Document:

Exhibit 10-10 - 10-Q JAS 2006

    
      
        

          

          COMMERCIAL
            PAPER ISSUING AND PAYING AGENT

          AGREEMENT

          

          Agreement,
            dated as of October 23, 2006, between Citibank, N.A., a national banking
            association, having an office at 388 Greenwich Street, New York, New
            York 10013
            (“Citibank”) and Procter & Gamble International Funding S.C.A., a
société
            en commandite par actions
            organized under the laws of the Grand Duchy of Luxembourg, having a registered
            office at 5 rue Eugène Ruppert, L-2453 Luxembourg, RCS Luxembourg B 114 825 (the
“Issuer”) and The Procter & Gamble Company, a corporation organized under
            the laws of the State of Ohio, having an office at One Procter & Gamble
            Plaza, Cincinnati, Ohio 45202 (the “Guarantor”).

          

          

          WITNESSETH:

          

          THAT
            WHEREAS,
            the
            Issuer and the Guarantor wish to appoint Citibank as their agent in connection
            with the issuance and payment of certain short-term promissory notes
            of the
            Issuer described below and Citibank wishes to accept such appointment,
            each on
            the terms and conditions set forth herein; 

          

          NOW,
            THEREFORE,
            in
            consideration of the premises and of the agreements hereinafter set forth,
            the
            parties hereby agree as follows:

          

          

          Section
            1. Appointment
            and Acceptance

          The
            Issuer and the Guarantor hereby appoint Citibank as their agent in connection
            with the issuance and payment of certain Notes (as defined below) of
            the Issuer,
            and Citibank agrees to act as such upon the terms and conditions set
            forth in
            this Agreement. 

          

          

          Section
            2. Form
            of Notes

          The
            short-term promissory notes to be issued by the Issuer and guaranteed
            by the
            Guarantor hereunder shall mean promissory notes of the Issuer, offered
            for sale
            in a transaction which is exempt from registration under Section 4(2)
            of the
            Securities Act of 1933, as amended (the “1933 Act), and having maturities of 397
            days or less and will be book-entry notes only represented by a master
            note
            issued with a restrictive legend and executed by the Issuer and the Guarantor
            in
            connection with the book-entry commercial paper program of The Depository
            Trust
            Issuer (“DTC”) or other depository (book-entry notes herein called the “Notes”
and individually a “Note”).

          

          Section
            3. Issuance
            of Notes; Authorized Agents

          
            	 	
                    (A)

                  	
                    Pursuant
                      to the Citi Direct for Securities On Line User Agreement (the
                      “Agreement”) with
                      Citibank, Citibank will accept issuance and payment instructions
                      for the
                      Notes through Citi Direct for Securities-Issuing and Paying
                      Agent North
                      America (“CIPANA”) from certain officers and employees of the Issuer, the
                      Guarantor, dealers, or others authorized by the Issuer or the
                      Guarantor to
                      access CIPANA (the “Authorized Agents”). Upon receipt of such
                      instructions, the following will occur:

                  

          

          

          

          
            	 	 	 	
                    If
                      an Authorized Agent specifies that a Note shall be issued in
                      book-entry
                      form represented by a master note, the Authorized Agent shall
                      transmit its
                      instructions through CIPANA in accordance with the standard
                      prevailing
                      book-entry Note program procedures of the DTC. The release
                      by an
                      Authorized Agent of the issuance instructions to the DTC shall
                      consititute
                      the issuance of a book-entry Note.

                  

          

          

          (B)  
The
            Authorized Agents shall not instruct Citibank to issue any Note with
            a maturity
            date which is (i) greater than the tenor allowable under the applicable
            law or
            (ii) a day on which Citibank’s or, the appropriate depository’s offices in New
            York, New York are not open for business. If applicable under this Agreement,
            Commercial Paper Notes (“CPNs”) shall have maturities of 397 days or
            less.

          

          

          
            	 	
                    (C)

                  	
                    The
                      Issuer, the Guarantor or in the case of their dealers, the
                      dealer, will
                      supply Citibank with an incumbency certificate listing the
                      names of the
                      Authorized Agents together with specimens of their signatures.
                      Until
                      Citibank receives a subsequent incumbency certificate from
                      the Issuer or
                      the dealer, as the case may be, Citibank shall be entitled
                      to rely on the
                      last such certificate delivered to it for purposes of determining
                      the
                      Authorized Agents.

                  

          

          

          

          Section
            4. Delivery
            of Notes and Payment for Note

           

          
            	 	
                    (A)

                  	
                    All
                      Notes shall be delivered in accordance with DTC
                      rules.

                  

          

          

          
            	 	
                    (B)

                  	
                    All
                      funds to be used in payment for Notes are to be credited to
                      the Issuer’s
                      account number 40804505 at Citibank (the “Issuer’s Account”). This account
                      may be changed upon written instruction from the Issuer or
                      the Guarantor,
                      accepted by Citibank.

                  

          

          

          

          Section
            5. Payment
            of Notes at Maturity

          Citibank
            agrees to effect payment on the Issuer’s or Guarantor’s behalf by debiting the
            Issuer’s Account in the amount of the face value amount of such Note, plus
            interest, if applicable, and to enter appropriate notations of payment.
            The
            Issuer and the Guarantor agree to maintain a sufficient credit balance
            in said
            account to pay each Note at maturity.

          

          The
            Issuer and the Guarantor acknowledge that nothing in this Agreement shall
            obligate Citibank to extend credit, grant financial accommodation, or
            otherwise
            advance funds to the Issuer or the Guarantor for the purpose of making
            any such
            payments or part thereof or otherwise effecting such transactions.

          

          

          

          Section
            6. Instructions

          
            	 	
                    (A)

                  	
                    The
                      Issuer and the Guarantor understand that all instructions,
                      whether in
                      telephone or in writing, are to be directed to Citibank’s Agency and Trust
                      Department. Notwithstanding the foregoing, any instructions
                      initially
                      provided by the Issuer or the Guarantor via telephone shall
                      be followed
                      immediately by written instructions. Instructions transmitted
                      through
                      computer terminals (including CIPANA) or by facsimile shall
                      be considered
                      written instructions for the purpose of this
                      Agreement.

                  

          

          

          
            	 	
                    (B)

                  	
                    All
                      instructions with respect to the issuance of Notes must be
                      given via
                      computer terminal (including CIPANA) by 1:00 p.m. New York
                      time.

                  

          

          

          
            	 	
                    (C)

                  	
                    Prepayment
                      instructions and cancellations of a previous issuance instruction
                      will be
                      accepted for book-entry issuances from an Authorized Agent
                      if received by
                      Citibank by 2:00 p.m. and, in the case of facsimile instructions,
                      only
                      after a confirming telephone call back to another Authorized
                      Agent of the
                      entity which gave the instruction. Regarding CPNs, notice that
                      the Issuer
                      will not redeem any Notes on the relevant Initial Redemption
                      Date (“as
                      defined in the applicable Commercial Paper Note Announcement”) must be
                      received in writing by Citibank by 11:00 a.m., New York time,
                      on such
                      Initial Redemption Date.

                  

          

           

          
            	 	
                    (D)

                  	
                    If
                      Citibank acts on any instruction sent or purported to be sent
                      by an
                      Authorized Agent, Citibank shall not, provided it complies
                      with this
                      Section 6, be responsible if that instruction is not an authorized
                      instruction of the Issuer or the Guarantor or is not in the
                      form the
                      Issuer or Guarantor sent or intended to send (whether due to
                      fraud,
                      distortion or otherwise) and the Issuer and Guarantor shall
                      jointly and
                      severally indemnify Citibank against any loss, liability claim
                      or expense
                      (including reasonable legal fees) it may incur in connection
                      with its
                      acting in accordance with that
                      instruction.

                  

          

          

          

          

          Section
            7.  Representations
            and Warranties of the Issuer and the Guarantor

           

          (A)
             The
            Issuer represents and warrants as follows:

           

          
            	 	
                    (i)

                  	
                    The
                      Issuer is a duly organized and validly existing société
                      en commandite par actions under
                      the laws of the Grand Duchy of Luxembourg and has the power
                      and authority
                      to own its property, to carry on its business as presently
                      being
                      conducted, to execute and deliver this Agreement and the Notes,
                      and to
                      perform and observe the conditions hereof and
                      thereof.

                  

          

           

          
            	 	
                    (ii)

                  	
                    This
                      Agreement has been duly and validly authorized, executed and
                      delivered by
                      the Issuer and constitutes the legal, valid and binding agreement
                      of the
                      Issuer. The issuance and sale of Notes by the Issuer hereunder
                      have been
                      duly and validly authorized by the Issuer and when delivered
                      by Citibank
                      as provided in this Agreement, each Note will be the legal,
                      valid and
                      binding obligation of the Issuer. 

                  

          

           

          
            	 	
                    (iii)

                  	
                    The
                      offer and sale by the Issuer of such Notes will constitute
                      exempt
                      transactions under Section 4(2) of the 1933 Act and, accordingly,
                      registration of the Notes under the 1933 Act will not be required.
                      Qualification of an indenture with respect to the Notes under
                      the Trust
                      Indenture Act of 1939, as amended, will not be required in
                      connection with
                      the offer, issuance, sale or delivery of the
                      Notes.

                  

          

          

          
            	 	
                    (iv)

                  	
                    Other
                      than filing with the Securities and Exchange Commission (the
“SEC”) a
                      notice on Form D in accordance with Rule 503 under the 1933
                      Act, if
                      necessary, no consent or action of, or filing or registration
                      with, any
                      governmental or public regulatory body or authority in the
                      United States
                      is required to authorize, or is otherwise required in connection
                      with, the
                      execution, delivery or performance of this Agreement or the
                      Notes.

                  

          

          

           

          (B)  The
            Guarantor represents and warrants as follows:

           

          
            	 	
                    (i)

                  	
                    The
                      Guarantor is a duly organized and validly existing corporation
                      in good
                      standing under the laws of the State of Ohio and has the corporate
                      power
                      and authority to own its property, to carry on its business
                      as presently
                      being conducted, to execute and deliver this Agreement and
                      its guarantee
                      of the Notes, and to perform and observe the conditions hereof
                      and
                      thereof.

                  

          

           

          
            	 	
                    (ii)

                  	This Agreement has been duly and validly authorized, executed
                    and
                    delivered by the Guarantor and constitutes the legal, valid and
                    binding
                    agreement of the Guarantor. The guarantee of each Note issued
                    and
                    distributed pursuant to this Agreement shall constitute legal,
                    valid and
                    binding obligation of the Guarantor.

          

           

          
            	 	
                    (iii)

                  	
                    The
                      guarantee and issuance of such Notes will constitute exempt
                      transactions
                      under Section 4(2) of the 1933 Act and, accordingly, registration
                      of the
                      Notes under the 1933 Act will not be required. Qualification
                      of an
                      indenture with respect to the guarantee of and the issuance
                      of the Notes
                      under the Trust Indenture Act of 1939, as amended, will not
                      be required in
                      connection with the offer, issuance, sale or delivery of the
                      Notes.
                      

                  

          

          

           

          
            	 	
                    (iv)

                  	
                    Other
                      than filing with the SEC a notice on Form D in accordance with
                      Rule 503
                      under the 1933 Act, if necessary, no consent or action of,
                      or filing or
                      registration with, any governmental or public regulatory body
                      or authority
                      in the United States is required to authorize, or is otherwise
                      required in
                      connection with, the execution, delivery or performance of
                      this Agreement
                      or the guarantee of the Notes.

                  

          

           

          (C)    Each
            issuance of Notes by the Issuer and guarantee of such Notes by the Guarantor
            shall be deemed a representation and warranty by the Issuer and the Guarantor
            to
            Citibank, as of the date thereof, that, both before and after giving
            effect to
            such issuance the representations and warranties of the Issuer and the
            Guarantor
            set forth in Section 7(A) hereof remain true and correct on and as of
            such date
            as if made on and as of such date (except to the extent such representations
            and
            warranties expressly relate solely to an earlier date).  

          

          

          Section
            8. Governing
            Law and Jurisdiction

          This
            Agreement shall be governed by and construed in accordance with the laws
            of the
            State of New York. Any claims made under this Agreement shall be heard
            and
            determined in the Federal or state courts located in the State of New
            York. EACH
            OF CITIBANK, THE ISSUER AND THE GUARANTOR WAIVES ITS RIGHT TO TRIAL BY
            JURY IN
            ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE
            TRANSACTIONS CONTEMPLATED HEREBY.

          
 

          Section
            9. Fees

          The
            Issuer and the Guarantor agree to pay the fees and expenses for the services
            rendered under this Agreement, as set forth in writing from time to time,
            between the Issuer, the Guarantor and Citibank. The Issuer and the Guarantor
            will be provided thirty (30) days advance notice of any prospective increase
            in
            fees. 

          

          

          Section
            10. Indemnification

          The
            Issuer and the Guarantor agree to jointly and severally indemnify Citibank
            and
            its affiliates, their respective directors, officers, employees, and
            agents, and
            any successor thereto (each such person being an “Indemnified Person”) from and
            against any and all losses, claims, damages and liabilities, joint or
            several,
            to which such Indemnified Person may become subject under any applicable
            federal
            or state law, or otherwise, related to or arising out of any matter or
            transaction contemplated by this Agreement and the Citi Direct for Securities
            On
            Line User Agreement, and to the performance by Citibank of the services
            contemplated by this Agreement and shall promptly reimburse any Indemnified
            Person for all expenses (including, but not limited to, fees and disbursements
            of internal and external counsel), as they are incurred, in connection
            with the
            investigation of, preparation for or defense of any pending or threatened
            claim
            or any action or proceeding arising therefrom, whether or not such Indemnified
            Person is a party, provided,
            however,
            that
            the Issuer and the Guarantor shall not be liable in any such case to
            the extent
            such loss, claim, damage or liability is finally judicially determined
            to have
            resulted from an Indemnified Person’s gross negligence or willful misconduct.

          

          

          Section
            11. Assignment

          This
            Agreement shall not be assignable by either party without the written
            consent of
            the other and any purported assignment made in contravention of this
            Section 11,
            shall be null and void and of no effect whatsoever. However, Citibank
            shall have
            the right to assign, transfer, or subcontract either in whole or in part,
            any of
            its rights or obligations under this Agreement to any affiliate of Citibank,
            upon at least 30 days prior written notice to the Issuer. 

          

          

          Section
            12. Force
            Majeure

          Either
            party is excused from performance and shall not be liable for any delay
            in
            delivery or for nondelivery, in whole or in part, caused by the occurrence
            of
            any contingency beyond the control of the party including, but not limited
            to,
            fires, civil disobedience, riots, rebellions, accident, explosion, flood,
            storm,
            Acts of God and similar occurrences.

          

          

          Section
            13. Termination

          This
            Agreement may be terminated by either party upon 30 days prior written
            notice to
            the other. Termination of this Agreement shall not affect the Issuer’s or the
            Guarantor’s liabilities to Citibank hereunder in connection with any Notes
            issued prior to such termination. Citibank shall have a continuing obligation
            to
            act on behalf of the Issuer and the Guarantor in accordance with the
            terms and
            conditions of this Agreement with respect to Notes outstanding, as of
            the
            termination date, until such Notes have matured and been paid by the
            Issuer or
            Guarantor, but shall have no obligation with respect to the issuance
            of Notes
            after such termination date.

           

          

          Section
            14. Complete
            Agreement; Counterparts.

          This
            Agreement, together with the Schedules attached hereto, constitutes the
            entire
            Agreement between the parties with respect to the subject matter hereof
            and
            supersedes in all respects all prior proposals, negotiations, conversations,
            discussions and agreements between the parties concerning the subject
            matter
            hereof. This Agreement may be executed in counterparts, each of which
            shall be
            deemed an original, but all of which shall constitute one and the same
            instrument. 

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          

          

          IN
            WITNESS WHEREOF,
            the
            parties hereto, through their duly authorized officers, have executed
            this
            Agreement as of the day and year set forth above.

          

          

          PROCTER
            & GAMBLE                      CITIBANK,
            NA.

          INTERNATIONAL
            FUNDING S.C.A.,

          as
            Issuer

           

          By: 
            ___________________________            By:
            __________________________

           

          Name:
            _________________________            Name:
            ________________________ 

                          
            (print)                                                                              
(print)

          Title:
            ___________________________            Title:
            _________________________

          

          

          Date:
            ___________________________            Date:
            ________________________

           

           

          THE
            PROCTER & GAMBLE  

          COMPANY,

          as
            Guarantor

           

          

          

          By:
            _____________________________

          

          

          Name:
            ___________________________

          (print)      

          Title:
            _____________________________

          

          

          Date:
            _____________________________Exhibit 10.49

                                            EXECUTION
      COPY

     

    SECOND
      AMENDMENT AND CONSENT, dated as of September 28, 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, N.A., 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 have agreed to extend credit to the Borrowers on the terms and
      subject to the conditions set forth in the Revolving Credit Agreement;

     

    WHEREAS,
      the Company and certain of its Subsidiaries are considering entering into a
      series of transactions, as a result of which (a) Verlag DAS BESTE GmbH, a
      company incorporated under the laws of Germany (the “German
      Subsidiary”),
      and
      The Reader’s Digest Association Limited, a company incorporated under the laws
      of England and Wales (the “English
      Subsidiary”),
      will
      cease to be directly held wholly owned subsidiaries of the Company and will
      instead become indirectly held wholly owned subsidiaries of the Company (other
      than for a 10% interest in the German Subsidiary which shall continue to be
      directly held by the Company) and (b) Pegasus Netherlands Services C.V., a
      limited partnership formed under the laws of The Netherlands (the “New
      Foreign Holding Company”),
      will
      become (i) a wholly owned subsidiary of the Company, with a general partnership
      interest constituting approximately 99% of all partnership interests therein
      being held directly by the Company and a limited partnership interest
      constituting approximately 1% of all partnership interests therein being held
      indirectly by the Company and (ii) the direct or indirect holder of various
      foreign subsidiaries of the Company, including the German Subsidiary (other
      than
      for a 10% interest therein which shall continue to be directly held by the
      Company) and the English Subsidiary (such series of transactions as set forth
      in
      clauses (a) and (b), the “Reorganization”);

     

    WHEREAS,
      attached hereto as Exhibit
      A
      is an
      organizational structure chart of the Company and certain of its Subsidiaries,
      as such structure exists prior to the Reorganization;

     

    WHEREAS,
      attached hereto as Exhibit
      B
      is an
      organizational structure chart of the Company and certain of its Subsidiaries,
      as such structure is expected to exist following consummation of the
      Reorganization; and

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    WHEREAS,
      in connection with the Reorganization, the Company has requested that the
      Lenders consent to certain transactions, amend the Pledge Agreement and
      terminate each of the Foreign Pledge Agreements related to the German Subsidiary
      and the English Subsidiary, and the Lenders whose signatures appear on the
      signature pages hereof, constituting at least the Required Lenders, are willing
      to consent to such transactions, such amendment and such terminations on the
      terms and subject to the conditions set forth herein;

     

    WHEREAS,
      the Company has also requested that the Lenders amend certain provisions of
      the
      Revolving Credit Agreement and the Lenders whose signatures appear on the
      signature pages hereof, 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 contained herein and other
      good and valuable consideration, the sufficiency and receipt of which are hereby
      acknowledged, the parties hereto agree as follows:

     

    SECTION
      1. Defined
      Terms.
      Capitalized terms used but not otherwise defined herein (including in the
      recitals hereto) have the meanings assigned to them in the Revolving Credit
      Agreement.

