mm06-1010_8ke102.htm


     

    EXHIBIT 10.2

    
 

    
       

      
        
          EXECUTION
VERSION

          


        

      

    


    AMENDMENT NO. 7 TO CREDIT
AGREEMENT

     

    This
AMENDMENT NO. 7 TO CREDIT AGREEMENT (this “Amendment”) dated as
of June 9, 2010 by and among ARCHIPELAGO LEARNING, LLC (formerly known as Study
Island, LLC), a Delaware limited liability company (“Borrower”), the other
persons designated as a “Credit Party” on the signature pages hereof, the
financial institutions designated as “Existing Lenders” on the signature pages
hereof (collectively, the “Consenting Lenders”),
the financial institutions designated as a “Supplemental Term Loan Lender” on
the signature pages hereof, the financial institutions designated as a
“Supplemental Revolving Lender” on the signature pages hereof and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation (“Agent”), for itself
as a Lender (including as Swingline Lender) and L/C Issuer and as Agent for
Lenders.  Unless otherwise specified herein, capitalized terms used in
this Agreement shall have the meanings ascribed to them in the Credit Agreement
(as hereinafter defined).

     

    R E C I T
A L S:

     

    WHEREAS,
Borrower, the other Credit Parties, Agent and Lenders have entered into that
certain Credit Agreement, dated as of November 16, 2007 (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit
Agreement”); and

     

    WHEREAS,
Borrower, Agent and Lenders have agreed to amend certain terms of the Credit
Agreement as described herein.

     

    NOW
THEREFORE, in consideration of the mutual execution hereof and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

     

    Section
1. Amendments to Credit
Agreement.  Immediately upon the satisfaction of each of the
applicable conditions precedent set forth in Section 3 of this Amendment, the
following amendments to the Credit Agreement shall become effective as of the
date hereof:

     

    (a) Section
1.1(a) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

    “(a)(i)
it has heretofore made an initial Loan to Borrower on the Closing Date (the
“Initial Term Loan”), and/or (ii) to make a supplemental Loan to Borrower on the
Seventh Amendment Effective Date (the “Supplemental Term Loan” and, collectively
with the Initial Term Loan, the “Term Loan”) in the principal amounts not to
exceed its Commitment as set forth on Schedule 1.1(a)
attached to this Agreement on the Closing Date and the amended and restated
Schedule 1.1(a)
attached to the Seventh Amendment hereto, as applicable (its “Term Loan
Commitment”).  In addition to reflecting each Lender’s Term Loan
Commitment with respect to the Supplemental Term Loan, the amended and restated
Schedule 1.1(a)
attached to the Seventh Amendment reflects the outstanding principal amount of
the Term Loan other than the Supplemental Term Loan held by each Term Loan
Lender as of the Seventh Amendment Effective Date; and”.

     

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

     

     

    (b) Section
1.1(b) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

    “(b)           to
make Loans to the Borrower (each such Loan, a “Revolving Loan”) from time to
time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender’s name in Schedule 1.1(b) under
the heading “Revolving Loan Commitment” (such amount as the same may have been
reduced or increased during the period from the Closing Date to the Seventh
Amendment Effective Date as a result of one or more assignments pursuant to
Section 9.9 or increased on the Seventh Amendment Effective Date as the same may
be reduced or increased during the period after the Closing Date as a result of
one or more assignments pursuant to Section 9.9, being referred to herein as
such Lender’s “Revolving Loan Commitment”); provided, however, that, after
giving effect to any Borrowing of Revolving Loans, the aggregate principal
amount of all outstanding Revolving Loans shall not exceed the Maximum Revolving
Loan Balance.  The “Maximum Revolving Loan Balance” from time to time
will be the Aggregate Revolving Loan Commitment then in effect less the sum of
(x) the aggregate amount of Letter of Credit Obligations plus (y) outstanding
Swing Loans.  In addition to reflecting the Supplemental Revolving
Loan Commitment (as defined in the Seventh Amendment) of each Supplemental
Revolving Lender (as defined in the Seventh Amendment), the amended and restated
Schedule 1.1(b)
attached to the Seventh Amendment reflects each Revolving Lender’s Revolving
Loan Commitment as of the Seventh Amendment Effective Date after giving effect
to the transactions contemplated thereby.”.

     

    (c) Section
1.6(a) of the Credit Agreement is hereby amended by deleting the reference to
“Alternate Base Rate” appearing therein and substituting “Base Rate” in its
place.

     

    (d) Section
1.6(c)(ii) of the Credit Agreement is hereby amended by deleting the reference
to “ABR Revolving Loans” appearing therein and substituting “Base Rate Revolving
Loans” in its place.

     

    (e) Section
1.7(a) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

    “(a)           Termination of
Commitments.  The Term Loan Commitments shall automatically
terminate on the respective dates on which the applicable Term Loans are
advanced.  The Revolving Loan Commitments, the Swingline Commitment
and the commitment to issue Letters of Credit shall automatically terminate on
the Revolving Termination Date.”.

     

    (f) Section
1.9 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

     

     

    “Amortization of Term
Borrowings.  (a) The principal amount of the Initial Term Loan
shall be paid in installments on the dates and in the respective amounts shown
below (as adjusted from time to time pursuant to Section
1.10(g)):

    


    
      	
              Date of
      Payment

            	 	
              Amount of
      Term

              Loan
      Payment

            	 
	 
      	 	 	 
	
              June
      30, 2010

            	 	$	175,000	 
	
              September
      30, 2010

            	 	$	175,000	 
	
              December
      31, 2010

            	 	$	175,000	 
	
              March
      31, 2011

            	 	$	175,000	 
	
              June
      30, 2011

            	 	$	175,000	 
	
              September
      30, 2011

            	 	$	175,000	 
	
              December
      31, 2011

            	 	$	175,000	 
	
              March
      31, 2012

            	 	$	175,000	 
	
              June
      30, 2012

            	 	$	175,000	 
	
              September
      30, 2012

            	 	$	175,000	 
	
              December
      31, 2012

            	 	$	175,000	 
	
              March
      31, 2013

            	 	$	175,000	 
	
              June
      30, 2013

            	 	$	175,000	 
	
              September
      30, 2013

            	 	$	175,000	 
	
              Term
      Loan Maturity Date

            	Entire
      remaining amount


    

    


     

    (b) The
principal amount of the Supplemental Term Loan shall be paid in installments on
the dates and in the respective percentages shown below (as adjusted from time
to time pursuant to Section
1.10(g)):

    


    
      	
              Date of
      Payment

            	 	
              Percentage of Supplemental
      Term Loan Made on the Seventh Amendment Effective
    Date

            	 
	 
      	 	 
      	 
	
              June
      30, 2010

            	 	
              0.25%

            	 
	
              September
      30, 2010

            	 	
              0.25%

            	 
	
              December
      31, 2010

            	 	
              0.25%

            	 
	
              March
      31, 2011

            	 	
              0.25%

            	 
	
              June
      30, 2011

            	 	
              0.25%

            	 
	
              September
      30, 2011

            	 	
              0.25%

            	 
	
              December
      31, 2011

            	 	
              0.25%

            	 
	
              March
      31, 2012

            	 	
              0.25%

            	 
	
              June
      30, 2012

            	 	
              0.25%

            	 
	
              September
      30, 2012

            	 	
              0.25%

            	 
	
              December
      31, 2012

            	 	
              0.25%

            	 
	
              March
      31, 2013

            	 	
              0.25%

            	 
	
              June
      30, 2013

            	 	
              0.25%

            	 
	
              September
      30, 2013

            	 	
              0.25%

            	 


    

    


     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

     

     

    
      
        	
                Date of
      Payment

              	 	
                Percentage of Supplemental
      Term Loan Made on the Seventh Amendment Effective
    Date

              	 
	 
      	 	 
      	 
	
                Term
      Loan Maturity Date

              	 	
                Entire
      remaining amount”

              	 


      

    

     

    (g) Section
1.10(b)(iv) of the Credit Agreement is hereby amended and restated in entirety
to read as follows:

     

    “(iv)           In
the event that the aggregate face amount of Letters of Credit exceeds the L/C
Sublimit, Borrower shall, without notice or demand, immediately replace
outstanding Letters of Credit or cash collateralize outstanding Letters of
Credit in accordance herewith, in an aggregate amount sufficient to eliminate
such excess.”.

     

    (h) Section
1.10(g) of the Credit Agreement is hereby amended and restated in entirety to
read as follows:

     

    “(g)           Application of
Prepayments.  Prior to any optional or mandatory prepayment
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and, if applicable, shall specify such selection in the notice of such
prepayment pursuant to Section 1.10(h), subject to the provisions of this
Section 1.10(g).  Any optional prepayments of Term Loans pursuant to
Section 1.10(a) shall be applied pro rata among the tranches of Term Loans and
then to the scheduled payments of such Term Loans as directed by the
Borrower.  Any mandatory prepayments pursuant to Section 1.10(c), (d),
(e) or (f) shall be applied first, to the prepayment of the Term Loans on a pro
rata basis among the tranches of Term Loans until all Term Loans are paid in
full, and second, to the prepayment of outstanding Revolving Loans until paid in
full (without a permanent reduction in the Revolving Loan
Commitments).  Any prepayments of Term Loans pursuant to Section
1.10(c), (d), (e) or (f) shall be applied to reduce scheduled installments
required under Section 1.9 in direct order of maturity.

     

    Amounts
to be applied pursuant to this Section 1.10 to the prepayment of Term Loans and
Revolving Loans shall be applied, as applicable, first, to reduce outstanding
Base Rate Term Loans and Base Rate Revolving Loans, respectively.  Any
amounts remaining after each such application shall be applied to prepay LIBOR
Term Loans or LIBOR Revolving Loans, as applicable.”.

     

    (i) Section
1.17(c) of the Credit Agreement is hereby amended by deleting the reference to
“this clause (iii)” appearing therein and substituting “this subsection (c)” in
its place.

     

    (j) Section
1.17(d) of the Credit Agreement is hereby amended by deleting the reference to
“clause (iii) above” appearing therein and substituting “subsection (c) above”
in its place.

     

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

     

     

    (k) Section
1.18(a)(A)(ii) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

     

    “(ii) the
Letter of Credit Obligations for all Letters of Credit would exceed the L/C
Sublimit;”.

     

    (l) A new
Section 1.20 shall be added to the Credit Agreement to read in its entirety as
follows:

     

    “1.20           Increase in
Commitments.

     

    (a)  Request.  So
long as no Event of Default is continuing or would result after giving pro forma
effect to the funding thereof, Borrower may by written notice to the Agent prior
to November 1, 2012 request an increase to the Term Loan Commitments (each, an
“Additional Term Loan
Commitment”); provided, that the minimum Additional Term Loan Commitment
shall be $5,000,000, and after giving effect to all such Additional Term Loan
Commitments, the aggregate Additional Term Loan Commitment shall not exceed
$25,000,000; provided, further, that the Borrower shall be in compliance with
the covenants contained in Article VI (after giving pro forma effect to the
Additional Incremental Term Loans (as defined below) to be made under such
Additional Term Loan Commitment and the application of the proceeds thereof) as
of the last day of the most recently completed fiscal quarter for which
financial statements have been delivered in accordance with Section 4.1(b)(i)
hereof prior to the applicable Additional Term Loan Effective
Date.  Such notice shall specify the amount of the proposed Additional
Term Loan Commitment and the date (the “Additional Term Loan
Effective Date”) on which Borrower proposes that such Additional Term
Loan Commitment shall be effective, which shall be a date not less than 10
Business Days after the date on which such notice is delivered to the Agent (or
such shorter period acceptable to the Agent in its discretion).  The
Additional Term Loan Commitment may be offered to existing Lenders and/or new
Lenders, subject to the standards for Sales of Loans set forth in Section
9.9(b); provided, that no Lender shall be obligated to increase its Term Loan
Commitment.

     

    (b)  Conditions.  Each
Additional Term Loan Commitment shall become effective, as of such Additional
Term Loan Effective Date; provided that each of the conditions set forth in
Sections 2.2(b) and (c) shall have been satisfied.

     

    (c)  Terms of Additional Term
Loan Commitments.  Terms and provisions of Loans made pursuant
to each Additional Term Loan Commitment (“Additional Incremental Term
Loans”), including without limitation amortization and maturity date but
excluding the effective interest rate, shall be identical to the Supplemental
Term Loan; provided that the effective interest rate of the Additional
Incremental Term Loans (taking into account all upfront, closing and similar
fees and original issue discount) shall not be greater than the effective
interest rate with respect to the Supplemental Term Loan on the Additional Term
Loan Effective Date (taking into account all arrangement fees, upfront, closing
and similar fees and original issue discount) plus 25 basis points per annum
unless (i) the effective interest rate with respect to the Supplemental Term
Loan is increased so that the effective interest rate applicable to the
Additional Incremental Term 

     

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

     

    Loans
does not exceed the effective interest rate then applicable to the Supplemental
Term Loan by more than 25 basis points per annum and (ii) the effective interest
rate with respect to the Revolving Loans and the other Term Loans is increased
by an amount equal to the increase in the effective interest rate applicable to
the Supplemental Term Loan made pursuant to the preceding clause
(i).

     

    The
Additional Term Loan Commitments shall be effected by an Increase Joinder
executed by Borrower, the Agent and each Lender making such increased or new
Commitment, in form and substance satisfactory to each of them.  The
Increase Joinder may, without the consent of any other Lenders, effect such
ministerial amendments to this Agreement and the other Loan Documents as may be
reasonably necessary or appropriate, in the opinion of the Agent, to effect the
provisions of this Section
1.20.  In addition, unless otherwise specifically provided
herein, all references in Loan Documents to Term Loans shall be deemed, unless
the context otherwise requires, to include the Additional Incremental Term
Loans, respectively, made pursuant to this Section
1.20.

     

    (d)  Making of Additional
Incremental Term Loans.  On each Additional Term Loan Effective
Date on which an Additional Term Loan Commitment is effective, subject to the
satisfaction of the foregoing terms and conditions, each Lender of such
Additional Incremental Term Loan shall make an Additional Incremental Term Loan
to Borrower in an amount equal to its Additional Term Loan
Commitment.

     

    (e)  Equal and Ratable
Benefit.  From and after each Additional Term Loan Effective
Date, the Loans and Commitments established pursuant to this paragraph shall
constitute Loans and Commitments under, and shall be entitled to all the
benefits afforded by, this Agreement and the other Loan Documents, and shall,
without limiting the foregoing, benefit equally and ratably from the guarantees
and security interests created by the Guaranty and Security
Agreement.  The Credit Parties shall take any actions reasonably
required by the Agent to ensure and/or demonstrate that the Liens and security
interests granted by the Guaranty and Security Agreement continue to be
perfected under the UCC or otherwise after giving effect to the establishment of
any such new Commitments.”

     

                          (m)           Section
3.11 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “3.11           Use of
Proceeds.  Borrower (a) has used the proceeds of the Initial
Term Loan to (i) make a distribution to Holdings on the Closing Date to pay a
portion of the Closing Dividend and (ii) pay related fees and expenses and the
costs and expenses required to be paid pursuant to Section 2.1, (b) will
use the Supplement Term Loan to partially finance the Education City
Acquisition, (c) will use the Revolving Loans and Swing Loans after the Closing
Date for working capital needs and general corporate purposes of Borrower and
its Subsisidiaries and (d) will use the Additional Incremental Term Loans to
finance Permitted Acquisitions.”

     

    (n)           Section
4.1(a) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

     

    “(a)           Annual
Reports.  As soon as available and in any event within 120 days
after the end of each fiscal year, (i) the consolidated and consolidating
balance sheet of Holdings as of the end of such fiscal year (or, in the case of
the fiscal year ending December 31, 2007, for the period from January 10, 2007
to December 31, 2007) and related consolidated statements of income, cash flows
and stockholders’ equity for such fiscal year and related consolidating
statements of income and cash flows, and for each such fiscal year ending on or
after December 31, 2009 in comparative form with such financial statements as of
the end of, and for, the preceding fiscal year, and notes thereto, accompanied,
in the case of the consolidated financial statements only, by an opinion of
Deloitte & Touche, LLP or other independent public accountants of recognized
standing (which opinion shall not be qualified as to scope or contain any going
concern or other similar qualification), stating that such consolidated
financial statements fairly present, in all material respects, the consolidated
financial condition, results of operations and cash flows of Holdings and its
Subsidiaries as of the dates and for the periods specified in accordance with
GAAP, and (ii) for each fiscal year ending on or after December 31, 2008, a
narrative report and management’s discussion and analysis of the financial
condition and results of operations for such fiscal year, as compared to
budgeted amounts and, for each such fiscal year ending on or after December 31,
2009, the previous fiscal year (it being understood that the furnishing of an
annual report of a parent holding company of Holdings on Form 10-K for such year
(if any) so long as such parent holding company has no significant assets or
operations other than its ownership of Net Proceeds from its IPO and any
follow-on offering and Holdings and its Subsidiaries as filed with the SEC will
satisfy the  Credit Parties’ obligation to deliver consolidated
financial statements under Section 4.1(a)(i)
with respect to such fiscal year and delivery obligations under Section 4.1(a)(ii)
with respect to such fiscal year).”.

     

    (o)           Section
4.1(b) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

    “(b)           Quarterly
Reports.  As soon as available and in any event within 45 days
after the end of each fiscal quarter, (i) the consolidated and consolidating
balance sheet of Holdings as of the end of such fiscal quarter and related
consolidated and consolidating statements of income and cash flows for such
fiscal quarter and for the then elapsed portion of the fiscal year (or, in the
case of the fiscal quarter ending December 31, 2007, the  period from
January 10, 2007 through December 31, 2007) and for each such fiscal quarter
ending after the first anniversary of the Closing Date, in comparative form with
the consolidated and consolidating statements of income and cash flows for the
comparable periods in the previous fiscal year, accompanied by a certificate of
a Financial Officer stating that such financial statements fairly present, in
all material respects, the financial condition, results of operations and cash
flows of Holdings and its Subsidiaries as of the date and for the periods
specified in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments and the absence of footnotes, and (ii) with respect
to each of the first three fiscal quarters in each fiscal year, a narrative
report and management’s discussion and analysis of the financial condition and
results of operations for such fiscal quarter and the then elapsed portion of
the fiscal year, as compared to budgeted amounts and, for each such fiscal
quarter ending after the first anniversary of the Closing Date, to the
comparable periods in the previous fiscal 

     

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    year (it
being understood that the furnishing of a quarterly report of a parent holding
company of Holdings on Form 10-Q for such quarter (if any) so long as such
parent holding company has no significant assets or operations other than its
ownership of Net Proceeds from its IPO and any follow-on offering and Holdings
and its Subsidiaries as filed with the SEC will satisfy the  Credit
Parties’ obligation to deliver consolidated financial statements under Section 4.1(b)(i)
with respect to such fiscal quarter and delivery obligations under Section 4.1(b)(ii)
with respect to such fiscal quarter).”.

     

    (p)           Section
4.1(c) of the Credit Agreement is hereby amended by deleting each reference to
“consolidated” appearing therein and substituting “consolidated and
consolidating” in each such place.

     

    (q)           Section
5.4(a) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(a)           Loans
by Borrower or any Credit Party directly to Archipelago Learning Holdings UK,
Ltd. made on the Seventh Amendment Effective Date to consummate the Education
City Acquisition, and any Permitted Refinancing thereof;”.

     

    (r)           Section
5.4(k) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(k)           so
long as no Event of Default has occurred and is continuing, other Investments
and Acquisitions in an aggregate amount not to exceed $10,000,000 plus the
Available Amount plus the Available Cash; provided, that Acquisitions and
Investments, in each case, which utilize any portion of the Available Amount and
constitute a Potential Permitted Acquisitions must satisfy all of the conditions
set forth in the definition of “Permitted Acquisition” other than condition (f)
thereof”.

    


    (s)           Section
5.7(a) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(a)           Investments
and Acquisitions in compliance with Section 5.4;”.

     

    (t)           Section
5.7(b) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(b)           the
TeacherWeb Acquisition and the Education City Acquisition;”.

     

    (u)           Section
5.11 of the Credit Agreement is hereby amended by (i) deleting “or” appearing at
the end of subsection (a) thereof, (ii) deleting “.” appearing at the end of
subsection (b) thereof and substituting “; or” in its place, and (iii) adding a
new subsection (c) thereto to read in its entirety as follows:

     

    “(c)           make
any earn-out payment (i) to the sellers in the Education City Acquisition if an
Event of Default under Sections 7.1(a) or 7.1(b) has occurred and is continuing
and (ii) to the sellers in any other Acquisition if an Event of Default has
occurred and is continuing or would result from making such earn-out
payment.”.

     

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

     

     

    (v)           Section
11.1 of the Credit Agreement is hereby amended by adding the following
references to the chart therein in their appropriate alphabetical
order:

     

    
    

     

    
      	 	“Additional Incremental Term Loans” 	1.20(c) 
	 	“Additional Term Loan Commitment” 	1.20(a) 
	 	“Additional Term Loan Effective Date” 	1.20(a) 
	 	“Initial Term Loan” 	1.1(a) 
	 	“Potential Permitted Acquisition” 	“Permitted Acquisition” 
	 	“Supplemental Term Loan” 	1.1(a) 


    

     

    (w)           Section
11.1 of the Credit Agreement is hereby amended by deleting the following
reference to the chart therein:

     

    “L/C
Sublimit”                                                                                     1.18

    


    (x)           The
definition “Consolidated EBITDA” set forth in Section 11.1 of the Credit
Agreement is hereby amended by adding a new sentence to the end thereof to read
as follows:

     

    “Notwithstanding
the foregoing, for the 3 month fiscal periods ending on a date identified in the
table below, Consolidated EBITDA for such fiscal period with respect to
EducationCity Inc. and Archipelago International Holdings, Inc. shall be deemed
to have been the amount set forth opposite such date:

     

               Fiscal
Period
Ending                                            Consolidated
EBITDA

     

               June
30,
2009                                                    
$1,946,492

     

               September
30,
2009                                           $1,298,767

     

               December
31,
2009                                           
$1,318,201

     

               March
31,
2010                                                 
$2,716,794.”

     

    (y)           Section
11.1 of the Credit Agreement is hereby amended by the addition of the following
definitions, which shall be inserted in their proper alphabetical
order:

     

    “Education
City Acquisition” means the acquisition of all of the Equity Interests of
Educationcity Ltd. pursuant to the terms of the Share Purchase Agreement, dated
as of the Seventh Amendment Effective Date, by and among Archipelago Learning,
Inc., Archipelago Learning Holdings UK, Ltd., and the Persons party thereto as
Sellers.

    


    “L/C
Sublimit” means $2,000,000.

    


    “SEC”
means the U.S. Securities and Exchange Commission or any successor
agency.

     

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

     

    


    “Seventh
Amendment” means Amendment No. 7 to Credit Agreement dated as of June 9, 2010
among the Borrower, the Agent and the Lenders signatory thereto.

    


    “Seventh
Amendment Effective Date” means the date on which the conditions set forth in
Section Three of the Seventh Amendment are waived or satisfied.

    


    “Term
Loan Lender” means each Lender with a Term Loan Commitment (or, if the Term Loan
Commitments have terminated, who holds Term Loans).

    


    (z)           The
following definitions in Section 11.1 of the Credit Agreement are hereby amended
and restated in their entirety to read as follows:

     

    “Aggregate
Revolving Loan Commitment” means the combined Revolving Loan Commitments of the
Lenders, which shall be in the amount of $10,000,000 on the Closing Date and
$20,000,000 on the Seventh Amendment Effective Date, as such amount may be
reduced from time to time pursuant to this Agreement.”

    


    “Applicable
Fee” means:

     

    (a)           for
the period commencing on the Closing Date through the fifth (5th)
Business Day after the date on which financial statements for March 31, 2008 are
delivered, 0.50%;

     

    (b)           thereafter
through the Seventh Amendment Effective Date, the Applicable Fee shall equal the
applicable fee in effect from time to time determined as set forth below based
upon the applicable Leverage Ratio then in effect pursuant to the appropriate
column under the table below:

     

    


    
      	 	
              Leverage
      Ratio

            	
              Applicable
      Fee

            	 
	 	
              Greater
      than or equal to 4.25 to 1

            	
              0.50%

            	 
	 	 	 	 
	 	
              Less
      than 4.25 to 1 and greater than or equal to 3.75 to 1

            	
              0.50%

            	 
	 	 	 	 
	 	
              Less
      than 3.75 to 1 and greater than or equal to 3.00 to 1

            	
              0.375%

            	 
	 	 	 	 
	 	
              Less
      than 3.00 to 1

            	
              0.25%

            	 


    

     

     

    
 

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

     

     

    The
Applicable Fee shall be adjusted from time to time upon delivery to the Agent of
the quarterly financial statements for each fiscal quarter required to be
delivered pursuant to Section 4.1 hereof accompanied by a written calculation of
the Leverage Ratio certified on behalf of the Borrower by a Responsible Officer
as of the end of the fiscal quarter for which such financial statements are
delivered.  If such calculation indicates that the Applicable Fee
shall increase or decrease, then on the fifth (5th)
Business Day following the date of delivery of such financial statements and
written calculation the Applicable Fee shall be adjusted in accordance
therewith; provided, however,
that if the Borrower shall fail to deliver any such financial statements for any
such fiscal quarter by the date required pursuant to Section 4.1, then, at the
Agent’s election, effective as of the fifth (5th)
Business Day following the date on which such financial statements were to have
been delivered, and continuing through the fifth (5th)
Business Day following the date (if ever) when such financial statements and
such written calculation are finally delivered, the Applicable Fee shall be
conclusively presumed to equal the highest Applicable Margin specified in the
pricing table set forth above; and

     

    (c)           thereafter,
0.50%.

     

               “Applicable
Margin” means:

     

    (a)           for
the period commencing on the Closing Date through the fifth (5th)
Business Day after the date on which financial statements for March 31, 2008 are
delivered: (x) if a Base Rate Loan, three percent (3.00%) per annum and (y) if a
LIBOR Rate Loan, four percent (4.00%) per annum; and

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

     

     

    (b)           thereafter
through the Seventh Amendment Effective Date, the Applicable Margin shall equal
the applicable LIBOR margin or Base Rate margin in effect from time to time
determined as set forth below based upon the applicable Leverage Ratio then in
effect pursuant to the appropriate column under the table below:

     

    


    
      	 	
              Revolving Loans, Swing Loans
      and Term Loan

            	 
	 	
              Leverage
      Ratio

            	
              LIBOR
      Margin

            	
              Base Rate
      Margin

            	 
	 	 	 	 	 
	 	
              Greater
      than or equal to 4.25 to 1

            	
              4.00%

            	
              3.00%

            	 
	 	 	 	 	 
	 	
              Less
      than 4.25 to 1 and greater than or equal to 3.75 to 1

            	
              3.75%

            	
              2.75%

            	 
	 	 	 	 	 
	 	
              Less
      than 3.75 to 1 and greater than or equal to 3.00 to 1

            	
              3.50%

            	
              2.50%

            	 
	 	 	 	 	 
	 	
              Less
      than 3.00 to 1

            	
              3.25%

            	
              2.25%

            	 


    

     

    The
Applicable Margin shall be adjusted from time to time upon delivery to the Agent
of the quarterly financial statements for each fiscal quarter required to be
delivered pursuant to Section 4.1 hereof accompanied by a written calculation of
the Leverage Ratio certified on behalf of the Borrower by a Responsible Officer
as of the end of the fiscal quarter for which such financial statements are
delivered.  If such calculation indicates that the Applicable Margin
shall increase or decrease, then on the fifth (5th)
Business Day following the date of delivery of such financial statements and
written calculation the Applicable Margin shall be adjusted in accordance
therewith; provided, however,
that if the Borrower shall fail to deliver any such financial statements for any
such fiscal quarter by the date required pursuant to Section 4.1, then, at the
Agent’s election, effective as of the fifth (5th)
Business Day following the date on which such financial statements were to have
been delivered, and continuing through the fifth (5th)
Business Day following the date (if ever) when such financial statements and
such written calculation are finally delivered, the Applicable Margin shall be
conclusively presumed to equal the highest Applicable Margin specified in the
pricing table set forth above.  Notwithstanding anything herein to the
contrary, Swing Loans may not be LIBOR Rate Loans.

     

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

     

     

    (c)           thereafter,
the Applicable Margin shall equal the applicable LIBOR margin or Base Rate
margin in effect from time to time determined as set forth below based upon the
applicable Leverage Ratio then in effect pursuant to the appropriate column
under the table below:

     

    


    
      	 	
              All Loans (other than the
      Additional Incremental Term Loans)

            	 
	 	
              Leverage
      Ratio

            	
              LIBOR
      Margin

            	
              Base Rate
      Margin

            	 
	 	 	 	 	 
	 	
              Greater
      than or equal to 4.25 to 1

            	
              4.50%

            	
              3.50%

            	 
	 	 	 	 	 
	 	
              Less
      than 4.25 to 1 and greater than or equal to 3.75 to 1

            	
              4.25%

            	
              3.25%

            	 
	 	 	 	 	 
	 	
              Less
      than 3.75 to 1 and greater than or equal to 3.00 to 1

            	
              4.00%

            	
              3.00%

            	 
	 	 	 	 	 
	 	
              Less
      than 3.00 to 1

            	
              3.75%

            	
              2.75%

            	 


    

     

    The
Applicable Margin shall be adjusted from time to time upon delivery to the Agent
of the quarterly financial statements for each fiscal quarter required to be
delivered pursuant to Section 4.1 hereof accompanied by a written calculation of
the Leverage Ratio certified on behalf of the Borrower by a Responsible Officer
as of the end of the fiscal quarter for which such financial statements are
delivered.  If such calculation indicates that the Applicable Margin
shall increase or decrease, then on the fifth (5th)
Business Day following the date of delivery of such financial statements and
written calculation the Applicable Margin shall be adjusted in accordance
therewith; provided, however,
that if the Borrower shall fail to deliver any such financial statements for any
such fiscal quarter by the date required pursuant to Section 4.1, then, at the
Agent’s election, effective as of the fifth (5th)
Business Day following the date on which such financial statements were to have
been delivered, and continuing through the fifth (5th)
Business Day following the date (if ever) when such financial statements and
such written calculation are finally delivered, the Applicable Margin shall be
conclusively presumed to equal the highest Applicable Margin specified in the
pricing table set forth above.  Notwithstanding anything herein to the
contrary, Swing Loans may not be LIBOR Rate Loans.

     

    “Available
Amount” means, on any date of determination, an amount, not less than zero,
equal to (a) the sum of (i) an amount, not less than zero, determined on a
cumulative basis equal to the amount of Excess Cash Flow for all Excess Cash
Flow Periods that is not (and, in the case of any fiscal year where the
respective required date of prepayment has not yet occurred pursuant to Section 1.10(f), will
not on such date of required prepayment be) required to be applied in accordance
with Section
1.10(f), plus (ii) the net proceeds
from Excluded Equity Issuances after the Seventh Amendment 

     

     

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

     

    Effective
Date, plus (iii) 100%
of the aggregate amount of cash and the fair market value, as determined in good
faith by the Borrower, of marketable securities contributed to the capital of
the Borrower following the Seventh Amendment Effective Date (other than by a
Restricted Subsidiary), plus (iv) 100% of the
aggregate amount of Net Proceeds not required to be applied to the Loans
pursuant to Section
1.10 and the fair market value, as determined in good faith by the
Borrower, of marketable securities received by the Borrower or a Restricted
Subsidiary from the sale or other disposition (other than to the Borrower or a
Restricted Subsidiary) of acquisitions and investments made by the Borrower or
its Restricted Subsidiaries pursuant to Section 5.4(k) or
Section 5.7(c)
(up to an amount equal to the amount deducted from the Available Amount when
these investments were initially made), and any dividends, distributions, return
of capital, interest, fees, premium, income, profits and other amounts realized
from such acquisitions or investments by the Borrower or its Restricted
Subsidiaries, in each case after the Seventh Amendment Effective Date (excluding
such amounts as are included in Consolidated EBITDA while such investments are
owned), plus (v) an
amount equal to the Net Proceeds of all other Asset Sales and Events of Loss
after the Seventh Amendment Effective Date that are not required to be applied
(whether as a prepayment or reinvestment) in accordance with Sections 1.10(c) or
(e), plus (vi) in the case of the
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary after the
Seventh Amendment Effective Date (which, for purposes hereof, shall be deemed to
include the merger, consolidation or similar transaction of an Unrestricted
Subsidiary into the Borrower or a Restricted Subsidiary, so long as the Borrower
or a Restricted Subsidiary is the surviving entity, and the transfer of all or
substantially all of the assets of an Unrestricted Subsidiary to the Borrower or
a Restricted Subsidiary), the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Borrower in good faith at the time
of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary,
minus (b) the portion
of the Available Amount previously utilized pursuant to Sections 5.4(k),
5.7(c), 5.8(g) and 5.11(a), minus (c) the portion of the
$50,000,000 basket previously utilized pursuant to clause (f)(i) of the
definition of Permitted Acquisition.

     

    “Consolidated
Fixed Charges” shall mean, for any Test Period, Consolidated Interest Expense
for such Test Period, adjusted by adding (without duplication):

     

    (a)   
        the aggregate amount of Capital
Expenditures for such Test Period;

     

    (b)    
       Consolidated Tax Expense paid or
payable in cash with respect to such Test Period (net of any cash refund in
respect of income taxes actually received with respect to such period) and,
without duplication, all Permitted Tax Distributions made during such
period;

     

    (c)  
         the principal amount of
all scheduled amortization payments on all Indebtedness (including the principal
component of all Capital Lease Obligations, but excluding such amortization
payments on Indebtedness incurred to finance Capital Expenditures included in
clause (b) above in such period or any prior period) of Borrower and its
Restricted Subsidiaries for such period (as determined on the first day of the
respective period);

     

     

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

     

     

    (d)        
   management fees and charges permitted under Section 5.8(h) and
added back in the calculation of Consolidated EBITDA for such Test
Period;

     

    (e)  
         the product of (i) all
dividend payments on any series of Disqualified Capital Stock of Holdings or any
of its Restricted Subsidiaries (other than dividend payments to Holdings or any
of its Restricted Subsidiaries) made during such period multiplied by (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
Holdings and its Restricted Subsidiaries, expressed as a decimal;

     

    (f)     
      the product of (i) all cash dividend
payments (other than dividends permitted by Sections 5.8(d), (e) or (k)) on any
common or Preferred Stock (other than Disqualified Capital Stock) of Holdings or
any of its Restricted Subsidiaries (other than dividend payments to Holdings or
any of its Restricted Subsidiaries) made during such period multiplied by (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
Holdings and its Restricted Subsidiaries, expressed as a decimal;
and

     

    (g)   
        the principal amount of all earn-out
and similar payments with respect to the Education City Acquisition made during
such period unless the aggregate amount of the baskets permitted to be utilized
pursuant to clause (f) of the definition of Permitted Acquisition have been
permanently reduced by such principal amount.

     

    For
purposes of determining compliance with the Fixed Charge Coverage Ratio in
Section 6.3 for the fiscal quarters ending March 31, 2008, June  30,
2008 and September 30, 2008, Consolidated Fixed Charges shall be measured from
January 1, 2008, and shall multiplied by 4.0, 2.0 and 1.333,
respectively.

     

                  
“Excess Cash Flow Period” shall mean each fiscal year of Borrower commencing
with the fiscal year ended December 31, 2010.

     

    “Permitted
Acquisition” means any Acquisition by (i) the Borrower (or any Wholly-Owned
Subsidiary of the Borrower) of all or substantially all of the assets, or any
business or division, of a target company, which assets are located in the
United States (including commonwealths and territories thereof), Canada, the
United Kingdom, Australia, New Zealand or a country in the European Union or
(ii) the Borrower (or any Wholly-Owned Subsidiary of the Borrower) of 100% of
the Equity Interests of a target company organized under the laws of any State
in, or commonwealth or territory of, the United States, the District of
Columbia, Canada, the United Kingdom, Australia, New Zealand or a country in the
European Union (in each case, a “Potential Permitted Acquisition”) to the extent
that each of the following conditions shall have been satisfied:

     

    (a)    
  to the
extent the Acquisition will be financed in whole or in part with the proceeds of
any Loan, the conditions set forth in Section 2.2 shall have been
satisfied;

     

    (b)   the
Borrower shall have furnished to the Agent and Lenders at least five (5)
Business Days (or such shorter period acceptable to Agent) prior to the
consummation of such Acquisition (1) if available, an executed term sheet and/or
commitment letter

     

     

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

     

    (setting
forth in reasonable detail the terms and conditions of such Acquisition) and, at
the request of the Agent, such other information and documents that the Agent
may request, including, without limitation, executed counterparts of the
respective agreements, documents or instruments pursuant to which such
Acquisition is to be consummated (including, without limitation, any related
management, non-compete, employment, option or other material agreements), any
schedules to such agreements, documents or instruments and all other material
ancillary agreements, instruments and documents to be executed or delivered in
connection therewith, (2) pro forma financial statements of Holdings and its
Subsidiaries after giving effect to the consummation of such Acquisition, (3) a
certificate of a Responsible Officer of the Borrower demonstrating on a pro
forma basis (as set forth in the definition of Consolidated EBITDA) compliance
with the covenants set forth in Article VI hereof after giving effect to the
consummation of such Acquisition and (4) copies of such other agreements,
instruments and other documents (including, without limitation, the Loan
Documents required by Section 4.11) as the Agent reasonably shall
request;

     

    (c)         
 the
Borrower and its Subsidiaries (including any new Subsidiary) shall execute and
deliver the agreements, instruments and other documents required by Section
4.11;

     

    (d)    
  such
Acquisition shall not be hostile and shall have been approved by the board of
directors (or other similar body) and/or the stockholders or other equityholders
of the target company;

     

    (e)
           no
Default or Event of Default shall then exist or would exist after giving effect
thereto;

     

    (f)  
  the total
consideration paid or payable (including without limitation, any deferred
payment and the principal amount of all Indebtedness assumed in connection
therewith) for all Acquisitions consummated during the term of this Agreement
after the Seventh Amendment Effective Date shall not exceed (i) the greater of
(x) $50,000,000 minus the portion of
the Available Amount utilized after the Seventh Amendment Effective Date
pursuant to Sections
5.4(k), 5.7(c), 5.8(g) and 5.11(a) and this
clause (i) or (y) the Available Amount; provided, that not more than $25,000,000
shall be attributable to the acquisition of assets of a target company not
located in any State in the United States, the District of Columbia or any
commonwealth or territory of the United States that has adopted Revised Article
9 of the UCC and the Equity Interests of a target company not organized under
the laws of any State in the United States, the District of Columbia or any
commonwealth or territory of the United States that has adopted Revised Article
9 of the UCC, plus (ii)
$20,000,000 (such amount, the “Annual Limitation”)
during the twelve-month period ending on the first anniversary of the Seventh
Amendment Effective Date and each twelve-month period thereafter (with unused
amounts in each twelve-month period (the “Carry-Forward
Amount”) carried over to the immediately following twelve-month period
(the “Carry-Forward
Period”) and all consideration paid or payable with respect to
Acquisitions consummated in any twelve-month period permitted under this clause
(ii) shall be first applied to reduce the applicable Annual Limitation and then
to reduce the Carry-Forward Amount, if any; it 

     

     

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

     

    being
understood and agreed that any unused Carry-Forward Amount expires at the end of
the applicable Carry-Forward Period); provided, that not more than $5,000,000
(such amount, the “Foreign Annual
Limitation”) during any twelve-month period shall be attributable to the
acquisition of assets of a target company not located in any State in the United
States, the District of Columbia or any commonwealth or territory of the United
States that has adopted Revised Article 9 of the UCC and the Equity Interests of
a target company not organized under the laws of any State in the United States,
the District of Columbia or any commonwealth or territory of the United States
that has adopted Revised Article 9 of the UCC (with unused amounts in each
twelve-month period (the “Foreign Carry-Forward
Amount”) carried over to the immediately following twelve-month period
(the “Foreign
Carry-Forward Period”) and all consideration paid or payable with respect
to Acquisitions consummated in any twelve-month period permitted under this
proviso to this clause (ii) shall be first applied to reduce the applicable
Foreign Annual Limitation and then to reduce the Foreign Carry-Forward Amount,
if any; it being understood and agreed that any unused Foreign Carry-Forward
Amount expires at the end of the applicable Foreign Carry-Forward
Period);

     

    (g)   
  the
Acquisition will be consummated in all material respects in accordance with
Requirements of Law;

     

    (h)  
  the
target company shall be, or shall be engaged in, a business of the type that the
Borrower and the Restricted Subsidiaries are permitted to be engaged in under
Section 5.13(b) hereof; and

     

    (i)    
  the
target company has EBITDA, subject to proforma adjustments acceptable to the
Agent, for the most recent four quarters prior to the acquisition date for which
financial statements are available, greater than zero.

     

    (aa)           Schedule
1.1(a) (“Term Loan Commitment”) to the Credit Agreement is hereby amended by
supplementing the provisions thereof with the information as to the Supplemental
Term Loan set forth in Annex A attached to this Amendment.

     

    (bb)          Schedule
1.1(b) (“Revolving Loan Commitment”) to the Credit Agreement is hereby amended
by supplementing the provisions thereof with the information as to the
Supplemental Revolving Lenders and Supplemental Revolving Loan Commitments set
forth in Annex B attached to this Amendment.

     

    Section
2. 
Representations and
Warranties.  In order to induce Agent and Lenders to enter into
this Amendment, each Credit Party represents and warrants, which representations
and warranties and covenants shall survive the execution and delivery of this
Amendment, that:

     

    (a)    
  No Default;
etc.  No Default or Event of Default has occurred and is
continuing after giving effect to this Amendment or would result from the
execution or delivery of this Amendment or the consummation of the transactions
contemplated hereby.

     

    (b)
      Power and Authority;
Authorization.  Such Credit Party has the corporate (or
equivalent) power and authority to execute and deliver this Amendment and to


     

     

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

     

    perform
the terms and provisions of the Credit Agreement, as amended by this Amendment,
and the execution and delivery by such Credit Party of this Amendment, and the
performance by such Credit Party of its obligations hereunder and under the
other Loan Documents has been duly authorized by all requisite corporate (or
equivalent) action by such Credit Party.

     

    (c)  
   Execution and
Delivery.  Such Credit Party has duly executed and delivered
this Amendment.

     

    (d)    
 
Enforceability.  This
Amendment and the Credit Agreement, as amended by this Amendment, constitute the
legal, valid and binding obligations of such Credit Party enforceable against
such Credit Party in accordance with their respective terms, except as
enforcement thereof may be subject to (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ right generally and (ii) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law).

     

    (e)           
Distributable
Reserves.  As of March 31, 2010, (i) the amount of Distributable Reserves (as defined below) within
Educationcity Ltd. is (£588,303) and the minimum amount of Distributable
Reserves within Educationcity Ltd. needed to permit the distribution in kind at
Book Value (as defined below) of 100% of the Equity Interests
of EducationCity Inc. by Educationcity Ltd. (the “Initial Target
Distribution”) is £1 (the "Minimum Distributable
Reserve").  "Distributable Reserves" means a company's accumulated,
realized profits, so far as not previously utilized by distribution or
capitalization, less its accumulated, realized losses, so far as not previously
written off in a reduction or organization of capital duly made, calculated in
accordance with the relevant provisions of Part II of the Companies Act 2006 (as
amended from time to time).  "Book Value" means, in relation to an
asset, the amount at which that asset is stated in the relevant accounts under
the Companies Act 2006 (as amended from time to time).

     

    Section
3. 
Conditions Precedent to
Effectiveness of Amendment.  The effectiveness of this
Amendment, the obligation of each Term Loan Lender with a Term Loan Commitment
with respect to the Supplemental Term Loan (each, a “Supplemental Term Loan
Lender”), and the obligation of each Revolving Lender (each, a “Supplemental Revolving
Lender”, and together with each Supplemental Term Loan Lender, the “Supplemental
Lenders”) with an increase in its existing Revolving Loan Commitment
(such increased amount, the “Supplemental Revolving Loan
Commitment”) are subject to the satisfaction of the following conditions
prior to or concurrently with the effectiveness of the Amendment:

     

    (a)    
 
execution
and delivery of this Amendment by each Credit Party, Agent and the Required
Lenders;

     

    (b)    
 
each
representation and warranty contained herein shall be true and correct in all
material respects;

     

    (c)    
 
the Agent
shall have received a Secretary’s Certificate of each Credit Party certifying
the passage and continued effectiveness of resolutions from such Credit Party
approving the transactions contemplated by this Amendment, and the incumbency of
the officers 

     

     

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

     

    executing
this Amendment and the documents delivered in connection therewith, in each case
in form and substance satisfactory to Agent;

     

    (d)    
 
the Agent
shall have received and be reasonably satisfied with the audited financial
statements of Educationcity Ltd. for the fiscal year ending December 31,
2009;

     

    (e)    
 
the Agent
shall have received, for the ratable benefit of the Consenting Lenders, an
amendment fee equal to one-quarter of one percent (0.25%) of the sum of the
Revolving Loan Commitments (other than Supplemental Revolving Loan Commitments)
of such Consenting Lenders and the aggregate principal amount of outstanding
Term Loans (other than the Supplemental Term Loans) of such Consenting
Lenders;

     

    (f)   the
Borrower shall have paid all other fees and other amounts due and payable by it
under the Credit Agreement, including without limitation reimbursement or other
payment of reasonable fees, costs and expenses owing to Latham & Watkins LLP
and all other amounts required to be reimbursed or paid by the Borrower
hereunder, under any other Loan Document and as separately agreed between the
Agent and Borrower;

     

    (g)    
  the
consummation of the Education City Acquisition;

     

    (h)            receipt
by Agent of the required Notice of Borrowing; and

     

    (i)   contemporaneously
with the consummation of the Education City Acquisition, (i) the execution and
delivery by the Borrower of a securities pledge amendment with respect to the
Equity Interests of Archipelago International Holdings, Inc. (“Archipelago Int’l
Holdings”) in the form of Exhibit 1 to the Guaranty and Security
Agreement, (ii) the execution and delivery by EducationCity Inc. of a joinder
agreement in the form of Exhibit 2 to the Guaranty and Security Agreement, and
(iii) the execution and delivery by Archipelago Int’l Holdings of a joinder
agreement in the form of Exhibit 2 to the Guaranty and Security
Agreement.

     

    Section
4. 
Additional
Covenants.

     

    (a)    
 
Landlord
Waiver.  The Borrower shall use commercially reasonable efforts
to deliver to Agent an executed landlord waiver within sixty (60) days after the
Seventh Amendment Effective Date in form and substance reasonably satisfactory
to Agent with respect to the Borrower’s leased premises at One McKinney Plaza,
Dallas, Texas.

     

    (b)           
Reporting of
Distributable Reserves.  Until Borrower or a Subsidiary of
Borrower has pledged 100% of the Equity Interests of EductionCity Inc. to Agent
pursuant to Section 4(c) below, as soon as available and in any event within 45
days after the end of each fiscal quarter, Borrower will furnish to Agent the
amount of Distributable Reserves within Educationcity Ltd. as of the end of such
fiscal quarter.

     

    (c)    
       Pledge of 100% of Equity
Interests of EducationCity Inc.  As soon as practical
after Educationcity Ltd. has obtained the Minimum Distributable
Reserve, Borrower will (i) cause Educationcity Ltd. to make the Initial Target
Distribution, (ii) cause its other Subsidiaries to make such
distributions and take such other actions necessary to permit
Borrower 

     

     

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

     

    or
another Credit Party to pledge to Agent 100% of the Equity Interests of
EducationCity Inc. and (iii) execute and deliver, or cause another Credit Party
to execute and deliver, to Agent a securities pledge amendment with respect to
100% of the Equity Interests of EducationCity Inc. in the form of Exhibit 1 to
the Guaranty and Security Agreement.  Borrower or a Subsidiary of
Borrower will execute and deliver to Agent a securities pledge amendment with
respect to 100% of the Equity Interests of EducationCity Inc. in the form of
Exhibit 1 to the Guaranty and Security Agreement no later than April 15,
2011.  To the extent that the securities pledge amendment described in
this Section 4(c) is executed by a Person that is not the Borrower or a Domestic
Subsidiary of Borrower (such Person, the “UK Grantor”),  Borrower
will, and will cause the UK Grantor to, take such actions that the Agent shall
deem advisable to perfect its security interest in such pledge of the Equity
Interests of EducationCity Inc. (including, without limitation, registration at
Companies House in the United Kingdom).

     

    Section
5. Reference To And Effect Upon
The Loan Documents.

     

    (a)    
 
Except as
specifically modified above, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified and
confirmed.

     

    (b)    
 
The
execution, delivery and effectiveness of this Agreement shall not operate as a
waiver of any right, power or remedy of Agent or any Lender under the Credit
Agreement or any Loan Documents, nor constitute a waiver of any provision of the
Credit Agreement or any Loan Documents, except as specifically set forth
herein.

     

    (c)    
 
Upon and
after the execution of this Amendment by each of the parties hereto, 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 modified hereby.

     

    (d)    
 
This
Amendment is a Loan Document executed pursuant to the Credit Agreement and shall
(unless otherwise expressly indicated herein) be construed, administered and
applied in accordance with the terms and provisions thereof.

     

    Section
6.       Costs And
Expenses.  Borrower agrees to reimburse Agent for all
reasonable and documented out-of-pocket costs and expenses incurred by Agent,
including the reasonable and documented costs and expenses of one counsel to
Agent for advice, assistance, or other representation in connection with this
Agreement.

     

    Section
7. 
Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.

     

    Section
8. 
Headings.  Section
headings in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purposes.

     

     

     

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

     

     

    Section
9. 
Counterparts.  This
Agreement may be executed in any number of counterparts (including by means of
facsimile transmission), each of which when so executed shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument.

     

    Section
10.     Certification and
Acknowledgement.  Borrower certifies and acknowledges that as
of the date hereof and after giving effect to the consummation of the Education
City Acquisition, Available Cash is $0.00.

     

    


    [Signature
Page Follows]

     

     

     

     

     

     

     

     

     

     

     

     

     


    
      
         


      

      
        21

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.

    


    
      	 
      	
              BORROWER:

            
	 
      	 
      
	 
      	
              ARCHIPELAGO
      LEARNING, LLC

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      


    

    


    


    
      	 
      	
              OTHER
      CREDIT PARTIES

            
	 
      	 
      
	 
      	
              AL
      MIDCO, LLC

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      


    

    


    


     

    


    


     


    
      
        
          [Signature
Page to Amendment No. 7 to Credit Agreement]

           

           

        

         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	 
      	
              GENERAL ELECTRIC CAPITAL
      CORPORATION,

              as
      Agent, an Existing Lender, a Supplemental Term Loan Lender and a
      Supplemental Revolving Lender

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      


    

    


    


     

    



    
      
        
          [Signature
Page to Amendment No. 7 to Credit Agreement]

           

           

        

         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	 
      	
              NEWSTAR
      COMMERCIAL LOAN TRUST 2005-1,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Servicer

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            


    

    


    


    
      	 
      	
              NEWSTAR
      COMMERCIAL LOAN TRUST 2006-1,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Servicer

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            


    

    


    


    
      	 
      	
              NEWSTAR
      COMMERCIAL LOAN TRUST 2009-1,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Servicer

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            


    

    


    


    
      	 
      	
              NEWSTAR
      LOAN FUNDING, LLC,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Manager

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            


    

    


    


    
      	 
      	
              NEWSTAR
      CREDIT OPPORTUNITIES FUNDING II LTD,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Manager

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            


    

    



    
      
        
          [Signature
Page to Amendment No. 7 to Credit Agreement]

           

           

        

         


      

      
         


        
          

        

      

      
         


      

    


    


    


    


    
      	 
      	
              BMO CAPITAL MARKETS FINANCING
      INC,

              as
      an Existing Lender

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      


    

    


    


    


    



    
      
        
          [Signature
Page to Amendment No. 7 to Credit Agreement]

           

        

         


      

      
         


        
          

        

      

      
         


      

    


    ANNEX A

    


    Schedule
1.1(a)

    


    Term Loan Commitments
(Supplemental Term Loan)

     

    


     

    
      	
              General
      Electric Capital Corporation

            	 	$	15,000,000.00	 
	 	 	 	 	 
	
              Total:

            	 	$	15,000,000.00	 


    

    


     

    Outstanding Principal Amount
of Term Loan (other than Supplemental Term Loan)

     

    
      	
              General
      Electric Capital Corporation

            	 	$	24,121,703.19	 
	 	 	 	 	 
	
              BMO
      Capital Markets Financing, Inc.

            	 	$	13,157,292.65	 
	 	 	 	 	 
	
              Newstar
      Credit Opportunities

            	 	$	10,690,300.27	 
	 	 	 	 	 
	
              Newstar
      Commercial Loan Trust 2006

            	 	$	5,384,888.03	 
	 	 	 	 	 
	
              Newstar
      Trust 2005-1

            	 	$	1,370,551.31	 
	 	 	 	 	 
	
              Newstar
      Commercial Loan Trust

            	 	$	6,675,963.55	 
	 	 	 	 	 
	
              Total:

            	 	$	61,400,699.00	 


    

    



    
      
        
          


           

        

         


      

      
         


        
          

        

      

      
         


      

    


    ANNEX B

    


    Schedule
1.1(b)

    


    Supplemental Revolving Loan
Commitments

     

    


     

    
      	
              General
      Electric Capital Corporation

            	 	$	10,000,000.00	 
	 	 	 	 	 
	
              Total:

            	 	 	 	 


    

    


     

    Revolving Loan Commitments
After Giving Effect to the Seventh Amendment

     

    
      	
              General
      Electric Capital Corporation

            	 	$	13,928,571.43	 
	 	 	 	 	 
	
              BMO
      Capital Markets Financing, Inc.

            	 	$	2,142,857.14	 
	 	 	 	 	 
	
              Newstar
      Credit Opportunities

            	 	$	1,741,071.43	 
	 	 	 	 	 
	
              Newstar
      Loan Funding LLC

            	 	$	2,187,500.00	 
	 	 	 	 	 
	
              Total:

            	 	$	20,000,000.00