FIRST AMENDMENT, dated as of April 19, 2006 (this “Amendment”), to the
$400,000,000 FIVE-YEAR REVOLVING CREDIT AGREEMENT, dated as of April 14, 2005
(as amended, restated, supplemented or otherwise modified from time to time, the
“Revolving Credit Agreement”), among THE READER’S DIGEST ASSOCIATION, INC., a
Delaware corporation (the “Company”), the BORROWING SUBSIDIARIES party thereto
(the “Borrowing Subsidiaries”), the LENDERS party thereto, JPMORGAN CHASE BANK,
as administrative agent (in such capacity, the “Administrative Agent”) and
collateral agent, THE ROYAL BANK OF SCOTLAND PLC, as syndication agent, and
COMMERZBANK AG, NEW YORK BRANCH, HSBC BANK USA, NATIONAL ASSOCIATION, and
WACHOVIA BANK, NATIONAL ASSOCIATION, as co-documentation agents.
 
WITNESSETH:
 
WHEREAS, the Lenders under the Revolving Credit Agreement have agreed to extend
credit to the Borrowers on the terms and subject to the conditions set forth
therein; and
 
WHEREAS, the Company has requested that the Required Lenders amend certain
provisions of the Revolving Credit Agreement and the Lenders under the Revolving
Credit Agreement whose signatures appear below, constituting at least the
Required Lenders, are willing to amend the Revolving Credit Agreement on the
terms and subject to the conditions set forth herein;
 
NOW, THEREFORE, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto hereby agree as follows:
 
SECTION 1.   Defined Terms. Capitalized terms used but not otherwise defined
herein have the meanings assigned to them in the Revolving Credit Agreement.
 
SECTION 2.   Amendment of Section 1.01. (a) The pricing table in the definition
of “Applicable Rate” in Section 1.01 of the Revolving Credit Agreement is hereby
amended in its entirety to read as follows: 
 
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Pricing Table
 
Consolidated Leverage Ratio
Eurodollar Spread
ABR Spread
Commitment Fees
Level 1
≥3.25
1.75%
0.75%
0.500%
Level 2
≥3.0 and <3.25
1.50%
0.50%
0.375%
Level 3
≥2.5 and <3.0
1.25%
0.25%
0.250%
Level 4
≥2.0 and <2.5
1.00%
0.00%
0.200%
Level 5
≥1.5 and <2.0
0.75%
0.00%
0.175%
Level 6
<1.5
0.50%
0.00%
0.150%

 
(b)  The last sentence of the definition of “Commitment” is hereby amended to
read as follows:
 
“The initial aggregate amount of the Lenders’ Commitments is $500,000,000.”
 
(c)  The following sentence is hereby inserted at the end of the definition of
“Consolidated EBITDA” in Section 1.01 of the Revolving Credit Agreement: 
 
“Solely for purposes of determining compliance with the covenants set forth in
Sections 6.08 and 6.09, but not for purposes of the definition of Applicable
Rate, if any Person shall have been acquired or divested by the Company or any
Subsidiary or if the Company or any Subsidiary shall have merged with any Person
during such period, Consolidated EBITDA shall be determined on a pro forma basis
as if such acquisition, divestiture or merger had occurred at the beginning of
such period.”
 
SECTION 3.   Amendment of Section 1.04. The following sentence is hereby
inserted at the end of Section 1.04 of the Revolving Credit Agreement:
 
“All computations required to be made hereunder on a pro forma basis giving
effect to any acquisition, divestiture, merger or similar event shall reflect on
a pro forma basis such event and, to the extent applicable and permitted under
Article 11 of Regulation S-X promulgated under the Securities Act of 1933, the
historical earnings and cash flows associated with the assets acquired or
disposed of, any related incurrence or reduction of Indebtedness and any
projected synergies, cost savings and other adjustments or similar benefits
expected to be realized as a result of such event.”
 
SECTION 4.   Amendment of Section 2.13(a). Section 2.13(a) of the Revolving
Credit Agreement is hereby amended by deleting “$200,000,000” and inserting in
its place “$100,000,000.”
 