     

    SECTION
      2. Satisfaction
      of Requirements of Sections 5.09 and 5.10.
      Upon the
      Reorganization Effective Date, the obligations of the Company under Sections
      5.09 and 5.10 of the Revolving Credit Agreement, to the extent such obligations
      relate to the Reorganization, shall be deemed satisfied.

     

    SECTION
      3. Satisfaction
      of Requirements of Section 6.05.
      Upon the
      Reorganization Effective Date, the requirements of Section 6.05 of the
      Revolving Credit Agreement, to the extent such requirements relate to the
      Reorganization, shall be deemed satisfied.

     

    SECTION
      4. Consent
      of Lenders to Amendment to Pledge Agreement.
      Upon the
      Reorganization Effective Date, the Lenders whose signatures appear on the
      signature pages hereto, constituting at least the Required Lenders, hereby
      consent to the amendment of the Pledge Agreement, substantially in the form
      of
Exhibit
      C
      hereto
      (the “Pledge
      Agreement Amendment”)
      (with
      such changes to Schedule II thereto approved by the Collateral Agent and the
      Company as shall be necessary to properly reflect the pledge of 65% of the
      issued and outstanding partnership interests of the New Foreign Holding
      Company), and hereby authorize and direct the Collateral Agent to execute and
      deliver such amendment.

     

    SECTION
      5. Consent
      of Lenders to Release of German Subsidiary and English
      Subsidiary.
      Upon
      the Reorganization Effective Date, the Lenders whose signatures appear on the
      signature pages hereto, constituting at least the Required Lenders,
      hereby:

     

    (a)
      consent
      to the release of the pledges of 65% of the Equity Interests of each of the
      German Subsidiary and the English Subsidiary, the reassignment to the Company
      of
      any and all rights and claims assigned by the Company under the Foreign Pledge
      Agreements related thereto, and the termination of such Foreign Pledge
      Agreements;

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (b)
      authorize
      and direct the Collateral Agent, on behalf of and in the name of such Lenders,
      to so release such pledges, reassign such rights and claims and terminate such
      agreements; and

     

    (c)
      in
      connection with the release of the Equity Interests of the German Subsidiary,
      the reassignment to the Company of any and all rights and claims assigned by
      the
      Company under the Foreign Pledge Agreement related thereto, and the termination
      of such Foreign Pledge Agreement, (i) authorize the Collateral Agent to appoint
      any agents or attorneys to execute and deliver any document, or otherwise to
      act, on behalf of and in the name of the Collateral Agent for such purposes,
      (ii) authorize the Collateral Agent to do any and all acts and to make any
      and
      all declarations which are deemed necessary or appropriate by the Collateral
      Agent for such purposes, (iii) approve, pursuant to Section 185 of the German
      Civil Code, the acts performed and declarations made by the Collateral Agent
      or
      its representatives or attorneys-in-fact (including, but not limited to, those
      before a notary in Basel, Switzerland) in connection with such purposes, and
      (iv) hereby relieve the Collateral Agent from the self-dealing restrictions
      imposed by Section 181 of the German Civil Code.

     

    SECTION
      6. Waiver
      of Pledge Requirement Related to Selection du Reader’s Digest
      S.A.
      Upon the
      Reorganization Effective Date, the Lenders whose signatures appear on the
      signature pages hereto, constituting at least the Required Lenders, hereby
      waive
      the provisions of paragraph (c) of the definition of “Collateral Requirement” in
      the Revolving Credit Agreement to the extent that such provisions require the
      Company to pledge 65% of the voting Equity Interests of Selection du Reader’s
      Digest S.A. on account of the financial results of the Company as of the fiscal
      year ended June 30, 2006. Such waiver shall be deemed to be effective as of
      June 30, 2006. 

     

    SECTION
      7. Amendment
      of Section 1.01.
      Upon the
      Covenant Effective Date, the pricing table in the definition of “Applicable
      Rate”
in
      Section 1.01 of the Revolving Credit Agreement is hereby amended and restated
      in
      its entirety to read as follows: 

     

    “
Pricing
      Table

     

    
      	
              Consolidated
                Leverage Ratio

            	
              Eurodollar
                Spread

            	
              ABR
                Spread

            	
              Commitment
                Fees

            
	
              Level
                1

              ≥4.0

            	
              2.25%

            	
              1.25%

            	
              0.500%

            
	
              Level
                2

              ≥3.5
                and <4.0

            	
              2.00%

            	
              1.00%

            	
              0.500%

            
	
              Level
                3

              ≥3.25
                and <3.5

            	
              1.75%

            	
              0.75%

            	
              0.500%

            
	
              Level
                4

              ≥3.0
                and <3.25

            	
              1.50%

            	
              0.50%

            	
              0.375%

            
	
              Level
                5

              ≥2.5
                and <3.0

            	
              1.25%

            	
              0.25%

            	
              0.250%

            
	
              Level
                6

              ≥2.0
                and <2.5

            	
              1.00%

            	
              0.00%

            	
              0.200%

            
	
              Level
                7

              ≥1.5
                and <2.0

            	
              0.75%

            	
              0.00%

            	
              0.175%

            
	
              Level
                8

              <1.5

            	
              0.50%

            	
              0.00%

            	
              0.150%

            

    

    ”

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    SECTION
      8. Amendment
      of Section 6.09.
      Upon the
      Covenant Effective Date, Section 6.09 of the Revolving Credit Agreement is
      hereby amended and restated in its entirety to read as follows:

     

    “SECTION
      6.09. Consolidated
      Leverage Ratio.
      The
      Company will not permit the Consolidated Leverage Ratio (a) as of September
      30,
      2006, to be greater than 4.75 to 1.00; (b) as of December 31, 2006, to be
      greater than 4.25 to 1.00; (c) as of March 31, 2007, to be greater than 4.00
      to
      1.00; and (d) as of the last day of any fiscal quarter ending after March 31,
      2007, to be greater than 3.50 to 1.00.”

     

    SECTION
      9. Restriction
      on Share Repurchases.
      Notwithstanding anything to the contrary in the Revolving Credit Agreement,
      during the period from the Covenant Effective Date to and including June 30,
      2007, the Company and its Subsidiaries shall not make any payment (whether
      in
      cash, securities or other property), including any sinking fund or similar
      deposit, on account of the purchase, redemption, retirement, acquisition,
      cancellation or termination of any Equity Interests in the Company; provided,
      however,
      that
      the foregoing shall not restrict the ability of the Company to make any such
      payments in an aggregate amount not exceeding $5,000,000 pursuant to and in
      accordance with stock option plans or other benefit plans for management or
      employees of the Company; provided,
      further,
      however,
      that
      the foregoing shall not restrict the ability of the Company to make any such
      payments in an aggregate amount not exceeding $30,000,000 if, as of the last
      day
      of the then most recently ended fiscal quarter, the Consolidated Leverage Ratio
      of the Company, as set forth in the certificate related to such fiscal quarter
      delivered by the Company pursuant to Section 5.01(c) of the Revolving Credit
      Agreement, is less than or equal to 3.50 to 1.00; provided,
      further,
      however,
      that if
      the Company makes any such payment pursuant to the immediately preceding proviso
      on or prior to March 31, 2007, upon the making of such payment, Section 6.09
      of
      the Revolving Credit Agreement shall be amended and restated in its entirety
      to
      read as follows:

     

    “SECTION
      6.09. Consolidated
      Leverage Ratio.
      The
      Company will not permit the Consolidated Leverage Ratio (a) as of September
      30,
      2006, to be greater than 4.75 to 1.00; (b) as of December 31, 2006, to be
      greater than 4.25 to 1.00; and (c) as of the last day of any fiscal quarter
      ending after December 31, 2006, to be greater than 3.50 to 1.00.”

     

    For
      all
      purposes under the Revolving Credit Agreement, this Section 9 shall be deemed
      to
      be a covenant set forth in Article VI of the Revolving Credit Agreement.

     

    SECTION
      10. Representations,
      Warranties and Agreements Related to the Reorganization.
      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:

     

    (a)
      The
      representations and warranties set forth in Article IV of the Revolving Credit
      Agreement are true and correct in all material respects on and as of the
      Reorganization Effective Date and after giving effect to this Amendment and
      the
      Reorganization, 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, in which case such representations and warranties are true and correct
      in
      all material respects on and as of such earlier date.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (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 constitutes (assuming due execution and delivery by the Required
      Lenders) 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
      Reorganization Effective Date, after giving effect to this Amendment and the
      Reorganization, no Default or Event of Default has occurred and is
      continuing.

     

    SECTION
      11. Representations,
      Warranties and Agreements Related to the Covenant Amendments.
      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:

     

    (a)
      The
      representations and warranties set forth in Article IV of the Revolving Credit
      Agreement are true and correct in all material respects on and as of the
      Covenant 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, in which
      case such representations and warranties are true and correct in all material
      respects on and as of such 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 (assuming due execution and delivery
      by
      the Required Lenders) 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
      Covenant Effective Date, after giving effect to this Amendment, no Default
      or
      Event of Default has occurred and is continuing.

     

    SECTION
      12. Conditions
      to Effectiveness of Reorganization Related Terms.
      The
      terms of this Amendment contained in Sections 2 through 6 hereof shall become
      effective as of the date on which the following conditions are satisfied (the
      “Reorganization
      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 and Lenders constituting at least the Required
      Lenders.

     

    (b)
      Each
      of
      the German Subsidiary and the English Subsidiary shall be or shall become on
      the
      Reorganization Effective Date a wholly owned indirect subsidiary of the New
      Foreign Holding Company (other than for a 10% interest in the German Subsidiary,
      which shall continue to be directly held by the Company).

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (c)
      The
      Collateral Agent shall have received duly executed counterparts of (i) the
      Pledge Agreement Amendment, executed by the Company and each Borrowing
      Subsidiary and (ii) a Foreign Pledge Agreement relating to 65% of the
      partnership interests in the New Foreign Holding Company, in form and substance
      satisfactory to the Administrative Agent and the Company (the “New
      Dutch Pledge Agreement”),
      executed by the Company. 

     

    (d)
      The
      representations and warranties set forth in Section 10 hereof shall be true
      and
      correct on and as of the Reorganization Effective Date.

     

    (e)
      The
      Agents shall have received favorable written opinions of (i) Clifford H. R.
      DuPree, Associate General Counsel of the Company, and (ii) Loyens & Loeff,
      Dutch counsel to the Collateral Agent, each in form and substance reasonably
      acceptable to the Agents.

     

    (f)
      The
      Administrative Agent shall have received, on behalf of the Lenders, a
      certificate as to the good standing or subsistence, if and to the extent such
      concepts are relevant in The Netherlands, of the New Foreign Holding Company,
      dated as of a date near the Reorganization Effective Date, from the appropriate
      governmental authority, or other evidence reasonably satisfactory to the
      Administrative Agent as to the good standing of such entity.

     

    (g)
      All
      fees
      payable and expenses reimbursable in connection with this Amendment (including
      the fees, charges and disbursements of Cravath, Swaine & Moore LLP, Lawrence
      Graham, Hengeler Mueller and Loyens & Loeff, counsel for the Agents) shall
      have been paid or shall simultaneously be paid in full to the extent
      invoiced.

     

    The
      Administrative Agent shall notify the Company and the Lenders of the
      Reorganization Effective Date, and such notice shall be conclusive and
      binding.

     

    Notwithstanding
      the foregoing, terms of this Amendment contained in Sections 2 through 6 hereof
      shall not become effective unless each of the foregoing conditions shall have
      been 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 December 27,
      2006.

     

    SECTION
      13. Conditions
      to Effectiveness of Covenant Related Amendments.
      The
      terms of this Amendment contained in Sections 7 through 9 hereof shall become
      effective as of the date on which the following conditions are satisfied (the
      “Covenant
      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 and Lenders constituting at least the Required
      Lenders.

     

    (b)
      The
      representations and warranties set forth in Section 11 hereof shall be true
      and
      correct on and as of the Covenant Effective Date.

     

    (c)
      All
      fees
      payable and expenses reimbursable in connection with this Amendment (including
      the fees, charges and disbursements of Cravath, Swaine & Moore LLP, Lawrence
      Graham, Hengeler Mueller and Loyens & Loeff, counsel for the Agents) shall
      have been paid or shall simultaneously be paid in full to the extent
      invoiced.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    The
      Administrative Agent shall notify the Company and the Lenders of the Covenant
      Effective Date, and such notice shall be conclusive and binding.

     

    SECTION
      14. Applicable
      Law.
      THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
      OF
      THE STATE OF NEW YORK.

     

    SECTION
      15. 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 or
      electronic image scan shall be effective as delivery of a manually executed
      counterpart hereof.

     

    SECTION
      16. Amendment
      Fee.
      The
      Company agrees to pay to the Administrative Agent, for the account of each
      Lender that consents to this Amendment, an amendment fee (the “Amendment
      Fee”)
      in an
      amount equal to 10 basis points on the amounts of the consenting Lenders’
commitments under the Revolving Credit Agreement. The Amendment Fees will be
      earned and payable upon the earlier of the Reorganization Effective Date or
      the
      Covenant Effective Date. 

     

    SECTION
      17. Expenses.
      The
      Company agrees to reimburse the Agents for their reasonable out-of-pocket
      expenses in connection with this Amendment, including the reasonable fees,
      charges and disbursements of Cravath, Swaine & Moore LLP, Lawrence Graham,
      Hengeler Mueller and Loyens & Loeff, each counsel to the
      Agents.

     

    SECTION
      18. Revolving
      Credit Agreement.
      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. For the avoidance of doubt,
      this Amendment shall be treated as a “Loan Document”, as such term is defined in
      the Revolving Credit Agreement. 

     

    SECTION
      19. Power
      of Attorney Related to the New Dutch Pledge Agreement.
      Upon
      the Reorganization Effective Date, the Lenders whose signatures appear on the
      signature pages hereto, constituting at least the Required Lenders, hereby
      (a)
      authorize and direct the Collateral Agent, on behalf of and in the name of
      such
      Lenders, to execute and deliver the New Dutch Pledge Agreement, (b) authorize
      the Collateral Agent to appoint any agents or attorneys to execute and deliver
      any document, or otherwise to act, on behalf of and in the name of the
      Collateral Agent for such purposes and (c) authorize the Collateral Agent to
      do
      any and all acts and to make any and all declarations which are deemed necessary
      or appropriate by the Collateral Agent for such purposes.

     

    [remainder
      of page intentionally blank - signature page is the next page]

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
      executed by their respective authorized officers as of the date first above
      written.

    

      
        	
                THE
                  READER’S DIGEST ASSOCIATION, INC.,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  William H. Magill

              	 
	 	
                Name:
                  William H. Magill

                Title:
                  Vice President and Treasurer

              	 

      

      

      
        	
                BOOKS
                  ARE FUN, LTD.,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  William H. Magill

              	 
	 	
                Name:
                  William H. Magill

                Title:
                  Vice President and Treasurer

              	 

      

      

      
        	
                QSP,
                  INC.,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  William H. Magill

              	 
	 	
                Name:
                  William H. Magill

                Title:
                  Vice President and Treasurer

              	 

      

      

      
        	
                REIMAN
                  MEDIA GROUP, INC.,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  William H. Magill

              	 
	 	
                Name:
                  William H. Magill

                Title:
                  Vice President and Treasurer

              	 

      

      

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

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Randolph Cates

              	 
	 	
                Name:
                  Randolph Cates

                Title:
                  Vice President

              	 

      

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    To
      approve the Second Amendment and Consent to the Revolving Credit
      Agreement:

    

    

      

      
        	
                Name
                  of Institution:
                   
                  ABN AMBRO BANK N.V.  

                              
as
                  a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Frances O’R. Logan

              	 
	 	
                Name:
                  Frances O’R. Logan

                Title:
                  Managing Director

              	 
	 	
                 

                 

                /s/
                  John Jankowski

              	 
	 	
                Name:
                  John Jankowski

                Title:
                  Assistant Vice President

              	 

      

      

      

       

    

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                   
                  Bank
                  of America, N.A  

                             
                  as a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Peter Vanderhorst

              	 
	 	
                Name:
                  Peter Vanderhorst

                Title:
                  Principal

              	 

      

      

      

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                   
                  Goldman
                  Sachs Credit Partners L.P.  

                              
as
                  a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  James Balcom

              	 
	 	
                Name:
                  James Balcom

                Title:
                  Authorized Signatory

              	 

      

      

      

       

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

       

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                   
                  HSBC Bank
                  USA, National Association  

                              
as
                  a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  William L. Meli

              	 
	 	
                Name:
                  William L. Meli

                Title:
                  Vice President

              	 

      

      

      

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

       

       

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                   
                  Hizuho
                  Corporate Bank Ltd.  

                              
as
                  a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Raymond Ventura

              	 
	 	
                Name:
                  Raymond Ventura 

                Title:
                  Deputy General Manager

              	 

      

      

      

       

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

      

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                    National
                  Australia Bank Limited  

                             
                  as a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Eduardo Salazar

              	 
	 	
                Name:
                  Eduardo Salazar 

                Title:
                  Senior Vice President and 

                Head
                  of Corporate Banking

              	 

      

      

      

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

       

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                    The
                  Northern Trust Company  

                             
                  as a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Jeffrey B. Clark

              	 
	 	
                Name:
                  Jeffrey B. Clark 

                Title:
                  Senior Vice President

              	 

      

      

      

       

      
        
           

        

        
          -14-

          
            

          

        

        
           

        

      

      

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                    Toronto
                  Dominion (Texas) LLC  

                              
as
                  a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Debbi L. Brito

              	 
	 	
                Name:
                  Debbi L. Brito 

                Title:
                  Authorized Signatory

              	 

      

      

      

       

      
        
           

        

        
          -15-

          
            

          

        

        
           

        

      

      

       

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                    Wachovia
                  Bank, National Association  

                              
as
                  a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  John Brady

              	 
	 	
                Name:
                  John Brady 

                Title:
                  Director

              	 

      

      

      

       

      

      
        
           

        

        
          -16-

          
            

          

        

        
           

        

      

       

      

       

      

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                    Loan
                  Funding XIII LLC for itself or as agent for Corporate Funding XIII
                   

                             
                  as a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Brian C. Carlson

              	 
	 	
                Name:
                  Brian C. Carlson 

                Title:
                  Principal

                Silvermine
                  Capital Management LLC

              	 

      

      

      

       

      

      
        
           

        

        
          -17-

          
            

          

        

        
           

        

      

       

       

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                    Commerzbank,
                  AG, New York and Grand Cayman  

                              
as
                  a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Robert S. Taylor 

              	 
	 	
                Name:
                  Robert S. Taylor 

                Title:
                  Senior Vice President

              	 
	 	
                 

                 

                /s/
                  Barbara Peters 

              	 
	 	
                Name:
                  Barbara Peters 

                Title:
                  Assistant Treasurer

              	 

      

      

      

       

      
        
           

        

        
          -18-

          
            

          

        

        
           

        

      

      

       

       

       

      To
        approve the Second Amendment and Consent to the Revolving Credit
        Agreement:

      

      

      
        	
                Name
                  of Institution:
                    The
                  Royal Bank of Scotland PLC  

                              
as
                  a Lender,

                 

              	 
	
                by:

              	 
	 	
                /s/
                  Vincent Fitzgerald 

              	 
	 	
                Name:
                  Vincent Fitzgerald

                Title:
                  Managing Director

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