Exhibit 10.35
EXECUTION VERSION
THIRD AMENDMENT, dated as of February 12,
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 informed the Administrative Agent
that it intends to issue senior unsecured notes in an aggregate principal amount
of at least $300,000,000 the principal of which are not by their terms payable
or required to be prepaid, redeemed, repurchased or defeased, in whole or in
part, at the option of any holder thereof or on any date prior to the Tranche B
Maturity Date (as defined in the Term Loan Agreement) or the "Maturity Date"
under and as defined in the Amended and Restated Five-Year Credit Agreement (as
defined in the Term Loan Agreement) (the "2004 SENIOR NOTES").
WHEREAS, the Company has requested that the Required Lenders
amend certain provisions of the Revolving Credit Agreement in connection with
the issuance of the 2004 Senior Notes as set forth in 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. AMENDMENT TO SECTION 6.06(h). Section 6.06(h) of the
Revolving Credit Agreement is hereby amended in its entirety to read as follows:
"(h) Restricted Payments permitted by Section 6.10(a)(iii),
(v) or (vi)."
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SECTION 3. AMENDMENT TO SECTION 6.06(i). Section 6.06(i) of the
Revolving Credit Agreement is hereby amended in its entirety to read as follows:
"(i) acquisitions of Equity Interests or assets for
consideration with a value not greater than $50,000,000 during any
fiscal year; 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 and (iii) the Company shall have Ratings of at least BBB-
and Baa3, in each case with stable outlook; and"
SECTION 4. AMENDMENT TO SECTION 6.08(c). Section 6.08(c) of the
Revolving Credit Agreement is hereby amended in its entirety to read as follows:
"(c) provisions limiting loans, advances, guarantees or other
investments or Restricted Payments by Subsidiaries that are not more
restrictive than the provisions related to loans, advances, guarantees
or other investments or Restricted Payments by Subsidiaries set forth
in Section 6.06 or Section 6.10(a)."
SECTION 5. AMENDMENT TO SECTION 6.10(a). Section 6.10(a) of the
Revolving Credit Agreement is hereby amended in its entirety to read as follows:
"(a) The Company will not, nor will it permit any Subsidiary
to, declare or make, or agree to pay or make, directly or indirectly,
any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except (i) the Company may declare and pay
dividends with respect to its capital stock payable solely in Equity
Interests, (ii) Subsidiaries may declare and pay dividends ratably with
respect to their capital stock, (iii) the Company may make payments to
holders of not more than $5,000,000 in stated value of preferred stock
of the Company that are required to be made as a result of the exercise
of appraisal rights to which they may be entitled in connection with
the Recapitalization, (iv) the Company or its Subsidiaries may make
Restricted Payments, not exceeding $5,000,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit
plans for management or employees of the Company and its Subsidiaries,
(v) the Company may carry out the Class B Repurchase and the
Recapitalization; PROVIDED that such transactions are completed on or
prior to December 31, 2002 and (vi) the Company may pay cash dividends
and repurchase stock and make other Restricted Payments during any
fiscal year in an aggregate amount not exceeding $50,000,000; PROVIDED
that for any fiscal year during which the Company shall pay cash
dividends, repurchase stock and make other Restricted Payments in an
aggregate amount greater than $25,000,000, the Company shall make
prepayments of Borrowings pursuant to Section 2.12(g) of the Term Loan
Agreement in an aggregate amount equal to the amount required pursuant
to Section 6.10(a)(vi) of the Term Loan; PROVIDED further that so long
as (x) no Default shall have occurred and be continuing, (y) the
Company shall demonstrate pro forma compliance with the covenant set
forth in Section 6.13 and (z) the
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Company shall have Ratings of at least BBB- and Baa3, in each case with
stable outlook, the second proviso above shall not apply, and the
Company may pay cash dividends and repurchase stock and make other
Restricted Payments during any fiscal year in an aggregate amount equal
to Excess Cash Flow for the prior year.
SECTION 6. 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. 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.
(b) As of the Amendment Effective Date (as defined below), after giving
effect to this Amendment, no Default has occurred and is continuing.
SECTION 7. 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) The Administrative Agent shall have received the Amendment Fees payable
to the Lenders under Section 9 hereof.
(c) The Borrower shall have issued the 2004 Senior Notes.
(d) 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.
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SECTION 8. 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 1:00 p.m., New York City time on February 20, 2004, an
amendment fee (collectively, the "AMENDMENT FEES") equal to 0.05% of such
Lender's Commitment as of the Amendment Effective Date. The Amendment Fees will
be payable in immediately available funds on the Amendment Effective Date;
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 9. 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 10. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 11. 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 12. 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:
To approve the Third Amendment to the Revolving Credit Agreement:
Name of Institution:
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by:
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Name:
Title:
