AMENDMENT AND WAIVER

Exhibit 10.1

AMENDMENT AND WAIVER, dated as of February 9, 2007 (this “ Amendment ”), among AMERICAN MEDIA, INC. (“ Holdings ”), AMERICAN MEDIA OPERATIONS, INC. (the “ Borrower ”), the lenders party hereto, and JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).

A. Reference is made to the Credit Agreement dated as of January 30, 2006, as amended by the Amendment and Waiver dated as of February 13, 2006, the Amendment and Waiver dated as of June 23, 2006, the Amendment and Waiver dated as of August 18, 2006 and the Amendment and Waiver dated as of October 26, 2006 (as further amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Holdings, the Borrower, the lenders party thereto, and the Administrative Agent. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Credit Agreement.

B. Holdings and the Borrower have requested that the Required Lenders amend and waive certain provisions of the Credit Agreement. The Required Lenders are willing to agree to such amendment and waiver on the terms and subject to the conditions of this Amendment.

Accordingly, 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. Amendments to Section 1.01 of the Credit Agreement . Section 1.01 of the Credit Agreement is amended as follows:

(a) The definition of the term “Applicable Rate” is deleted and replaced with the following:

“ Applicable Rate ” means a rate per annum determined in accordance with the following:

(a) Subject to paragraph (c) below, the “Applicable Rate” for any day means (i) 2.25% per annum with respect to any ABR Loan that is a Term Loan, (ii) 3.25% per annum with respect to any Eurodollar Loan that is a Term Loan or (iii) with respect to any ABR Loan or Eurodollar Loan that is a Revolving Loan or any ABR Loan that is a Swingline Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “ABR Spread” or “Eurodollar Spread” or “Commitment Fee Rate”, as the case may be, based upon the Leverage Ratio as of the most recent determination date:

(b) For purposes of the foregoing clause (a)(iii) above, (i) the Leverage Ratio shall be determined as of the end of each fiscal quarter of the Borrower’s fiscal year, based upon the Borrower’s consolidated financial statements delivered pursuant to Section 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the date of delivery to the Administrative Agent of such consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change; provided that, until the Financial Statement Completion Date, the Leverage Ratio shall be deemed to be in Category 1 for purposes of determining the Applicable Rate; provided further that the Leverage Ratio shall be deemed to be in Category 1 at the option of the Administrative Agent or at the request of the Required Lenders if the Borrower fails to deliver the consolidated financial statements required to be delivered by it pursuant to Section 5.01(a) or (b) during the period from the expiration of the time for delivery thereof until such consolidated financial statements are delivered.

(c) Notwithstanding anything to the contrary herein, (i) for any day on which the Borrower’s corporate rating is less than Caa1 by Moody’s or CCC+ by S&P, the “Applicable Rate” shall be 2.50% per annum with respect to any ABR Loan and 3.50% per annum with respect to any Eurodollar Loan, and (ii) if the Borrower makes any cash payment, pursuant to clause (i) of Section 4.03(e) of either of the indentures under which the Existing Subordinated Debt is outstanding, to the holders of the 2002 Senior Subordinated Notes or the 2003 Senior Subordinated Notes in lieu of issuing Additional 2002 Senior Subordinated Notes or Additional 2003 Senior Subordinated Notes, then, effective upon and after payment of such fee, the Applicable Rate shall be 3.50% per annum with respect to any Eurodollar Loan and 2.50% per annum with respect to any ABR Loan.

 

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(b) The definition of the term “Consolidated EBITDA” is amended by adding, after the amount “$15,000,000” in clause (ii) of the proviso to clause (f) of such definition, the following:

“(provided that the aggregate amount that may be added back pursuant to this clause (ii) of the proviso to clause (f) in respect of the calculation of Consolidated EBITDA for the period of four consecutive fiscal quarters ended June 30, 2007, September 30, 2007 and December 31, 2007 shall be further limited to $12,000,000, $8,000,000 and $4,000,000, respectively, in each case excluding the fees and disbursements of counsel to the Borrower, the Administrative Agent and the Lenders incurred or reimbursed in connection with amendments to this Agreement, the 2002 Senior Subordinated Notes and the 2003 Senior Subordinated Notes (A) prior to the effectiveness of the Fifth Amendment or (B) after the effectiveness of the Fifth Amendment in an aggregate amount not exceeding $250,000)”.

(c) The definition of the term “Consolidated Interest Expense” is amended by deleting the period at the end thereof and adding the following:

“; provided that (i) the issuance of any Additional 2002 Senior Subordinated Notes or any Additional 2003 Senior Subordinated Notes shall not be included in the determination of Consolidated Interest Expense for any period and (ii) any cash interest paid with respect to any Additional 2002 Senior Subordinated Notes or any Additional Senior Subordinated Notes shall be included in the determination of Consolidated Interest Expense for such period.”

(d) The definition of the term “Financial Restatement Conditions” is deleted and replaced with the following:

“ Financial Restatement Conditions ” means the conditions that the Financial Restatement (a) does not decrease the Borrower’s consolidated operating income by an amount exceeding (i) $25,000,000 for any fiscal year ended March 29, 2004 or March 31, 2005, or (ii) $40,000,000 in the aggregate for all such periods (and including in such periods, for purposes of this clause (ii), the period of two consecutive fiscal quarters ended September 30, 2005), and (b) does not decrease the Borrower’s Consolidated EBITDA by an amount exceeding (i) $25,000,000 for any fiscal year ended March 29, 2004 or March 31, 2005, or (ii) $35,000,000 in the aggregate for all such periods (and including in such periods, for purposes of this clause (ii), the period of two consecutive fiscal quarters ended September 30, 2005); provided that, if certain costs related to newsstand and terminal promotions that historically have been capitalized and amortized (as described to the Administrative Agent) are, as a result of the Financial Restatement, required to be treated as expenses, then (A) the $25,000,000 amount in each of clause (a)(i) and (b)(i) above shall be $30,000,000, (B) the $40,000,000 amount in clause (a)(ii) above shall be

 

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$50,000,000 and (C) the $35,000,000 amount in clause (b)(ii) above shall be $45,000,000.

(e) The definitions of the terms “2003 Senior Subordinated Notes” and “2002 Senior Subordinated Notes” are deleted and replaced with the following:

“ 2003 Senior Subordinated Notes ” means (a) the 8.875% Senior Subordinated Notes due 2011 issued by the Borrower on January 16, 2003 in the aggregate principal amount of $150,000,000 and the Indebtedness represented thereby and (b) any Additional 2003 Senior Subordinated Notes and the Indebtedness represented thereby.

“ 2002 Senior Subordinated Notes ” means (a) the 10.25% Senior Subordinated Notes due 2009 issued by the Borrower on February 11, 2002, in the aggregate principal amount of $400,000,000 and the Indebtedness represented thereby and (b) any Additional 2002 Senior Subordinated Notes and the Indebtedness represented thereby.

(f) The following defined terms are inserted in the appropriate alphabetical order:

“ Additional 2003 Senior Subordinated Notes ” means any additional 8.875% Senior Subordinated Notes due 2011 issued by the Borrower pursuant to clause (i) of Section 4.03(e) of the indenture under which the 2003 Senior Subordinated Notes are outstanding (without giving effect to any amendment or modification thereof after the date of the Fifth Amendment).

“ Additional 2002 Senior Subordinated Notes ” means any additional 10.25% Senior Subordinated Notes due 2009 issued by the Borrower pursuant to clause (i) of Section 4.03(e) of the indenture under which the 2002 Senior Subordinated Notes are outstanding (without giving effect to any amendment or modification thereof after the date of the Fifth Amendment).

“ Fifth Amendment ” means the Amendment and Waiver dated as of February 9, 2007, to this Agreement.

SECTION 2. Amendment to Section 2.11 of the Credit Agreement . (a) Clause (4) of the last proviso to Section 2.11(c) of the Credit Agreement is amended by deleting the date “March 15, 2007” and substituting in lieu thereof the date “April 15, 2007.”

(b) Paragraph (g) of Section 2.11 of the Credit Agreement is amended by deleting the words “the first anniversary of” and substituting in lieu thereof the following: “the date that is 18 months following”.

 

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SECTION 3. Amendment to Section 5.01 of the Credit Agreement . (a) Section 5.01(a) of the Credit Agreement is amended by deleting the date “February 15, 2007” appearing in the proviso at the end thereof and substituting in lieu thereof the date “March 15, 2007”.

(b) The proviso at the end of Section 5.01(b) of the Credit Agreement is amended as follows: (i) clause (x) of such proviso is amended by deleting the date “February 15, 2007”, and substituting in lieu thereof the date “March 15, 2007”; and (ii) clauses (y), (z) and (zz) of such proviso are amended by deleting the date “March 15, 2007” and, in each case, substituting in lieu thereof the date “April 15, 2007”.

(c) Section 5.01 of the Credit Agreement is amended by (i) deleting the word “and” at the end of clause (f) thereof, (ii) deleting the period at the end of clause (g) thereof and substituting in lieu thereof the following: “; and” and (iii) adding at the end thereof the following:

(h) within five Business Days after the end of each month, during the period from effectiveness of the Fifth Amendment until the later to occur of (i) December 31, 2007 or (ii) the Financial Statement Completion Date, as of the last day of such month (A) circulation by title of each of (1) National Enquirer, (2) Star and (3) Shape, (B) Revolving Exposures as of such date and (C) cash on the consolidated balance sheet of the Borrower and its Restricted Subsidiaries; provided that the circulation information provided pursuant to clause (A) above may be estimated, but any such estimated information shall be updated on a monthly basis thereafter until final circulation information is provided for the relevant period.

SECTION 4. Amendment to Section 6.05 of the Credit Agreement . Section 6.05 of the Credit Agreement is amended by deleting clause (f)(ii) thereof and substituting in lieu thereof the following:

(ii) after the Financial Statement Completion Date and on or prior to December 31, 2007;

SECTION 5. Amendment to Section 6.12 of the Credit Agreement . The table in Section 6.12 of the Credit Agreement is amended and restated in its entirety as follows:

 

 

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SECTION 6. Amendment to Section 6.13 of the Credit Agreement . The table in Section 6.13 of the Credit Agreement is amended and restated in its entirety as follows:

 

provided , that in the event that, during the period from April 1, 2007 to and including March 31, 2008, as a result of any sale of Specified Assets and prepayment of Term Borrowings pursuant to Section 2.11(c), the Senior Secured Leverage Ratio is reduced, after giving effect to such prepayment, to 3.75 to 1.00 (or less), then the Senior Secured Leverage Ratio required as of the last day of any fiscal quarter ending on any date thereafter during such period shall be reduced to 4.25 to 1.00.

SECTION 7. Amendment to Section 6.14 to the Credit Agreement . The table in Section 6.14 of the Credit Agreement is amended and restated in its entirety as follows:

 

SECTION 8. Waivers and Acknowledgments . (a) The undersigned Lenders hereby waive compliance with the covenants set forth in Sections 6.12, 6.13 and 6.14 of the Credit Agreement, in each case solely in respect of the ratios required thereunder as of September 30, 2006, December 31, 2006 and March 31, 2007 and, in the case of Section 6.14, March 31, 2006 and June 30, 2006.

 

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(b) The undersigned Lenders hereby waive any Default arising under clause (g) of Article VII of the Credit Agreement in relation to the Existing Subordinated Debt, to the extent, but only to the extent, any such Default results from a Reporting Violation (as defined below); provided, that such waiver shall terminate and cease to apply if (i) any Existing Subordinated Debt becomes due, or is declared to become due, or is required to be prepaid, repurchased, redeemed or defeased, prior to its stated maturity, in any such case as a result of a Reporting Violation, or (ii) the holder or holders of any Existing Subordinated Debt (or the requisite number or percentage in interest entitled to do so under the terms thereof, if applicable), or any trustee or agent on its or their behalf, (A) gives notice to Holdings, the Borrower or any Subsidiary of a Reporting Violation, if the effect of such notice is to commence a grace or cure period upon the expiration of which any right or remedy may be exercised if the Reporting Violation is continuing, or (B) otherwise commences any proceeding with respect to the exercise of any material rights or remedies (as determined by the Required Lenders) that may be exercised based upon a Reporting Violation.

(c) It is acknowledged and agreed that the mere existence of a Reporting Violation, in and of itself, shall not constitute a breach of any of the representations and warranties in the Credit Agreement or a Material Adverse Effect.

(d) For purposes hereof, the term “Reporting Violation” means any failure to comply with any provision of any agreement or instrument evidencing or governing the terms of any Existing Subordinated Debt that requires the delivery of financial statements for the Borrower and its subsidiaries or the filing by the Borrower of reports (or delivery by the Borrower of reports required to be filed by it) with the Securities and Exchange Commission, to the extent such non-compliance results from the failure by the Borrower to deliver unaudited financial statements for the fiscal quarters ended December 31, 2005, June 30, 2006, September 30, 2006, or December 31, 2006, to file its report on 10-Q for the fiscal quarters ended December 31, 2005, June 30, 2006, September 30, 2006, or December 31, 2006, to deliver audited financial statements for the fiscal year ended March 31, 2006, or to file its report on 10-K for the fiscal year ended March 31, 2006, in each case within the time required.

(e) It is acknowledged and agreed that the waivers and acknowledgments set forth in Section 7 of the First Amendment, Section 12 of the Second Amendment, Section 5 of the Third Amendment and Section 8 of the Fourth Amendment shall remain in effect after the Fifth Amendment Effective Date.

 

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SECTION 9. Certain Covenants . The provisions set forth in Section 9 of the Fourth Amendment are superseded in their entirety by this Section 9. Unless and until the financial statements for the fiscal quarters ended December 31, 2005, June 30, 2006, September 30, 2006, and December 31, 2006, the Financial Restatement, and the financial statements for the fiscal year ended March 31, 2006, together with the certificates and reports required to be delivered pursuant to Section 5.01, have, in each case, been delivered, and any Reporting Violations are cured, each of Holdings and the Borrower hereby covenants and agrees with each Lender and the Administrative Agent that:

(a) neither Holdings nor the Borrower will, nor will they permit any Restricted Subsidiary to, (i) declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment otherwise permitted by clause (x)(B) of Section 6.08(a) of the Credit Agreement or (except to the extent of Restricted Payments made by the Borrower to Holdings in order to permit Holdings to make Restricted Payments of the type allowed by clauses (iii) through (v) of Section 6.08(a) of the Credit Agreement) clause (xi) of Section 6.08(a) of the Credit Agreement, or incur any obligation (contingent or otherwise) to do so or (ii) make any investment in any Unrestricted Subsidiary if any proceeds of such investment are to be used for any purpose otherwise prohibited by this clause (a); and

(b) neither Holdings nor the Borrower will, nor will they permit any Subsidiary to, give any consideration to or for the benefit of any holder of Existing Subordinated Debt for any amendment, modification or waiver of any agreement, instrument or other document evidencing or governing any Existing Subordinated Debt or any waiver or consent of or arrangement with any of such holders of the Existing Subordinated Debt (in each case, a “ Subordinated Debt Amendment ”), in each case with respect to a Reporting Violation; provided that the foregoing shall not prohibit payment of a cash fee (or the equivalent thereof) in connection with any such Subordinated Debt Amendment if (i) such fee does not exceed an amount that would be, based upon available information, usual and customary for fees paid to obtain similar consents or waivers under similar circumstances and (ii) at the time of, and after giving effect to, the payment of such fee, the sum of the Revolving Commitments exceeds the sum of the Revolving Exposures by at least $35,000,000. It is understood that the forgoing shall not be construed to prohibit the payment of the fees payable pursuant to the last sentence of Section 4.02 of each of the indentures in respect of the Existing Subordinated Debt (as in effect as of the date hereof) in order to obtain the benefit of the extension of time provided for therein, subject to payment of additional fees that would be payable to the Lenders pursuant to Section 7 of the Fourth Amendment as a result thereof. Section 7 of the Fourth Amendment shall apply to the payment of fees referred to in the preceding sentence (as though this Amendment were not in effect), but otherwise shall not apply after the Fifth Amendment Effective Date.

 

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SECTION 10. Representations and Warranties . Each of Holdings and the Borrower hereby represents and warrants to and agrees with each Lender and the Administrative Agent that, after giving effect to this Amendment:

(a) the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects with the same effect as if made on the Fifth Amendment Effective Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true and correct as of such earlier date; and

(b) as of the Fifth Amendment Effective Date, no Default has occurred and is continuing.

SECTION 11. Conditions to Effectiveness . This Amendment (including the waivers set forth in Section 8 above) shall become effective as of the date of the satisfaction in full of the following conditions precedent (the “ Fifth Amendment Effective Date ”):

(a) the Administrative Agent shall have received duly executed counterparts hereof that, when taken together, bear the authorized signatures of Holdings, the Borrower and the Required Lenders;

(b) the Administrative Agent shall have received all other amounts due and payable under the Credit Agreement on or prior to the Fifth Amendment Effective Date, including, to the extent invoiced, all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees, charges and disbursements of Cravath, Swaine & Moore LLP, counsel for the Administrative Agent); and

(c) the Administrative Agent shall have received the Amendment Fee (as defined below).

