Exhibit 10.1
AMENDMENT NO. 7 AND WAIVER NO. 4
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 STEARNS 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 No. 6, dated
as of March 30, 2006 (and, 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/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Executive Vice President and
Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

         

HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4

            GUARANTORS:

HAIGHTS CROSS COMMUNICATIONS, INC.
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Executive Vice President and
Chief Financial Officer     

            SUNDANCE/NEWBRIDGE
EDUCATIONAL PUBLISHING, LLC
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Vice President     

            TRIUMPH LEARNING, LLC
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Vice President     

            RECORDED BOOKS, LLC
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Vice President     

            OAKSTONE PUBLISHING, LLC
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Vice President   

 

--------------------------------------------------------------------------------

 

         

HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4

            SNP, LLC f/k/a CHELSEA HOUSE
PUBLISHERS, LLC
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Vice President     

            THE CORIOLIS GROUP, LLC
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Vice President     

            W F HOWES LIMITED
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        Title:  
Vice President     

            OPTIONS PUBLISHING, LLC
      By:   /s/ Paul J. Crecca         Name:   Paul J. Crecca        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/ John Foote         Name:   John Foote        Title:   Vice
President   

 

--------------------------------------------------------------------------------

 

         

HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4

            BEAR STEARNS CORPORATE
LENDING, INC., as a Lender and as
Syndication Agent
      By:   /s/ Victor Bulzacchelli         Name:   Victor Bulzacchelli       
Title:   Vice President   

 

--------------------------------------------------------------------------------

 

         

HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4

            CIT LENDING SERVICES
CORPORATION, as a Lender
      By:   /s/ Scott Ploshay         Name:   Scott Ploshay        Title:   VP 
 

 

--------------------------------------------------------------------------------

 

         

HAIGHTS CROSS AMENDMENT NO. 7 AND WAIVER NO. 4

            VAN KAMPEN SENIOR LOAN FUND
By: Van Kampen Asset Management       By:   /s/ Darvin D. Pierce         Name:  
Darvin D. Pierce        Title:   Executive Director