EXHIBIT 10.39
EXECUTION COPY
FIFTH AMENDMENT, dated as of September
9, 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, 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
(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 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. Amendment of Section 1.01. The following
sentence is hereby inserted at the end of the definition of
"Consolidated EBITDA" in Section 1.01 of the Revolving Credit
Agreement:
"Notwithstanding the foregoing, for purposes of
determining Consolidated EBITDA, reductions in Consolidated
Net Income in the five consecutive fiscal quarters of the
Company commencing with the fiscal quarter ending June 30,
2004, that are attributable to the expensing during such
fiscal quarters of promotion costs capitalized by the
Company prior to June 30, 2004, shall be excluded; provided,
that the reductions in Consolidated Net Income that are
excluded under this sentence shall not exceed $66,500,000 in
the aggregate."
SECTION 3. Amendment of Section 5.01. The following
sentence is hereby inserted at the end of Section 5.01 of
the Revolving Credit Agreement:
"Notwithstanding the foregoing, it is agreed that
the Company may change its accounting practices with respect
to promotion costs by expensing rather than capitalizing
such costs, and that such change will not be deemed to
prevent the satisfaction of any requirement in this Section
that financial statements be prepared in accordance with
GAAP consistently applied."
SECTION 4. 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;
(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; and
(c) As of the Amendment Effective Date (as defined below),
after giving effect to this Amendment, no Default has occurred and is
continuing.
SECTION 5. 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; and
(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 6. 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 7. Applicable Law. THIS AMENDMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 8. 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 9. 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.
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:
--------------------------------
Name:
Title:
BOOKS ARE FUN, LTD.,
by:
--------------------------------
Name:
Title:
QSP, INC.,
by:
--------------------------------
Name:
Title:
REIMAN MEDIA GROUP, INC.,
by:
--------------------------------
Name:
Title:
JPMORGAN CHASE BANK, individually and as
Administrative Agent and Collateral Agent,
by:
--------------------------------
Name:
Title:
To approve the Fifth Amendment to the Revolving Credit
Agreement:
Name of Institution: -------------------------------
by:
-------------------------------
Name:
Title: