Exhibit 10.38
EXECUTION VERSION
FOURTH AMENDMENT, dated as of May 24, 2004
(this "Amendment"), to the $192,500,000 AMENDED AND
RESTATED FIVE-YEAR REVOLVING CREDIT AND COMPETITIVE
ADVANCE FACILITY AGREEMENT, dated as of May 20, 2002
(as amended, 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 (the
"Lenders") and JPMORGAN CHASE BANK, as administrative
agent (in such capacity, the "Administrative Agent")
and collateral agent (in such capacity, the
"Collateral Agent").
WITNESSETH:
WHEREAS, pursuant to the Revolving Credit Agreement, the Lenders have
agreed to extend credit to the Borrowers on the terms and subject to the
conditions set forth therein.
WHEREAS, the Company has requested that the Required Lenders amend certain
provisions of the Revolving Credit Agreement in connection with the amendment
and restatement of the Term Loan Agreement (as defined in the Revolving Credit
Agreement prior to giving effect to this Amendment) and the Lenders 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. Amendments to Section 1.01. The following definitions set forth
in Section 1.01 of the Revolving Credit Agreement are hereby amended by to read
in their entirety as follows
"Headquarters Sale and Leaseback" means a sale and leaseback
transaction consisting of the sale of the Company's headquarters
located in the town of New Castle and having a mailing address at
Reader's Digest Road, Pleasantville, NY 10570, for Net Proceeds of not
less than $35,000,000 (which Net Proceeds shall be used to repay either
(a) amounts outstanding under the Term Loan Agreement as required
pursuant to Section 2.12(b) thereof or (b) Standby Loans to the extent
such Standby Loans have been borrowed to prepay Term Loans outstanding
under the Term Loan Agreement), and the partial leaseback of such
headquarters by the Company.
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"Interest Expense" means, for any period, the interest expense
of the Company and the consolidated Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP (and giving
effect to any Swap Agreements that have the effect of increasing or
decreasing such interest expense), including (i) the amortization of
debt discounts to the extent included in interest expense in accordance
with GAAP, (ii) the amortization of all fees (including fees with
respect to interest rate protection agreements or other interest rate
hedging agreements) payable in connection with the incurrence of
indebtedness to the extent included in interest expense in accordance
with GAAP, (iii) the portion of any rents payable under capital leases
allocable to interest expense in accordance with GAAP and (iv) the
amount of commitment fees incurred prior to the Original Effective Date
under the Fee Letter dated as of March 21, 2002, as amended as of April
19, 2002, among the Company, JPMCB and GSCP; provided, that for
purposes of computing the Consolidated Interest Coverage Ratio and the
Consolidated Fixed Charge Coverage Ratio for any period, Interest
Expense will exclude the effect of any acceleration of the amortization
of deferred financing fees paid in cash in earlier periods as a result
of the making of the Tranche A Term Loans under the Term Loan Agreement
and the application of the proceeds thereof as provided therein.
"Term Loan Agreement" means the Amended and Restated Term Loan
Agreement dated as of May 24, 2004, as amended, supplemented or
otherwise modified from time to time, among the Company, certain
borrowing subsidiaries, certain lenders, ABN Amro Bank N.V., National
Australia Bank Limited and The Royal Bank of Scotland plc, as
co-documentation agents, and JPMorgan Chase Bank, as administrative
agent and collateral agent.
SECTION 3. 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:
(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 (as
defined below), 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; and
(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.
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(b) As of the Amendment Effective Date (as defined below), after giving
effect to this Amendment, no Default has occurred and is continuing.
SECTION 4. 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 and the Required Lenders;
(b) To the extent invoiced, the Administrative Agent shall have been
reimbursed for all its reasonable out of pocket expenses, including the
reasonable fees, charges and disbursements of its counsel, related to
this Amendment or the Revolving Credit Agreement.
SECTION 5. 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.
SECTION 6. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. 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 8. Expenses. The Company agrees to (a) pay all fees separately
agreed to between the Company and the Administrative Agent relating to this
Amendment and (b) 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.
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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:
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Name:
Title:
BOOKS ARE FUN, LTD.,
by:
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Name:
Title:
QSP, INC.,
by:
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Name:
Title:
REIMAN MEDIA GROUP, INC.,
by:
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Name:
Title:
JPMORGAN CHASE BANK, individually and as
Administrative Agent and Collateral Agent,
by:
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Name:
Title:
To approve the Fourth Amendment to the Revolving
Credit Agreement:
Name of Institution:
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by:
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Name:
Title: