AMENDMENT NO. 7 AND WAIVER NO. 4 TO REVOLVING CREDIT AGREEMENT
Exhibit 10.1
AMENDMENT NO. 7 AND WAIVER NO. 4
TO REVOLVING CREDIT AGREEMENT
TO REVOLVING CREDIT AGREEMENT
AMENDMENT NO. 7 AND WAIVER NO. 4 (this “Amendment”), dated as of March 28, 2007, to
the REVOLVING CREDIT AGREEMENT, dated as of August 20, 2003, by and among HAIGHTS CROSS OPERATING
COMPANY (the “Borrower”), the several lenders from time to time parties thereto (the
“Lenders”), BEAR XXXXXXX CORPORATE LENDING, INC., as Syndication Agent (in such capacity,
the “Syndication Agent”), and THE BANK OF NEW YORK (“BNY”), as administrative agent
for the Lenders (in such capacity, the “Administrative Agent”) as amended by Amendment No.
1 and Waiver No. 1, dated as of January 26, 2004, Amendment No. 2 and Waiver No. 2, dated as of
April 14, 2004, Amendment No. 3 and Consent No. 3, dated as of December 1, 2004, Amendment No. 4
and Waiver No. 3, dated as of March 31, 2005, Amendment No. 5 and Consent No. 4, dated as of March
31, 2005, and Amendment Xx. 0, xxxxx xx xx Xxxxx 00, 0000 (xxx, as further amended from time to
time, the “Credit Agreement”).
RECITALS
I. Unless defined herein, all capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement.
II. The Borrower has requested that the Required Lenders agree to amend Sections 7.1(a), (b),
(c) and (d) of the Credit Agreement.
III. The Borrower has also requested that the Required Lenders waive any Event of Default
which exists or may have occurred under the Credit Agreement due solely to the fact that (a) the
financial statements of Holdings for the fiscal years ended December 31, 2003, December 31, 2004
and December 31, 2005 and each of the March 31, June 30 and September 30 quarter-end financial
statements for these fiscal years, as well as the March 31, 2006, June 30, 2006 and September 30,
2006 quarter-end financial statements may not have been prepared in accordance with GAAP solely to
the extent that Holdings accounted in such financial statements for deferred income tax expense and
related deferred income tax liabilities on a consolidated basis whereas the application of GAAP as
it relates to such deferred income tax items has recently changed and is a matter beyond the
control of the Borrower and (b) the financial statements of Holdings for the fiscal year ended
December 31, 2005 may not have been prepared in accordance with GAAP solely to the extent that in
such financial statements Holdings did not classify Series A Warrants issued by Holdings as
liabilities or value such warrants at “fair value”, whereas such required treatment of Series A
Warrants results from a deeply remote technical accounting professional ruling beyond the
expectation that the Borrower would have the capability or resources to identify such an accounting
rule.
IV. The Administrative Agent and the Required Lenders have agreed to the Borrower’s requests
on the terms and subject to the conditions set forth in this Amendment.
Accordingly, in consideration of the covenants, conditions and agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments.
(a) Section 7.1(a) of the Credit Agreement is hereby amended by deleting the text
thereof and substituting therefor the following:
7.1. Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio at the
end of any period set forth below to exceed the ratio set forth below opposite such
period:
| Consolidated | ||
| Period | Leverage Ratio | |
1/1/07 - 3/31/07 |
5.50x | |
4/1/07 - 6/30/07 |
5.50x | |
7/1/07 - 9/30/07 |
5.50x | |
10/1/07 - 12/31/07 |
5.50x | |
1/1/08 - 3/31/08 |
5.50x | |
4/1/08 and thereafter |
5.50x |
(b) Section 7.1(b) of the Credit Agreement is hereby amended by deleting the text
thereof and substituting therefor the following:
(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower ending with the last day of any period set forth below to be less than the
ratio set forth below opposite such period:
| Consolidated Interest | ||
| Period | Coverage Ratio | |
1/1/07 - 3/31/07 |
1.45x | |
4/1/07 - 6/30/07 |
1.45x | |
7/1/07 - 9/30/07 |
1.45x | |
10/1/07 - 12/31/07 |
1.45x | |
1/1/08 - 3/31/08 |
1.45x | |
4/1/08 and thereafter |
1.45x |
(c) Section 7.1(c) of the Credit Agreement is hereby amended by deleting the text
thereof and substituting therefor the following:
(c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated
Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower ending with the last day of any period set forth below to be less than
the ratio set forth below opposite such period:
| Consolidated Fixed Charge | ||
| Period | Coverage Ratio | |
1/1/07 - 3/31/07 |
0.75x | |
4/1/07 - 6/30/07 |
0.75x | |
7/1/07 - 9/30/07 |
0.75x | |
10/1/07 - 12/31/07 |
0.75x | |
1/1/08 - 3/31/08 |
0.75x | |
4/1/08 and thereafter |
0.75x |
(d) Section 7.1(d) of the Credit Agreement is hereby amended by deleting the text
thereof and substituting therefor the following:
(d) Consolidated Senior Secured Leverage Ratio. Permit the
Consolidated Senior Secured Leverage Ratio at the end of any period set forth below
to exceed the ratio set forth below opposite such period:
| Consolidated Senior Secured | ||
| Period | Leverage Ratio | |
1/1/07 - 3/31/07 |
2.20x | |
4/1/07 - 6/30/07 |
2.20x | |
7/1/07 - 9/30/07 |
2.20x | |
10/1/07 - 12/31/07 |
2.20x | |
1/1/08-3/31/08 |
2.20x | |
4/1/08 and thereafter |
2.20x |
2. Limited Waivers
The Required Lenders hereby waive any Event of Default which exists or may have occurred under
the Credit Agreement due solely to the fact that (a) the financial statements of Holdings for the
fiscal years ended December 31, 2003, December 31, 2004 and December 31, 2005 and each of the March
31, June 30 and September 30 quarter-end financial statements for these fiscal years, as well as
the March 31, 2006, June 30, 2006 and September 30, 2006 quarter-end financial statements may not
have been prepared in
accordance with GAAP solely to the extent that Holdings accounted in such financial statements for
deferred income tax expense and related deferred income tax liabilities on a consolidated basis and
(b) the financial statements of Holdings for the fiscal year ended December 31, 2005 may not have
been prepared in accordance with GAAP solely to the extent that in such financial statements
Holdings did not classify Series A Warrants issued by Holdings as liabilities or value such
warrants at “fair value”.
3. Conditions to Effectiveness.
This Amendment shall be effective as of March 28, 2007 (the “Amendment No. 7 Effective
Date”), provided that the following conditions are satisfied on or before March 28, 2007:
(a) the Administrative Agent shall have received this Amendment executed by duly
authorized signatories of the Borrower and each of the Guarantors and by each of the
Required Lenders;
(b) the Administrative Agent shall have received an amendment fee for the benefit of
each Lender executing this Amendment equal to 0.10% of such Lender’s commitment; and
(c) the Administrative Agent shall have received such other documents as the
Administrative Agent may reasonably request and payment of any other fees due to the
Administrative Agent, including without limitation, the reasonable fees and expenses of its
counsel.
4. Miscellaneous
(a) The Borrower hereby:
(i) acknowledges and reaffirms its obligations under, and confirms the validity and
enforceability of, the Credit Agreement and the other Loan Documents;
(ii) acknowledges that the waivers granted in Section 2 are limited to the specific
matters described in such Section and are not waivers of any other matter which may now
exist or hereafter occur;
(iii) represents and warrants that, after giving effect to this Amendment, there
exists no Default or Event of Default and no Default or Event of Default will result from
the consummation of the transactions described in this Amendment; and
(iv) represents and warrants that the representations and warranties contained in the
Credit Agreement (other than the representations and warranties made as of a specific date)
are true and correct in all material respects on and as of the date hereof.
(b) Each of the Guarantors, by signing this Amendment, hereby:
(i) acknowledges and consents to the execution of this Amendment; and
(ii) acknowledges and reaffirms its obligations under, and confirms the validity and
enforceability of, the Guarantee and Collateral Agreement and the other Loan Documents to
which it is a party.
(c) This Amendment may be executed in any number of counterparts and by facsimile,
each of which shall be an original and all of which shall constitute one agreement. It
shall not be necessary in making proof of this Amendment to produce or account for more
than one counterpart signed by the party to be charged.
(d) This Amendment is being delivered in and is intended to be performed in the State
of New York and shall be construed and enforceable in accordance with, and be governed by,
the internal laws of the State of New York without regard to principles of conflict of
laws.
(e) The Borrower agrees to pay the reasonable fees and expenses of the Administrative
Agent’s counsel in connection with this Amendment and any other fees due to the
Administrative Agent.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their proper and duly authorized officers as of the day and year first above written.
| BORROWER: HAIGHTS CROSS OPERATING COMPANY |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer |
|||
HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4
| GUARANTORS: HAIGHTS CROSS COMMUNICATIONS, INC. |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer |
|||
| SUNDANCE/NEWBRIDGE EDUCATIONAL PUBLISHING, LLC |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President | |||
| TRIUMPH LEARNING, LLC |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President | |||
| RECORDED XXXXX, XXX |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President | |||
| OAKSTONE PUBLISHING, LLC |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President | |||
HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER XX. 0
| XXX, XXX x/x/x XXXXXXX XXXXX PUBLISHERS, LLC |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President | |||
| THE CORIOLIS GROUP, LLC |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President | |||
| X X XXXXX LIMITED |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President | |||
| OPTIONS PUBLISHING, LLC |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President | |||
HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4
| THE BANK OF NEW YORK, as a Lender and as Administrative Agent |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | Xxxx Xxxxx | |||
| Title: | Vice President | |||
HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4
| BEAR XXXXXXX CORPORATE LENDING, INC., as a Lender and as Syndication Agent |
||||
| By: | /s/ Xxxxxx Xxxxxxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxxxxxx | |||
| Title: | Vice President | |||
HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4
| CIT LENDING SERVICES CORPORATION, as a Lender |
||||
| By: | /s/ Xxxxx Xxxxxxx | |||
| Name: | Xxxxx Xxxxxxx | |||
| Title: | VP | |||
HAIGHTS CROSS AMENDMENT XX. 0 XXX XXXXXX XX. 0
| XXX XXXXXX SENIOR LOAN FUND By: Xxx Xxxxxx Asset Management |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Director | |||
