contacts (as defined in the Administrative Questionnaire) to
whom all syndicate-level information (which may contain material non-public
information about Holdings, the Borrowers, the other Loan Parties and their
Affiliates and related parties or their respective securities) will be made
available and who may receive such information in accordance with the Assignee’s
compliance procedures and applicable laws, including Federal and state
securities laws.

 

This
paragraph (b) shall not prohibit any Lender from assigning all or a
portion of its rights and obligations among separate Facilities on a non-pro
rata basis.

 

(c)  Subject
to acceptance and recording thereof by the Administrative Agent pursuant to Section 10.07(d),
from and after the effective date specified in each Assignment and Assumption,
the Eligible Assignee thereunder shall be a party to this Agreement and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05 with respect to facts
and circumstances occurring prior to the effective date of such
assignment).  Upon request, and the
surrender by the assigning Lender of its Note, the relevant Borrower (at its
expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
clause (c) shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with Section 10.07(e).

 

(d)  The
Administrative Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amounts (and related interest amounts) of the Loans, L/C Obligations
(specifying the Unreimbursed Amounts), L/C Borrowings and amounts due under Section 2.03,
owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). 
The entries in the Register shall be conclusive, absent manifest error,
and the Borrowers, the Agents and the Lenders shall treat each Person whose
name is recorded in the

 

138

 

Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Company, any Agent
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

 

(e)  Any
Lender may at any time, without the consent of, or notice to, the Borrowers or
the Administrative Agent, sell participations to any Person (other than a
natural person) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in L/C Obligations and/or Swing Line
Loans) owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the
Borrowers, the Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and the other Loan Documents and to approve any amendment,
modification or waiver of any provision of this Agreement or the other Loan
Documents; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 10.01 that directly
affects such Participant.  Subject to Section 10.07(f),
the Borrowers agree that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.07(c) but
shall not be entitled to recover greater amounts under such Sections than the
selling Lender would be entitled to recover. 
To the extent permitted by applicable Law, each Participant also shall
be entitled to the benefits of Section 10.09 as though it were a Lender; provided that such Participant agrees to
be subject to Section 2.13 as though it were a Lender.

 

(f)  A
Participant shall not be entitled to receive any greater payment under Section 3.01,
3.04 or 3.05 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the relevant Borrower’s
prior written consent.  A Participant
shall not be entitled to the benefits of Section 3.01 unless the relevant
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the relevant Borrower, to comply with Section 10.15
as though it were a Lender.

 

(g)  Any
Lender may at any time, without the consent of the Company or the Administrative
Agent, pledge or assign a security interest in all or any portion of its rights
under this Agreement (including under its Note, if any) to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

(h)  Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special
purpose funding vehicle identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the relevant Borrower (an “SPC”) the option to provide all or any part
of any Loan that such Granting Lender would otherwise be obligated to make
pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to fund
any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to make all or any part of such Loan, the Granting Lender shall
be obligated to make such Loan pursuant to the terms hereof.  Each party hereto hereby agrees that

 

139

 

(i) neither the grant to
any SPC nor the exercise by any SPC of such option shall increase the costs or
expenses or otherwise increase or change the obligations of the relevant
Borrower under this Agreement (including its obligations under Section 3.01,
3.04 or 3.05), (ii) no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement for which a Lender would be liable, and
(iii) the Granting Lender shall for all purposes, including the approval
of any amendment, waiver or other modification of any provision of any Loan
Document, remain the lender of record hereunder.  The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender.  Notwithstanding anything to the contrary
contained herein, any SPC may (i) with notice to, but without prior
consent of the relevant Borrower and the Administrative Agent and with the
payment of a processing fee of $3,500, assign all or any portion of its right
to receive payment with respect to any Loan to the Granting Lender and (ii) disclose
on a confidential basis any non-public information relating to its funding of
Loans to any rating agency, commercial paper dealer or provider of any surety
or Guarantee or credit or liquidity enhancement to such SPC.

 

(i)  Notwithstanding
anything to the contrary contained herein, (1) any Lender may in
accordance with applicable Law create a security interest in all or any portion
of the Loans owing to it and the Note, if any, held by it and (2) any
Lender that is a Fund may, without the consent of the Company or the
Administrative Agent, create a security interest in all or any portion of the
Loans owing to it and the Note, if any, held by it to the trustee for holders
of obligations owed, or securities issued, by such Fund as security for such
obligations or securities; provided
that unless and until such trustee actually becomes a Lender in compliance with
the other provisions of this Section 10.07, (i) no such pledge shall
release the pledging Lender from any of its obligations under the Loan
Documents and (ii) such trustee shall not be entitled to exercise any of
the rights of a Lender under the Loan Documents.

 

(j)  Notwithstanding
anything to the contrary contained herein, any L/C Issuer or the Swing Line
Lender may, upon thirty (30) days’ notice to the Company and the Lenders,
resign as an L/C Issuer or the Swing Line Lender, respectively; provided that on or prior to the
expiration of such 30-day period with respect to such resignation, the relevant
L/C Issuer or the Swing Line Lender shall have identified a successor L/C
Issuer or Swing Line Lender reasonably acceptable to the Company willing to
accept its appointment as successor L/C Issuer or Swing Line Lender, as
applicable.  In the event of any such
resignation of an L/C Issuer or the Swing Line Lender, the Company shall be
entitled to appoint from among the Lenders willing to accept such appointment a
successor L/C Issuer or Swing Line Lender hereunder; provided that no failure by the Company to appoint any such
successor shall affect the resignation of the relevant L/C Issuer or the Swing
Line Lender, as the case may be, except as expressly provided above.  If an L/C Issuer resigns as an L/C Issuer, it
shall retain all the rights and obligations of an L/C Issuer hereunder with
respect to all Letters of Credit outstanding as of the effective date of its
resignation as an L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans or fund
risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).  If the Swing Line Lender resigns as Swing
Line Lender, it shall retain all the rights of the Swing Line Lender provided
for hereunder with respect to Swing Line Loans made by it and outstanding as of
the effective date of such resignation, including the right to require the
Lenders to make Base Rate Loans or fund risk participations in outstanding
Swing Line Loans pursuant to Section 2.04(c).

 

SECTION 10.08.  Confidentiality.  Each
of the Agents and the Lenders agrees to maintain the confidentiality of the
Information, except that Information may be disclosed (a) to its
Affiliates and its and its Affiliates’ directors, officers, employees,
trustees, investment advisors 

 

140

 

and
agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential pursuant to the terms hereof); (b) to the extent
requested by any Governmental Authority; (c) to the extent  required by applicable Laws or regulations or
by any subpoena or similar legal process; (d) to any other party to this
Agreement; (e) subject to an agreement for the benefit of the Company
containing provisions substantially the same as those of this Section 10.08
(or as may otherwise be reasonably acceptable to the Company), to any pledgee
referred to in Section 10.07(g), counterparty to a Swap Contract, Eligible
Assignee of or Participant in, or any prospective Eligible Assignee of or
Participant in, any of its rights or obligations under this Agreement; (f) with
the written consent of the Company; (g) to the extent such Information
becomes publicly available other than as a result of a breach of this Section 10.08;
(h) to any Governmental Authority or examiner (including the National
Association of Insurance Commissioners or any other similar organization)
regulating any Lender; or (i) to any rating agency when required by it (it
being understood that, prior to any such disclosure, such rating agency shall
undertake to preserve the confidentiality of any Information relating to the
Loan Parties received by it from such Lender). 
In addition, the Agents and the Lenders may disclose the existence of
this Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry, and service providers to the
Agents and the Lenders in connection with the administration and management of
this Agreement, the other Loan Documents, the Commitments, and the Credit
Extensions.  For the purposes of this Section 10.08,
“Information” means all
information received from any Loan Party relating to any Loan Party or its
business, other than any such information that is publicly available to any
Agent or any Lender prior to disclosure by any Loan Party other than as a
result of a breach of this Section 10.08; provided that, in the case of
information received from a Loan Party after the date hereof, such information (i) is
clearly identified at the time of delivery as confidential or (ii) is
delivered pursuant to Section 6.01, 6.02 or 6.03 hereof.

 

EACH LENDER ACKNOWLEDGES THAT INFORMATION FURNISHED TO
IT PURSUANT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY INCLUDE
MATERIAL NON-PUBLIC INFORMATION CONCERNING HOLDINGS, THE BORROWERS, THE OTHER
LOAN PARTIES AND THEIR AFFILIATES AND RELATED PARTIES OR THEIR RESPECTIVE
SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING
THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH
MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

ALL INFORMATION, INCLUDING WAIVERS AND AMENDMENTS,
FURNISHED BY HOLDINGS, THE BORROWERS OR THE ADMINISTRATIVE AGENT PURSUANT TO,
OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL
INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT
HOLDINGS, THE BORROWERS, THE OTHER LOAN PARTIES AND THEIR AFFILIATES AND
RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. 
ACCORDINGLY, EACH LENDER REPRESENTS TO HOLDINGS, THE BORROWERS AND THE
ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE
A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION IN

 

141

 

ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW,
INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

SECTION 10.09.  Setoff.  In
addition to any rights and remedies of the Lenders provided by Law, upon the
occurrence and during the continuance of any Event of Default, each Lender and
its Affiliates is authorized at any time and from time to time, without prior
notice to the Company or any other Loan Party, any such notice being waived by
the Company (on its own behalf and on behalf of each Loan Party and its
Subsidiaries) to the fullest extent permitted by applicable Law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other Indebtedness at any time owing by, such
Lender and its Affiliates to or for the credit or the account of the respective
Loan Parties and their Subsidiaries against any and all Obligations owing to
such Lender and its Affiliates hereunder or under any other Loan Document, now
or hereafter existing, irrespective of whether or not such Agent or such Lender
or Affiliate shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured or
denominated in a currency different from that of the applicable deposit or
Indebtedness; provided that, in
the case of any such deposits or other Indebtedness for the credit or the
account of any Foreign Subsidiary, such set off may only be against any
Obligations of Foreign Subsidiaries. 
Each Lender agrees promptly to notify the Company and the Administrative
Agent after any such set off and application made by such Lender; provided, that the failure to give such
notice shall not affect the validity of such setoff and application.  The rights of the Administrative Agent and
each Lender under this Section 10.09 are in addition to other rights and
remedies (including other rights of setoff) that the Administrative Agent and
such Lender may have.  Notwithstanding
anything herein or in any other Loan Document to the contrary, in no event
shall the assets of any Foreign Subsidiary that is not a Loan Party constitute
collateral security for payment of the Obligations of the Company or any
Domestic Subsidiary, it being understood that (a) the Equity Interests of
any Foreign Subsidiary that is not a Loan Party do not constitute such an asset
and (b) the provisions hereof shall not limit, reduce or otherwise
diminish in any respect the Borrowers’ obligations to make any mandatory
prepayment pursuant to Section 2.05(b)(ii).

 

SECTION 10.10.  Interest Rate Limitation. 
Notwithstanding anything to the contrary contained in any Loan Document,
if at any time the interest rate applicable to any Loan, together with all
fees, charges and other amounts which are treated as interest on such Loan
under applicable Law (collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum
Rate”) which may be contracted for, charged, taken, received or
reserved by the Lender holding such Loan in accordance with applicable Law, the
rate of interest payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and,
to the extent lawful, the interest and Charges that would have been payable in
respect of such Loan but were not payable as a result of the operation of this Section shall
be cumulated and the interest and Charges payable to such Lender in respect of
other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Rate to the date of repayment, shall have been received by such
Lender.

 

SECTION 10.11.  Counterparts.  This
Agreement and each other Loan Document may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Delivery by telecopier of an executed
counterpart of a signature page to this Agreement and each other Loan
Document shall be effective as delivery of an original executed counterpart of
this Agreement and such other Loan Document. 
The Agents may also require that any such documents and signatures
delivered by telecopier be confirmed by a manually signed original thereof;
provided that the failure to request

 

142

 

or
deliver the same shall not limit the effectiveness of any document or signature
delivered by telecopier.

 

SECTION 10.12.  Integration.  This
Agreement, together with the other Loan Documents, comprises the complete and
integrated agreement of the parties on the subject matter hereof and thereof
and supersedes all prior agreements, written or oral, on such subject
matter.  In the event of any conflict
between the provisions of this Agreement and those of any other Loan Document,
the provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Agents or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement.  Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.

 

SECTION 10.13.  Survival of Representations and
Warranties.  All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
each Agent and each Lender, regardless of any investigation made by any Agent
or any Lender or on their behalf and notwithstanding that any Agent or any
Lender may have had notice or knowledge of any Default at the time of any
Credit Extension, and shall continue in full force and effect as long as any
Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or
any Letter of Credit shall remain outstanding.

 

SECTION 10.14.  Severability.  If
any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, the legality, validity and enforceability of
the remaining provisions of this Agreement and the other Loan Documents shall
not be affected or impaired thereby.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

SECTION 10.15.  Tax Forms.  (a)  (i)  Each
Lender and Agent that is not a “United States person” within the meaning of Section 7701(a)(30)
of the Code (each, a “Foreign Lender”)
shall deliver to the Company and the Administrative Agent, on or prior to the
date which is ten (10) Business Days after the Closing Date (or upon
accepting an assignment of an interest herein), two duly signed, properly completed
copies of either IRS Form W-8BEN or any successor thereto (relating to
such Foreign Lender and entitling it to an exemption from, or reduction of,
United States withholding tax on all payments to be made to such Foreign Lender
by the Company or any other Loan Party pursuant to this Agreement or any other
Loan Document) or IRS Form W-8ECI or any successor thereto (relating to
all payments to be made to such Foreign Lender by the Company or any other Loan
Party pursuant to this Agreement or any other Loan Document) or such other
evidence reasonably satisfactory to the Company and the Administrative Agent
that such Foreign Lender is entitled to an exemption from, or reduction of,
United States withholding tax, including any exemption pursuant to Section 871(h) or
881(c) of the Code, and in the case of a Foreign Lender claiming such an
exemption under Section 881(c) of the Code, a certificate that
establishes in writing to the Company and the Administrative Agent that such
Foreign Lender is not (i) a “bank” as defined in Section 881(c)(3)(A) of
the Code, (ii) a 10-percent stockholder within the meaning of Section 871(h)(3)(B) of
the Code, or (iii) a controlled foreign corporation related to the Company
with the meaning of Section 864(d) of the Code.  Thereafter and from time to time, each such
Foreign Lender shall (A) promptly submit to the Company and the
Administrative Agent such additional duly completed and signed copies of one or
more of such forms or certificates (or such successor forms or certificates as
shall be adopted from time to time by the relevant United States taxing
authorities) as may then be 

 

143

 

available
under then current United States Laws and regulations to avoid, or such
evidence as is reasonably satisfactory to the Company and the Administrative
Agent of any available exemption from, or reduction of, United States
withholding taxes in respect of all payments to be made to such Foreign Lender
by the Company or other Loan Party pursuant to this Agreement, or any other
Loan Document, in each case, (1) on or before the date that any such form,
certificate or other evidence expires or becomes obsolete, (2) after the
occurrence of any event requiring a change in the most recent form, certificate
or evidence previously delivered by it to the Company and the Administrative
Agent and (3) from time to time thereafter if reasonably requested by the
Company or the Administrative Agent, and (B) promptly notify the Company
and the Administrative Agent of any change in circumstances which would modify
or render invalid any claimed exemption or reduction.

 

(ii)  Each
Foreign Lender, to the extent it does not act or ceases to act for its own
account with respect to any portion of any sums paid or payable to such Foreign
Lender under any of the Loan Documents (for example, in the case of a typical
participation by such Foreign Lender), shall deliver to the Company and the
Administrative Agent on the date when such Foreign Lender ceases to act for its
own account with respect to any portion of any such sums paid or payable, and
at such other times as may be necessary in the determination of the Company or
the Administrative Agent (in either case, in the reasonable exercise of its
discretion), (A) two duly signed completed copies of the forms or
statements required to be provided by such Foreign Lender as set forth above,
to establish the portion of any such sums paid or payable with respect to which
such Foreign Lender acts for its own account that is not subject to United
States withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY
(or any successor thereto), together with any information such Foreign Lender
chooses to transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Foreign Lender is not acting
for its own account with respect to a portion of any such sums payable to such
Foreign Lender.

 

(iii)  Each
Lender and Agent (or Participant) that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in
which a Borrower is formed or organized, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to such Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by such Borrower,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding, or at a reduced
rate, provided that such Lender
or Agent (or Participant) is legally entitled to complete, execute and deliver
such documentation.  Each Lender and
Agent (or Participant) shall promptly notify such Borrower and the Administrative
Agent of any change in circumstances which would modify or render invalid any
claimed exemption or reduction.

 

(iv)  No
Borrower shall be required to pay any additional amount or any indemnity
payment under Section 3.01 to (A) any Lender if such Lender shall
have failed to satisfy the foregoing provisions of this Section 10.15(a),
or (B) any U.S. Lender if such U.S. Lender shall have failed to satisfy
the provisions of Section 10.15(b); provided
that (i) if such Lender shall have satisfied the requirement of this or Section 10.15(b),
as applicable, on the date such Lender became a Lender or, if later, the date
such Lender made an Incremental Overseas Term Loan to any Borrower or the date
a CAM Exchange occurred, or ceased to act for its own account with respect to
any payment under any of the Loan Documents, nothing in this Section 10.15(a) or
Section 10.15(b) shall relieve any Borrower of its obligation to pay
any amounts pursuant to Section 3.01 in the event that, as a result of any
change in any applicable Law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or

 

144

 

application thereof, such
Lender is no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender or other
Person for the account of which such Lender receives any sums payable under any
of the Loan Documents is not subject to withholding or is subject to withholding
at a reduced rate and (ii) nothing in this Section 10.15(a) shall
relieve any Borrower of its obligation to pay any amounts pursuant to Section 3.01
in the event that the requirements of Section 10.15(a)(ii) or
10.15(a)(iii) have not been satisfied if such Borrower is entitled, under
applicable Law, to rely on any applicable forms and statements required to be
provided under this Section 10.15 by the Lender that does not act or has
ceased to act for its own account under any of the Loan Documents, including in
the case of a typical participation.

 

(v)  The
Administrative Agent may deduct and withhold any taxes required by any Laws to
be deducted and withheld from any payment under any of the Loan Documents.

 

(b)  Each
Lender and Agent that is a “United States person” within the meaning of Section 7701(a)(30)
of the Code (each, a “U.S. Lender”)
shall deliver to the Administrative Agent and the Company two duly signed,
properly completed copies of IRS Form W-9 on or prior to the Closing Date
(or on or prior to the date it becomes a party to this Agreement), certifying
that such U.S. Lender is entitled to an exemption from United States backup
withholding tax, or any successor form. 
If such U.S. Lender fails to deliver such forms, then the Administrative
Agent may withhold from any payment to such U.S. Lender an amount equivalent to
the applicable backup withholding tax imposed by the Code.  Thereafter and from time to time, each such
U.S. Lender shall (A) promptly submit to the Company and the Administrative
Agent such additional duly completed and signed copies of one or more of such
forms or certificates (or such successor forms) as may then be available under
then current United States Laws and regulations to avoid, or such evidence as
is reasonably satisfactory to the Company and the Administrative Agent of any
available exemption from United States back up withholding taxes in respect of
all payments to be made to such U.S. Lender by the Company or other Loan Party
pursuant to this Agreement, or any other Loan Document, in each case, (1) on
or before the date that any such form or other evidence expires or becomes
obsolete, (2) after the occurrence of any event requiring a change in the
most recent form or evidence previously delivered by it to the Company and the
Administrative Agent and (3) from time to time thereafter if reasonably
requested by the Company or the Administrative Agent, and (B) promptly
notify the Company and the Administrative Agent of any change in circumstances
which would modify or render invalid any claimed exemption.

 

SECTION 10.16.  Governing Law.  (a) 
THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

(b) 
ANY LEGAL ACTION OR PROCEEDING ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH BORROWER, HOLDINGS, EACH AGENT AND EACH LENDER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS.  EACH
BORROWER, HOLDINGS, EACH AGENT AND EACH LENDER IRREVOCABLY WAIVES

 

145

 

ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH COURTS IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT
RELATED THERETO.

 

SECTION 10.17.  Waiver of Right to Trial by Jury.  EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 10.17
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

SECTION 10.18.  Binding Effect.  This
Agreement shall become effective when it shall have been executed by the
Borrowers and Holdings and the Administrative Agent shall have been notified by
each Lender, Swing Line Lender and L/C Issuer that each such Lender, Swing Line
Lender and L/C Issuer has executed it and thereafter shall be binding upon and
inure to the benefit of the Company, each Agent and each Lender and their respective
permitted successors and assigns, except that the Company shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lenders except as permitted by Section 7.04.

 

SECTION 10.19.  Lender Action.  Each
Lender agrees that it shall not take or institute any actions or proceedings,
judicial or otherwise, for any right or remedy against any Loan Party or any
other obligor under any of the Loan Documents or the Secured Hedge Agreements
(including the exercise of any right of setoff, rights on account of any banker’s
lien or similar claim or other rights of self-help), or institute any actions
or proceedings, or otherwise commence any remedial procedures, with respect to
any Collateral or any other property of any such Loan Party, without the prior
written consent of the Administrative Agent. 
The provision of this Section 10.19 are for the sole benefit of the
Lenders and shall not afford any right to, or constitute a defense available
to, any Loan Party.

 

SECTION 10.20.  USA PATRIOT Act.  Each
Lender hereby notifies the Borrowers that pursuant to the requirements of the
Patriot Act, it is required to obtain, verify and record information that
identifies the Borrowers, which information includes the name and address of
the Borrowers and other information that will allow such Lender to identify the
Borrowers in accordance with the Act.

 

SECTION 10.21.  Agent for Service of Process.  The
Company agrees that promptly following request by the Administrative Agent it
shall cause each Foreign Subsidiary which is a Loan Party or for whose account
a Letter of Credit is issued to appoint and maintain an agent reasonably
satisfactory to the Administrative Agent to receive service of process in New
York City on behalf of such Foreign Subsidiary.

 

146

 

SECTION 10.22.  Effectiveness of the Merger;
Assignment and Delegation to and Assumption by Reader’s Digest. 
Reader’s Digest shall have no rights or obligations hereunder until the
consummation of the Merger and any representations and warranties of Reader’s
Digest hereunder shall not become effective until such time.  Upon consummation of the Merger, and without
any further action by any Person, (a) Reader’s Digest hereby irrevocably
and unconditionally (i) assumes and agrees punctually to pay, perform and
discharge when due each of the Obligations and each and every debt, covenant
and agreement incurred, made or to be paid, performed or discharged by the
Company under the Loan Documents, (ii) agrees to be bound by all the
terms, provisions and conditions of the Loan Documents applicable to the
Company and (iii) agrees that it will be responsible for and deemed to
have made all the representations and warranties of the Company, whenever made
or deemed to have been made and (b) Reader’s Digest automatically assumes
and agrees to perform all the obligations of Acquisition Co under the
Commitment Letter dated November 16, 2006, among Holdings, Acquisition Co,
the Arrangers and the Agents and the Fee Letter referred to therein.  Upon the effectiveness of the assumption
provided for above, Reader’s Digest will be the Company for all purposes of
this Agreement and the other Loan Documents and may exercise every right and
power of the Company under this Agreement and the other Loan Documents.

 

SECTION 10.23.  Judgment Currency.  If,
for the purposes of obtaining judgment in any court, it is necessary to convert
a sum due hereunder or any other Loan Document in one currency into another
currency, the rate of exchange used shall be that at which in accordance with
normal banking procedures the Administrative Agent could purchase the first
currency with such other currency on the Business Day preceding that on which
final judgment is given.  The obligation
of each Borrower in respect of any such sum due from it to the Administrative
Agent or the Lenders hereunder or under the other Loan Documents shall,
notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is
denominated in accordance with the applicable provisions of this Agreement (the
“Agreement Currency”), be
discharged only to the extent that on the Business Day following receipt by the
Administrative Agent of any sum adjudged to be so due in the Judgment Currency,
the Administrative Agent may in accordance with normal banking procedures
purchase the Agreement Currency with the Judgment Currency.  If the amount of the Agreement Currency so
purchased is less than the sum originally due to the Administrative Agent from
any Borrower in the Agreement Currency, such Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the
Administrative Agent or the Person to whom such obligation was owing against such
loss.  If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the
Administrative Agent in such currency, the Administrative Agent agrees to
return the amount of any excess to such Borrower (or to any other Person who
may be entitled thereto under applicable Law).

 

SECTION 10.24.  German Tax Confirmation.  (a)   If, at
any time after the Closing Date, the German Borrower determines that a
confirmation by the Administrative Agent and/or each of the Euro Term Lenders
substantially in the form of the Decree issued by the German Federal Ministry
of Finance as of October 20, 2005 (substantially in the form of Exhibit L,
the “Tax Confirmation”) may be
required under the decrees to § 8a of the German Corporate Income Tax Act (Körperschaftsteuergesetz or KStG) dated July 15,
2004, July 22, 2005, and October 20, 2005 (as in effect on the
date hereof, the “Decrees”) with
respect to the Euro Term Loans, the German Borrower may prepare and deliver to
the Euro Term Lenders (through the Administrative Agent) a complete and
accurate draft Tax Confirmation listing all guarantees and security interests
securing the claims of the Euro Term Lenders under the Loan Documents and the
Secured Hedge Agreements and provide to the Euro Term Lenders any further
information which may reasonably be required by the Administrative Agent or any
Euro Term Lender to issue the

 

147

 

Tax Confirmation (based on the then applicable
practice of the German tax authorities), such information to be requested
within fifteen (15) Business Days after the delivery of the draft Tax
Confirmation by the German Borrower to the Euro Term Lenders (through the
Administrative Agent).

 

(b)  The Tax
Confirmation shall only include factual but not legal statements to be issued
by the Euro Term Lenders.  The Tax
Confirmation shall not contain any statement that any Euro Term Lender is not
permitted to issue by law, administrative rule or regulation of the
jurisdiction to which the relevant Euro Term Lender is subject.

 

(c)  Each Euro Term
Lender (including any Person that becomes a Euro Term Lender subsequent to the
date hereof pursuant to Section 10.07) hereby authorizes the
Administrative Agent on behalf of such Euro Term Lender to issue a Tax
Confirmation and provide it to the German Borrower within sixteen (16) Business
Days after such Euro Term Lender’s receipt of the following (which receipt
shall be deemed to have occurred upon the Administrative Agent’s posting of the
following to Intralinks or other similar information transmission
system):

 

(i)  the German Borrower’s request
therefor,

 

(ii)  a complete and accurate draft
of such Tax Confirmation listing all guarantees and security interests pursuant
to clause (a) above, and

 

(iii)  all further information
reasonably requested within the period set forth for such request pursuant to
clause (a) above to enable the Euro Term Lenders to complete such Tax
Confirmation,

 

unless such Euro Term Lender notifies the
Administrative Agent within the 15-Business Day period described in clause (a) above
that (x) it is prohibited from doing so by law, administrative rule or
regulation of the jurisdiction to which such Euro Term Lender is subject or (y) it
has reasonably determined that the factual information provided by the German
Borrower is not correct or not complete or, in the view of such Euro Term
Lender (acting in good faith), is misleading or (z) such Euro Term Lender
has not been released from confidentiality obligations to any Loan Party under
applicable banking secrecy rules with respect to confidential information
with respect to such Loan Party contained in such Tax Confirmation or, to the
extent applicable, has not been instructed to disclose any such information by
the relevant Loan Party.  Subject to the
terms of the preceding sentence, within the 16-Business Day period set forth
above, the Administrative Agent acting also on behalf of the Euro Term Lenders
shall issue and provide to the German Borrower the requested Tax Confirmation.

 

(d)  The Company
agrees to pay or reimburse the Administrative Agent and each Euro Term Lender
for all reasonable expenses incurred in connection with any Tax Confirmation in
accordance with the principles set forth in Section 10.04, including Attorney
Costs.  The Company shall indemnify and
hold harmless each Indemnitee from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments
and suits and related reasonable expenses (including all reasonable Attorney
Costs) of any kind or nature whatsoever which may at any time be imposed on,
incurred by or asserted against any such Indemnitee in any way relating to or
arising out of or in connection with any Tax Confirmation in accordance with
the principles set forth in Section 10.05. 
The agreements in this clause (d) shall survive the resignation of
the Administrative Agent, the replacement of any Lender, the termination of the
Aggregate Commitments and repayment, satisfaction or discharge of all other
Obligations.

 

148

 

(e)  The German Borrower confirms to
the Administrative Agent and each Euro Term Lender that (i) the Euro Term
Lenders will issue their respective Tax Confirmations exclusively at the request
of the German Borrower and solely for the purpose of providing information to
the German tax authorities as required pursuant to the Decrees, (ii) the
Euro Term Lenders are not responsible for examining any Borrower’s tax position
or for achieving any certain tax treatment with respect to any Borrower and (iii) no
Loan Party will raise any claims against the Administrative Agent or any Euro
Term Lender based on, or in connection with, any Tax Confirmation and no Euro
Term Lender will have any liability to any Loan Party with respect to any Tax
Confirmation (other than, subject to the principles of Section 10.05, for
failure to comply with the last sentence of Section 10.24(c)).

 

(f)  It is the common understanding
of the parties hereto that no party is providing any legal and/or tax advice to
any other party with respect to this Agreement or, in particular, with respect
to the application of § 8a KStG and the interpretation of § 8a KStG in the
Decrees, and that it is the responsibility of each party, in particular each
Loan Party, to consult with its own legal/tax advisers.

 

(g)  Each Loan Party releases each
Euro Term Lender from its duty of confidentiality and/or obligation of bank
secrecy (Bankgeheimnis) with
regard to the issuance of a Tax Confirmation to the German Borrower and its
submission to the German tax authorities.

 

(h)  If, after the date of this
Agreement, changes occur to German tax legislation or its interpretation
materially prejudicing the tax treatment of interest payments of the German
Borrower, the Administrative Agent and the Euro Term Lenders agree that they
will negotiate in good faith (without any legal obligation to agree) with the
Company and the German Borrower to restructure the Collateral securing the Euro
Term Loans to seek to reduce the impact of such materially prejudicial tax
treatment while retaining Collateral acceptable to the Euro Term Lenders.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

149

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the date first above written.

 

 

	
   

  	
  DOCTOR ACQUISITION CO.

  
	
   

  	
   

  
	
   

  	
       by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

 

 

	
   

  	
  RDA HOLDING CO.

  
	
   

  	
        by

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

 

 

	
   

  	
  THE READER’S DIGEST ASSOCIATION,

  INC.

  
	
   

  	
   

  
	
   

  	
      by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

 

 

	
   

  	
  RD GERMAN HOLDINGS GMBH

  
	
   

  	
   

  
	
   

  	
      by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  Administrative Agent and a Lender,

  
	
   

  	
   

  
	
   

  	
      by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

 

 

	
   

  	
  CITICORP NORTH AMERICA, INC., as

  Co-Syndication Agent and a Lender,

  
	
   

  	
   

  
	
   

  	
      by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

 

 

	
   

  	
  MERRILL LYNCH, PIERCE, FENNER &

  SMITH INCORPORATED,
  as Co-

  Syndication Agent,

  
	
   

  	
   

  
	
   

  	
      by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

 

 

	
   

  	
  MERRILL LYNCH CAPITAL

  CORPORATION, as a
  Lender,

  
	
   

  	
   

  
	
   

  	
      by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

 

 

	
   

  	
  THE ROYAL BANK OF SCOTLAND PLC,

  as Documentation Agent and a Lender,

  
	
   

  	
   

  
	
   

  	
      by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Senior Secured Credit Agreement

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"}]]