SECTION 12. Amendment Fee . In consideration of the agreements of the Lenders contained in this Amendment, Holdings and the Borrower jointly agree to pay to the Administrative Agent, for the account of each Lender that delivers an executed counterpart of this Amendment prior to 3:00 p.m., New York City time, on February 9, 2007, an amendment fee (the “Amendment Fee”) in an amount separately disclosed or agreed in writing.

SECTION 13. Credit Agreement . Except as specifically stated herein, the Credit Agreement shall continue in full force and effect in accordance with the provisions thereof. This Amendment shall constitute a Loan Document.

SECTION 14. Applicable Law . THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

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SECTION 15. Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be an original but all of which, when taken together, shall constitute but one 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 of this Amendment.

[SIGNATURES ON FOLLOWING PAGE]

 

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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.

 

 

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Lender Name: Cent CDO 12 Limited
By: Riversource Investments, LLC as Collateral Manager
by		/s/ Traci D. Garcia
Name:		Traci D. Garcia
Title:		Sr. Business Analyst

 

Lender Name:		Grayston CLO II 2004-1 LTD.
		By: Bear Stearns Asset Management, Inc.
		as its Collateral Manager

 

by		/s/ Niall Rosenzweig
Name:		Niall Rosenzweig
Title:		Managing Director

 

Lender Name:		Bear Stearns Loan Trust
		By: Bear Stearns Asset Management, Inc.,
		as its attorney-in-fact

 

by		/s/ Niall Rosenzweig
Name:		Niall Rosenzweig
Title:		Managing Director

 

Lender Name:		Gallatin Funding I Ltd.
		By: Bear Stearns Asset Management Inc.
		as its Collateral Manager

 

by		/s/ Niall Rosenzweig
Name:		Niall Rosenzweig
Title:		Managing Director

 

Lender Name:		GALLATIN CLO II 2005-1 LTD.
		BY: BEAR STEARNS ASSET MANAGEMENT INC.
		AS ITS COLLATERAL MANAGER

 

by		/s/ Niall Rosenzweig
Name:		Niall Rosenzweig
Title:		Managing Director

 

Lender Name:		Gallatin CLO III 2006-1, Ltd. As Assignee,
		By: Bear Stearns Asset Management, Inc.
		as Its Collateral Manager

 

by		/s/ Niall Rosenzweig
Name:		Niall Rosenzweig
Title:		Managing Director

 

Lender Name:		NORTHWOODS CAPITAL IV, LIMITED
		BY: ANGELO, GORDON & CO., L.P.,
		AS COLLATERAL MANAGER

 

by		/s/ BRADLEY PATTELLI
Name:		BRADLEY PATTELLI
Title:		MANAGING DIRECTOR

 

Lender Name:		NORTHWOODS CAPITAL V, LIMITED
		BY: ANGELO, GORDON & CO., L.P.
		AS COLLATERAL MANAGER

 

by		/s/ BRADLEY PATTELLI
Name:		BRADLEY PATTELLI
Title:		MANAGING DIRECTOR

 

Lender Name:		NORTHWOODS CAPITAL VI, LIMITED
		BY: ANGELO, GORDON & CO., L.P.
		AS COLLATERAL MANAGER

 

by		/s/ BRADLEY PATTELLI
Name:		BRADLEY PATTELLI
Title:		MANAGING DIRECTOR

 

Lender Name:		NORTHWOODS CAPITAL VII, LIMITED
		BY: ANGELO, GORDON & CO., L.P.
		AS COLLATERAL MANAGER

 

by		/s/ BRADLEY PATTELLI
Name:		BRADLEY PATTELLI
Title:		MANAGING DIRECTOR

 

Lender Name:		Merrill Lynch Global Investment Series:
		Income Strategies Portfolio
		Magnetite Asset Investors L.L.C.

 

by		/s/ Anthony Heyman
Name:		Anthony Heyman
Title:		Authorized Signatory

 

Lender Name:		Morgan Stanley
		Prime Income Trust

 

by		/s/ John Hayes
Name:		John Hayes
Title:		Executive Director

 

Lender Name: D EUTSCHE B ANK T RUST C OMPANY A MERICAS

 

by		/s/ Susan LeFevre				/s/ Evelyn Thierry
Name:		Susan LeFevre				Evelyn Thierry
Title:		Director				Vice President