Exhibit 4.1
AMENDMENT NO. 1 TO CREDIT AGREEMENT
DATED AS OF JUNE 22, 2000
SCHOLASTIC CORPORATION, a Delaware corporation, and XXXXXXXXXX XXX.,
a New York corporation (the "BORROWERS"), and CITIBANK, N.A., as administrative
agent (the "AGENT") for the Lenders (as defined in the Credit Agreement referred
to below), hereby agree as follows:
PRELIMINARY STATEMENTS
(1) The Borrowers are party to an Amended and Restated Credit
Agreement dated as of August 11, 1999 (the "CREDIT AGREEMENT") with the banks,
financial institutions and other institutional lenders party thereto and
Citibank, N.A., as Administrative Agent. Capitalized terms not otherwise defined
in this Amendment shall have the same meanings as specified in the Credit
Agreement.
(2) The Borrowers have requested that the Required Lenders agree to
amend the financial covenants in the Credit Agreement . The Lenders have
indicated their willingness to so agree on the terms and conditions of this
Amendment.
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement
is, effective as of the date of this Amendment and subject to the satisfaction
of the conditions precedent set forth in Section 2, hereby amended as follows:
(a) Section 5.02(b) is amended by deleting the reference to
"subsection (b) of this Section" and substituting therefor the reference
"subsection (c) of this Section".
(b) Section 5.02(e)(ii) is amended (i) by inserting
immediately after clause (C) a new clause (D) to read ", (D) 25% of the
stated value of any preferred stock converted to common equity" and (ii)
by relettering the clause (D) as clause (E).
(c) Section 5.03 is amended in full to read as follows:
SECTION 5.03. FINANCIAL COVENANTS. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrowers will:
(a) CONSOLIDATED DEBT RATIO. Maintain at all times a
Consolidated Debt Ratio of not more than the ratio set forth below
for each period set forth below:
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FISCAL QUARTER ENDING RATIO
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August 31, 2000 0.690 to 1.00
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November 30, 2000 0.660 to 1.00
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February 28, 2001 0.660 to 1.00
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May 31, 2001 0.625 to 1.00
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August 31, 2001 0.650 to 1.00
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November 30, 2001 0.625 to 1.00
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February 28, 2002 0.625 to 1.00
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May 31, 2002 and thereafter 0.600 to 1.00
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(b) CONSOLIDATED INTEREST COVERAGE RATIO. Maintain as at the
last day of each of their fiscal quarters a Consolidated Interest
Coverage Ratio of not less than the ratio set forth below for each
period set forth below:
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FISCAL QUARTER ENDING RATIO
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August 31, 2000 3.50 to 1.00
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November 30, 2000 3.50 to 1.00
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February 28, 2001 3.50 to 1.00
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May 31, 2001 3.30 to 1.00
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August 31, 2001 3.30 to 1.00
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November 30, 2001 3.50 to 1.00
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February 28, 2002 3.50 to 1.00
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May 31, 2002 and thereafter 3.50 to 1.00
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(d) Schedule 5.02(a) is amended in full to read as set forth
as Schedule A to this Amendment.
SECTION 2. CONDITIONS OF EFFECTIVENESS OF THIS AMENDMENT. This
Amendment shall become effective as of the date first above written when and
only if the Administrative Agent shall have received counterparts of this
Amendment executed by the Borrowers and the Required Lenders or, as to any of
the Lenders, advice satisfactory to the Administrative Agent that such Initial
Lender has executed this Amendment.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The
Borrowers represent and warrant as follows:
(a) Each Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of its incorporation.
(b) The execution, delivery and performance by each Borrower of this
Amendment or the Credit Agreement and the other Loan Documents, as amended
hereby, are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do
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not contravene (i) such Borrower's charter or by-laws or (ii) law or any
contractual restriction binding on or affecting such Borrower.
(c) This Amendment has been duly executed and delivered by each
Borrower. This Amendment and the Credit Agreement and the other Loan
Documents, as amended hereby, are the legal, valid and binding obligation
of each Borrower party thereto, enforceable against such Borrower in
accordance with their respective terms.
(d) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any
other third party is required for the due execution, delivery and
performance by any Borrower of this Amendment or the Credit Agreement or
the other Loan Documents, as amended hereby.
(e) There is no pending or threatened action, suit, investigation,
litigation or proceeding, including, without limitation, any Environmental
Claim, affecting the Holding Company or any of its Subsidiaries before any
court, governmental agency or arbitrator that (i) either would be
reasonably likely to have a Material Adverse Effect or (ii) purports to
adversely affect the legality, validity or enforceability of this
Amendment or the Credit Agreement and the other Loan Documents, as amended
hereby.
SECTION 4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE
LOAN DOCUMENTS. (a) On and after the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and the other Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
SECTION 5. COSTS AND EXPENSES. The Borrowers agree to pay on demand
all reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery and administration,
modification and amendment of this Amendment and the other documents to be
delivered hereunder (including, without limitation, the reasonable and
documented fees and expenses of counsel for the Administrative Agent with
respect hereto and thereto) in accordance with the terms of Section 8.04 of the
Credit Agreement.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 7. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SCHOLASTIC CORPORATION.
By /s/
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Name:
Title:
XXXXXXXXXX XXX..
By /s/
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Name:
Title:
CITIBANK, N.A.
By /s/
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Name:
Title:
THE CHASE MANHATTAN BANK
By /s/
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Name:
Title:
FLEET BANK, N.A.
By /s/
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Name:
Title:
SUMMIT BANK
By /s/
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Name:
Title:
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UMB BANK, N.A.
By /s/
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Name:
Title:
HSBC BANK USA
By /s/
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Name:
Title:
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SCHEDULE 5.02(a)
EXISTING LIENS AND ENCUMBRANCES
1) An Operating Overdraft Agreement was entered into on September 12, 0000
xxxxxxx Xxxxxxxxxx Xxxxxx Ltd. ("SCL") and Canadian Imperial Bank of
Commerce has a negative pledge that SCL cannot give security over any of
its assets to any other lender.
2) In 1983, the City of Jefferson, Missouri provided financing to Xxxxxxxxxx
Xxx. through the issuance of Industrial Revenue bonds to complete a
substantial addition to its national distribution center in Jefferson
City, Missouri. These Bonds were renegotiated in March 1992. Scholastic
has issued to the Bond Trustee an unconditional guarantee of principal and
interest. Land acquired in Jefferson City, Missouri, during f/y 1982, a
building at Scholastic's national distribution center and certain
equipment are pledged as security.
3) In December 1993, Scholastic entered into an agreement pursuant to which
the XXX provides Scholastic with financial assistance through the issuance
of XXX Xxxxx in connection with the purchase of furniture, fixtures and
equipment for use at Scholastic's headquarters at 000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx. In connection with such financial assistance, Scholastic has
granted the XXX a security interest in such furniture, fixtures and
equipment.
4) Liens given to the Screen Actors Guild ("SAG") in connection with the
production of The Magic School Bus property.
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