UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) THE READER’S DIGEST ASSOCIATION, ) Case No. 09-23529 (RDD) INC., et al., ) ) Debtors. ) Jointly Administered ) SUPPLEMENTAL DECLARATION OF LAWRENCE YOUNG IN SUPPORT OF THE DEBTORS’ APPLICATION TO EMPLOY AND RETAIN ALIXPARTNERS, LLP AS RESTRUCTURING ADVISOR FOR THE DEBTORS NUNC PRO TUNC TO THE COMMENCEMENT DATE Lawrence Young of AlixPartners, LLP (“AlixPartners”) makes this supplemental declaration pursuant to 28 U.S.C. § 1746 (the “Supplemental Declaration”) and states: 1. I am a managing director of AlixPartners, a Delaware limited liability partnership, which has as its principal place of business 2000 Town Center, Suite 2400, Southfield, Michigan 48075. 2. Except as otherwise noted, I have personal knowledge of the matters set forth herein and, if called as a witness, would testify competently thereto.1 3. In September 2009, I executed my original declaration (the “Initial Declaration”) in support of the Debtors’ Application to Employ and Retain AlixPartners as Their Restructuring Advisor (the “Application”).2 1 Certain of the disclosures herein relate to matters within the knowledge of other professionals at AlixPartners and are based on information provided to me by them. 2 Capitalized terms, not otherwise defined herein, shall have the meanings as determined within the Initial Declaration. In respect of information that was presented in the Initial Declaration and replicated within the 4. In the Initial Declaration, I stated that AlixPartners reserved the right to supplement its Initial Declaration in the event that AlixPartners discovered any facts bearing on matters described in the Initial Declaration regarding AlixPartners’ employment by the Debtors. 5. As such, AlixPartners has reviewed and corrected its prepetition billing summary and has continued to monitor potential connections to parties in interest in the chapter 11 cases so as to make appropriate supplemental disclosures. The purpose of this Supplemental Declaration is to update and supplement the disclosure contained in my Initial Declaration and to provide additional information, modifications and clarifications. 6. AlixPartners understands that the Debtors will submit to the Court a proposed order, revised as consistent with this Supplemental Declaration, authorizing the retention of AlixPartners as restructuring advisor to the Debtors. I. Services, Tasks, Benefits to the Debtors’ Estates 7. The post-petition financial advisory services to be provided to the Debtors by AlixPartners are generally of the same nature as the financial advisory services provided to the Debtors pre-petition. This is subject to the understanding, of course, that as the Debtors’ chapter 11 cases progress and evolve, then AlixPartners’ role will correspondingly adapt as necessary. For avoidance of doubt, AlixPartners’ pre-petition role with the Debtors was purely advisory in nature and did not include assumption of any executive positions or any decision- making roles. Application, it is understood that the Application will be deemed to be accordingly modified to the extent that such information is modified in this Supplemental Declaration. 2 8. With respect to paragraph 6 of the Initial Declaration, as well as the corresponding content in the Engagement Letter, AlixPartners restates such paragraph, including all subparagraphs thereunder, in its entirety as follows: “6. Subject to further order of the Court and consistent with the Engagement Letter, the Debtors anticipate that AlixPartners will render the following restructuring advisory services during these chapter 11 cases, including without limitation: a. assist the Debtors and their non-US subsidiaries in developing a global operating plan and long term business plan which will facilitate the development of potential cost reduction opportunities, management financial matrices, and key reporting matrices for the Debtors. b. assist the Debtors and their non-US subsidiaries in developing and implementing a global cash management system, processes and procedures that provide management visibility across operations. c. advise the Debtors’ senior management with respect to the negotiation and implementation of restructuring initiatives such as assistance with implementing the Debtors’ cost reductions, assistance in selected financial planning and analysis functions, assistance in negotiation of vendor discussions and settlements, and assistance in developing due diligence support and analysis. d. assist the Debtors in managing the “working group” professionals who are assisting the Debtors in the reorganization process or who are working for the Debtors’ various stakeholders to improve coordination of their effort and individual work product to be consistent with the Debtors’ overall restructuring goals; AlixPartners will use best efforts to avoid duplication of efforts with the Debtors’ other professionals. e. assist in obtaining and presenting information required by parties in interest in the Debtors’ bankruptcy process including official committees appointed by the United States Trustee. f. assist the Debtors in other business and financial aspects of a chapter 11 proceeding, including, but not limited to, development of a Disclosure Statement and Plan of Reorganization. g. assist with the preparation of the statements of financial affairs, schedules and other regular reports required by the Bankruptcy Court as well as providing assistance in such areas as testimony before the Bankruptcy Court on matters that are within AlixPartners’ areas of expertise. h. assist the Debtors in managing the claims and claims reconciliation processes, except that AlixPartners will not provide any “claims agent” 3 services to the Debtors; AlixPartners will use best efforts to avoid duplication of efforts with the Debtors’ other professionals. i. assist in developing and implementing contingency plans outside of the United States. 9. The financial, restructuring or other advisory services to be provided by AlixPartners in respect of the non-US, non-debtor subsidiaries of the Debtors are generally directed toward enhancing the value that such subsidiaries represent as assets within the Debtors’ estates. Historically, the Debtors have funded their non-US subsidiaries’ financial advisory services. Further, the Debtors and their non-US subsidiaries have an intertwined system of cash management with the non-US subsidiaries’ typically flowing funds back to the Debtors. 10. As exemplified within the Periodic Report Regarding the Value, Operations and Profitability of Entities In Which the Debtors’ Estates Hold a Substantial or Controlling Interest (filed by the Debtors on September 25, 2009, at Docket No. 119), the Debtors’ non-US subsidiaries are key assets within the Debtors’ estates. The non-US services provided could encompass the full range of financial advisory services and tasks similar to those applicable to the Debtors. Such services are generally directed toward enhancing the “net book value” on the balance sheets of such subsidiaries (see Exhibits A and B-1 of the subject report) or improving the “statements of operations” of such subsidiaries (see Exhibit B-2 of the subject report). Such services may produce a corresponding benefit to the value of the Debtors’ estates.3 In respect of the non-US subsidiaries for which AlixPartners will provide services, any and all 3 Certain specific services that AlixPartners will provide in respect of these non-US subsidiaries (particularly its UK subsidiary) are intended to reduce specific significant liabilities that are, or could potentially in the future be, reflected in the balance sheets for such subsidiaries (referred to within Exhibit B-2 of the subject report); a reduction in balance sheet liabilities would directly result in an increase in the “net book value” of such subsidiaries. 4 improvements to their balance sheets and to their operations and profitability would directly result in an increase in the value of such subsidiaries as assets within the Debtors’ estates. II. Disclosures and Clarifications 11. As provided in paragraph 12 of the Initial Declaration and further clarified and augmented herein, AlixPartners conducted a conflicts analysis which included a search of AlixPartners’ client database to determine the existence of any relationships with the entities identified by the Debtors as potential parties in interest in these chapter 11 cases. Such parties (collectively, the “Potential Parties in Interest”) include, without limitation, the Debtors, their non-debtor affiliates and certain entities holding large claims against or interests in the Debtors, and are categorized and specifically listed in Schedule 1 attached to this Supplemental Declaration. 12. Based on that review, AlixPartners set forth certain disclosures within the Initial Declaration and represented that to the best of its knowledge, AlixPartners knew of no fact or situation that would represent a conflict of interest for AlixPartners with regard to the Debtors. 13. In an effort to provide clarified and more streamlined disclosures, and without limiting the representation (above) relating to conflicts, AlixPartners4 hereby augments, summarizes and clarifies its earlier disclosures of its connections to the Potential Parties in Interest with the disclosures set forth in the subparagraphs immediately below and in the client- chart attached hereto as Schedule 2 (all such initial, augmented, summarized and clarified disclosures, collectively,