SECTION 5.   Amendment of Section 6.09. Section 6.09 of the Revolving Credit
Agreement is hereby amended in its entirety to read as follows:
 
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“SECTION 6.09. Consolidated Leverage Ratio. The Company will not permit the
Consolidated Leverage Ratio as of the last day of any fiscal quarter to be
greater than 3.50 to 1.00; provided, however, that the Consolidated Leverage
Ratio as of the last day of the fiscal quarter ending on September 30, 2006 will
not be greater than 3.75 to 1.00.”
 
SECTION 6.   Increase in Commitments. (a) Schedule 2.01 attached to the
Revolving Credit Agreement is hereby deleted and replaced with Schedule 2.01
attached hereto.
 
(b)   On the Amendment Effective Date, (i) the aggregate principal amount of the
Loans (the “Initial Loans”) outstanding immediately prior to giving effect to
the Amendment of Schedule 2.01 provided for herein (the “Schedule 2.01
Amendment”) shall be deemed to be paid, (ii) each Lender under the Revolving
Credit Agreement that increases its Commitment pursuant to the Schedule 2.01
Amendment (each, an “Increasing Lender”) shall pay to the Administrative Agent
in same day funds an amount equal to the difference between (A) the product of
(1) such Increasing Lender’s Applicable Percentage (calculated after giving
effect to the Schedule 2.01 Amendment), multiplied by (2) the amount of the
Subsequent Borrowings (as defined below) and (B) the product of (1) such
Increasing Lender’s Applicable Percentage (calculated without giving effect to
the Schedule 2.01 Amendment), multiplied by (2) the amount of the Initial Loans,
(iii) each Lender that shall not have been a Lender prior to the Schedule 2.01
Amendment (each, a “New Lender”) shall pay to the Administrative Agent in same
day funds an amount equal to the product of (1) such New Lender’s Applicable
Percentage (calculated after giving effect to the Schedule 2.01 Amendment)
multiplied by (2) the amount of the Subsequent Borrowings, (iv) after the
Administrative Agent receives the funds specified in clauses (ii) and (iii)
above, the Administrative Agent shall pay to each Lender that does not increase
its Commitment pursuant to the Schedule 2.01 Amendment (each, a “Non-Increasing
Lender”) the portion of such funds that is equal to the excess of (A) the
product of (1) such Non-Increasing Lender’s Applicable Percentage (calculated
without giving effect to the Schedule 2.01 Amendment) multiplied by (2) the
amount of the Initial Loans, over (B) the product of (1) such Non-Increasing
Lender’s Applicable Percentage (calculated after giving effect to the Schedule
2.01 Amendment) multiplied by (2) the amount of the Subsequent Borrowings,
(v) after the effectiveness of the Schedule 2.01 Amendment, the applicable
Borrowers shall be deemed to have made new Borrowings (the “Subsequent
Borrowings”) in an aggregate principal amount equal to the aggregate principal
amount of the Initial Loans and of the types and for the Interest Periods
specified in a Borrowing Request delivered to the Administrative Agent in
accordance with Section 2.03 of the Revolving Credit Agreement, (vi) each
Non-Increasing Lender, each Increasing Lender and each New Lender shall be
deemed to hold its Applicable Percentage of each Subsequent Borrowing (each
calculated after giving effect to the Schedule 2.01 Amendment) and (vii) the
applicable Borrowers shall pay each Increasing Lender and each Non-Increasing
Lender any and all accrued but unpaid interest on the Initial Loans. The deemed
payments made pursuant to clause (i) above in respect of each Eurodollar Loan
shall be subject to indemnification by the Borrowers pursuant to the provisions
of Section 2.17 of the Revolving Credit Agreement if the Amendment Effective
Date occurs other than on the last day of the Interest Period relating thereto
and breakage costs result.
 
SECTION 7.   Representations, Warranties and Agreements. The Company, as to
itself and each of its Subsidiaries, hereby represents and warrants to and
agrees with each Lender and the Administrative Agent that:
 
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(a)   The representations and warranties set forth in Article IV of the
Revolving Credit Agreement, as amended hereby, are true and correct in all
material respects on and as of the Amendment Effective Date and after giving
effect to this Amendment, with the same effect as if made on and as of such
date, except to the extent such representations and warranties expressly relate
to an earlier date.
 
(b)   This Amendment has been duly authorized, executed and delivered by the
Company and each Borrowing Subsidiary. Each of this Amendment and the Revolving
Credit Agreement as amended hereby constitutes a legal, valid and binding
obligation of the Company and each Borrowing Subsidiary, enforceable against the
Company and each Borrowing Subsidiary in accordance with its terms, except as
enforceability may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity.
 
(c)   As of the Amendment Effective Date, after giving effect to this Amendment,
no Default or Event of Default has occurred and is continuing.
 
SECTION 8.   Conditions to Effectiveness. This Amendment shall become effective
as of the date that the following conditions are satisfied (the “Amendment
Effective Date”):
 
(a)   The Administrative Agent shall have received duly executed counterparts
hereof which, when taken together, bear the authorized signatures of the
Company, the Borrowing Subsidiaries, the New Lenders and Lenders constituting at
least the Required Lenders.
 
(b)   The representations and warranties set forth in Section 7 above shall be
true and correct in all material respects on the Amendment Effective Date.
 
(c)   The Borrowers shall be in compliance with all the terms and provisions set
forth herein on their part to be observed or performed, and at the time of and
immediately after the Amendment Effective Date, no Event of Default or Default
shall have occurred and be continuing.
 
(d)   The Agents shall have received a certificate, signed by a Financial
Officer of the Company, confirming the satisfaction of the conditions set forth
in paragraphs (b) and (c) above on and as of the Amendment Effective Date, after
giving effect to this Amendment.
 
(e)   The Agents shall have received a written opinion of Clifford H. R. DuPree,
Associate General Counsel of the Company, in form and substance reasonably
acceptable to the Administrative Agent.
 
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(f)   The Agents shall have received, on behalf of the Lenders (i) a copy of the
certificate or articles of incorporation or other organizational documents,
including all amendments thereto, of each of the Loan Parties, certified as of a
recent date by the Secretary of State (or other appropriate governmental
authority) of the state of its organization; (ii) a certificate as to the good
standing or subsistence, to the extent available, of each of the Loan Parties as
of a recent date, from the appropriate Secretary of State (or other appropriate
governmental authority) or other evidence reasonably satisfactory to the Agents
as to the good standing of such Loan Party; (iii) a certificate of the Secretary
or Assistant Secretary of each Loan Party dated the Amendment Effective Date and
certifying (A) that attached thereto is a true and complete copy of the by-laws
or other organizational documents of such Loan Party as in effect on the
Amendment Effective Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) that attached thereto is a true
and complete copy of resolutions duly adopted by the Board of Directors (or
other analogous governing body) and, where applicable, the Executive Committee
of such Board of Directors of such Loan Party (and, if necessary, resolutions
duly adopted by the shareholders or other equity owners of such Loan Party)
authorizing the execution, delivery and performance of this Amendment to which
such Loan Party is or is to be a party and the Transactions, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (C) that the certificate or articles of incorporation or other
organizational documents of such Loan Party have not been amended since the date
of the last amendment thereto shown on the certificate furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen signature of each
officer executing this Amendment or any other document delivered in connection
herewith on behalf of such Loan Party; and (iv) a certificate of another officer
as to the incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to clause (iii) above.
 
(g)   All fees, interest and other amounts accrued for the accounts of or owing
to the Lenders and the Administrative Agent under the Revolving Credit
Agreement, whether or not due and payable as of the Amendment Effective Date,
and all fees payable in connection with this Amendment shall have been paid or
shall simultaneously be paid in full.
 
(h)   All adjustments required pursuant to Section 6(b) above to ensure that as
of the Amendment Effective Date each Lender’s Revolving Credit Exposure shall
not exceed such Lender’s Applicable Percentage of the aggregate Revolving Credit
Exposures (in each case calculated after giving effect to the Schedule 2.01
Amendment) shall have been made.
 
Notwithstanding the foregoing, this Amendment shall not become effective and the
amendments and transactions provided for herein shall not occur unless each of
the foregoing conditions is satisfied (or waived pursuant to Section 10.02 of
the Revolving Credit Agreement) at or prior to 5:00 p.m., New York City time, on
April 28, 2006 (and, in the event such conditions are not so satisfied or
waived, the obligations of the Lenders to complete the transactions provided for
herein shall terminate at such time). The Administrative Agent shall notify the
Company and the Lenders of the Amendment Effective Date, and such notice shall
be conclusive and binding.
 
SECTION 9.   Revolving Credit Agreement; New Lenders. (a) Except as specifically
stated herein, the Revolving Credit Agreement shall continue in full force and
effect in accordance with the provisions thereof. As used therein, the terms
“Agreement”, “herein”, “hereunder”, “hereto”, “hereof” and words of similar
import shall, unless the context otherwise requires, refer to the Revolving
Credit Agreement as modified hereby.
 
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(b)   For the avoidance of doubt, by signing this Amendment each party hereto
agrees that the new Lenders will become Lenders under the Revolving Credit
Agreement with Commitments as set forth in Schedule 2.01 attached hereto.
 
SECTION 10.   Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 11.   Counterparts. This Amendment may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute an original but all of which, when taken together, shall constitute a
single instrument. Delivery of an executed counterpart of a signature page of
this Amendment by telecopy shall be effective as delivery of a manually executed
counterpart hereof.
 
SECTION 12.   Expenses. The Company agrees to reimburse the Administrative Agent
for its reasonable out-of-pocket expenses in connection with this Amendment,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore LLP, counsel for the Administrative Agent.
 

[[NYCORP:2591717v9:4438D:04/17/06--02:41 p]]
 
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3

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
duly executed by their respective authorized officers as of the date first above
written.
 
THE READER’S DIGEST ASSOCIATION, INC.,
 
by:
     
Name:
Title:

BOOKS ARE FUN, LTD.,
 
by:
     
Name:
Title:

QSP, INC.,
 
by:
     
Name:
Title:

REIMAN MEDIA GROUP, INC.,
 
by:
     
Name:
Title:

JPMORGAN CHASE BANK, N.A., individually and as Administrative Agent and
Collateral Agent,
 
by:
     
Name:
Title:

[[NYCORP:2591717v9:4438D:04/17/06--02:41 p]]
 
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3

To approve the First Amendment to the Revolving Credit Agreement:
 
Name of Institution:  
 
by:
     
Name:
Title:

 

 
STATUS (check which is applicable)

 
New Lender (if not a Lender under the existing Revolving Credit Agreement)
     
Existing Lender (if a current Lender under the existing Revolving Credit
Agreement)

 

 

 

[[NYCORP:2591717v9:4438D:04/17/06--02:41 p]]
 
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3

Schedule 2.01

COMMITMENTS

Lender
Existing Commitment
Increase/
New Commitment
Final Commitment
JPMorgan Chase Bank, N.A.
$50,000,000
$15,000,000
$65,000,000
The Royal Bank of Scotland plc
$72,500,000
$2,500,000
$75,000,000
Commerzbank Aktiengesellschaft
$50,000,000
$12,500,000
$62,500,000
Wachovia Bank, N.A.
$50,000,000
$12,500,000
$62,500,000
HSBC Bank USA National Association
$35,000,000
$15,000,000
$50,000,000
National Australia Bank Limited
$25,000,000
$10,000,000
$35,000,000
The Northern Trust Company
$25,000,000
$10,000,000
$35,000,000
Bank of America, N.A.
$25,000,000
$5,000,000
$30,000,000
ABN AMRO Bank, N.V.
$25,000,000
--
$25,000,000
Goldman Sachs Credit Partners, L.P.
$12,500,000
$7,500,000
$20,000,000
Mizuho Corporate Bank, Ltd.
$20,000,000
--
$20,000,000
Toronto Dominion (Texas) LLC
--
$10,000,000
$10,000,000
Citibank FSB
$5,000,000
--
$5,000,000
Loan Funding XIII LLC
$5,000,000
--
$5,000,000
       
Total:
$400,000,000
$100,000,000
$500,000,000