Exhibit 10.30
EXECUTION COPY
FIRST AMENDMENT, dated as of June 27, 2003
(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
(the "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 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 Credit Agreement as set forth in this Amendment,
and the Lenders whose signatures appear below, constituting at least the
Required Lenders, are willing to amend the 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 Credit Agreement.
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SECTION 2. AMENDMENTS TO SECTION 1.01. Section 1.01 of the Credit Agreement
is hereby amended as follows:
(a) by deleting in its entirety the table set forth in the definition of
the term "Applicable Rate" and substituting the following therefor:
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Ratings Eurodollar ABR Spread Facility
(S&P/Xxxxx'x) Spread Fee
---------------------------- ------------- ------------- --------------
Xxxxx 0 1.500% 0.500% 0.250%
higher than BBB-/Baa3
---------------------------- ------------- ------------- --------------
Xxxxx 0 1.875% 0.875% 0.375%
BBB-/Baa3
---------------------------- ------------- ------------- --------------
Xxxxx 0 2.250% 1.250% 0.500%
BB+/Ba1
---------------------------- ------------- ------------- --------------
Xxxxx 0 2.500% 1.500% 0.500%
BB/Ba2
---------------------------- ------------- ------------- --------------
Xxxxx 0 2.750% 1.750% 0.500%
lower than BB and Ba2
or unrated
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(b) by deleting in its entirety the definition of the term
"Consolidated EBITDA" and substituting the following therefor:
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net
Income for such period PLUS, to the extent not otherwise included in
such Consolidated Net Income, the sum (without duplication) of (a)
income tax expense, (b) Interest Expense, (c) depreciation and
amortization, (d) non-recurring, non-cash restructuring charges and
cash restructuring charges identified in Schedule 1.01(a), (e) losses
on the contemplated sale of the Company's subsidiary xxxxx.xxx, Inc.,
and extraordinary losses, (f) non-cash charges in respect of
compensation paid to employees or members of the Board of Directors of
the Company in the form of equity incentives (including, but not
limited to, stock options, restricted stock and deferred stock) and (g)
the cumulative effect of changes in accounting principles, minus, to
the extent added in computing such Consolidated Net Income, the sum
(without duplication) of (x) consolidated interest income, (y)
extraordinary gains and (z) the cumulative effect of changes in
accounting principles."
SECTION 3. AMENDMENT TO SECTION 6.06(i). Section 6.06(i) of the Credit
Agreement is hereby amended in its entirety to read as follows:
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"(i) acquisitions of Equity Interests or assets for
consideration with a value not greater than $25,000,000 during any
fiscal year of the Company; provided that after June 30, 2004, any
acquisition of Equity Interests or assets may be completed without
regard to such limitation so long as (i) no Default shall have occurred
and be continuing at the time of such acquisition, (ii) the Company
shall have delivered to the Agents a certificate of a Financial Officer
demonstrating pro forma compliance with the covenant set forth in
Section 6.13 (but with each applicable ratio reduced by 0.25) and (iii)
the Company shall have Ratings of at least BBB- and Baa3, in each case
with stable outlook;"
SECTION 4. AMENDMENT TO SECTION 6.13. Section 6.13 of the Credit Agreement
is hereby amended in its entirety to read as follows:
"SECTION 6.13. CONSOLIDATED LEVERAGE RATIO. The Company will
not permit the Consolidated Leverage Ratio as of any date during any
period set forth below to be greater than the ratio set forth opposite
such period:
Period Ratio
------ -----
Effective Date through 9/30/02 3.90:1.00
10/1/02 through 3/31/03 3.75:1.00
4/1/03 through 6/30/03 3.60:1.00
7/1/03 through 9/30/03 4.25:1.00
10/1/03 through 6/30/04 3.75:1.00
7/1/04 through 9/30/04 4.00:1.00
10/1/04 through 12/31/04 3.25:1.00
1/1/05 through 3/31/05 3.00:1.00
4/1/05 through 9/30/05 2.75:1.00
10/1/05 and thereafter 2.50:1.00"
SECTION 5. AMENDMENTS TO SECTION 6.15. Section 6.15 of the Credit Agreement
is hereby amended in its entirety to read as follows:
"SECTION 6.15. CAPITAL EXPENDITURES. The Company will not
permit Consolidated Capital Expenditures to exceed (i) $40,000,000
during any fiscal year of the Company ending on or prior to June 30,
2003, (ii) $30,000,000 during the fiscal year of the Company ending on
June 30, 2004, or (iii) $40,000,000 during any fiscal year of the
Company thereafter; PROVIDED that, notwithstanding
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the foregoing, an amount not greater than 50% of the scheduled amount
available for capital expenditures in any given year but not used in
such year may be used for capital expenditures in the next subsequent
year only (it being agreed that the scheduled amount for any year will
be deemed used before any amount carried over from a prior year)."
SECTION 6. AMENDMENTS TO SECTION 10.12. Section 10.12 of the Credit
Agreement is hereby amended by inserting the following sentence immediately
after the final sentence of such Section:
"Notwithstanding anything herein to the contrary, the
Borrower, each Lender and the Agent (and each employee, representative,
or other agent of each of the foregoing parties) may disclose to any
and all Persons without limitation of any kind, the U.S. tax treatment
and U.S. tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that
are provided to any of the foregoing parties relating to such U.S. tax
treatment and U.S. tax structure."
SECTION 7. AMENDMENTS TO SCHEDULE 1.01(a). Schedule 1.01(a) to the Credit
Agreement is hereby replaced with Schedule 1.01(a) to this Amendment.
SECTION 8. 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
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. Each of this Amendment and the 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 (as defined below), after giving
effect to this Amendment, no Default has occurred and is continuing.
SECTION 9. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective as of the date first above written (the "AMENDMENT EFFECTIVE DATE")
upon satisfaction of the following conditions:
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(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) The Administrative Agent shall have received the Amendment Fees payable
to the Lenders under Section 10 hereof.
(c) 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 Credit Agreement.
SECTION 10. AMENDMENT FEE. The Company agrees to pay to the Administrative
Agent, for the account of each Lender that shall have executed and delivered a
copy of this Amendment to the Administrative Agent (or its counsel) on or prior
to 12:00 noon, New York City time on June 26, 2003, an amendment fee
(collectively, the "AMENDMENT FEES") equal to .25% of the amount of the
Commitment of such Lender (whether used or unused) as of the Amendment Effective
Date. The Amendment Fees will be payable in immediately available funds on June
27, 2003; provided that the Company shall have no liability for the Amendment
Fees if this Amendment shall not have been executed and delivered by the
Required Lenders.
SECTION 11. CREDIT AGREEMENT. Except as specifically stated herein, the
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 Credit Agreement as modified hereby.
SECTION 12. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 13. 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 14. 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 & Xxxxx 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:
XXXXXX 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:
SIGNATURE PAGE to
FIRST AMENDMENT, dated as of June 27, 2003, to
THE READER'S DIGEST ASSOCIATION, INC. $192,500,000
AMENDED AND RESTATED FIVE-YEAR REVOLVING CREDIT
AND COMPETITIVE ADVANCE FACILITY AGREEMENT
To approve the First Amendment to the Credit Agreement:
Name of Institution:
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by:
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Name:
Title:
