Document:

MHP-EX10.13.2-2012.12.31-Q4

EXECUTION VERSION

SECOND AMENDMENT
SECOND AMENDMENT, dated as of November 2, 2012 (this “Second Amendment”), to the Three-Year Credit Agreement, dated as of July 30, 2010 (as amended prior to the date hereof, the “Credit Agreement”), among THE McGRAW-HILL COMPANIES, INC. ( the “Borrower”), STANDARD & POOR’S FINANCIAL SERVICES LLC, as a Loan Guarantor (the “Loan Guarantor”), the lenders from time to time parties thereto (the “Lenders”), the Syndication Agent and the Documentation Agents parties thereto and JPMORGAN CHASE BANK, N.A., as administrative agent (the “Administrative Agent”).
W I T N E S S E T H:
WHEREAS, the Borrower, the Loan Guarantor, the Lenders and the Administrative Agent are parties to the Credit Agreement;
WHEREAS, the Borrower intends to pursue either the Spin-off or the Disposition as such terms are defined below; and
WHEREAS, the Administrative Agent and the Lenders are willing to consent to the Spin-Off or the Disposition (and all related intermediate intercompany transactions undertaken in preparation therefor), as applicable, and to agree to certain amendments to the Credit Agreement in connection therewith, but only on the terms and conditions contained in this Second Amendment.
NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto agree as follows:
1.Defined Terms.  Unless otherwise defined herein, capitalized terms used herein which are defined in the Credit Agreement (as amended by this Second Amendment) are used herein as therein defined.
2.Amendments to and Consents Under the Credit Agreement on the Initial Effective Date.  
(a)Amendments to Section 1.01 of the Credit Agreement.  On the Initial Effective Date (as defined below), Section 1.01 of the Credit Agreement is amended by inserting the following definitions in the appropriate alphabetical order:
“Disposition” means any transaction or series of related transactions (whether by sale of stock, assets or merger) pursuant to which the MHE Business is sold, transferred, divested or otherwise disposed of to another Person.  
“Form 10” means the MHE’s Form 10 filed with the Securities and Exchange Commission on July 11, 2012 (as amended on September 20, 2012, and as further amended, modified or supplemented; provided that any such further amendment, modification or supplement that, taken as a whole, is materially adverse to the interests of the Lenders must be reasonably satisfactory to the Lenders, as reasonably determined by the Administrative Agent).
“MHE” means McGraw-Hill Education, Inc. 
“MHE Business” means the businesses or assets of MHE as described in the Form 10. 

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“Second Amendment” means the Second Amendment to this Agreement, dated as of November 2, 2012, among the Borrower, Standard & Poor’s Financial Services LLC, the Lenders party thereto and the Administrative Agent. 
“Separation” means the Spin-Off or the Disposition, as the case may be.
“Spin-Off” means the distribution of 100% of the shares of common stock of MHE, substantially as described in the Form 10.
(b)Consent.  On the Initial Effective Date, the Administrative Agent and the Lenders consent to all intermediate intercompany transactions that have been or will be undertaken by the Borrower, MHE and the Subsidiaries of the Borrower and MHE in order to prepare for the consummation of, and are necessary to effect, the Spin-Off or the Disposition, as the case may be, to the extent that any such intermediate intercompany transactions would require the consent of the Lenders.
3.Amendments to and Consents under the Credit Agreement on the Separation Effective Date. 
(a)    Amendments to Section 5.01(b)(i)(y) of the Credit Agreement. On the Separation Effective Date (as defined below), sub-clause (y) of Section 5.01(b)(i) of the Credit Agreement is amended by deleting such sub-clause (y) in its entirety and replacing it with the following:
“(y) an Officer’s Certificate demonstrating in reasonable detail compliance with the restrictions contained in Section 6.03 hereof as of the last day of the accounting period covered by such financial statements (a “Compliance Certificate”) and, in addition, a written statement of the chief accounting officer, chief financial officer, any vice president or the treasurer or any assistant treasurer of the Borrower describing in reasonable detail the differences between the financial information contained in such financial statements and the information contained in the Officer’s Certificate relating to compliance with Section 6.03 hereof (it being understood that, from and after the consummation of the Separation, with respect to any accounting period which includes one or more Fiscal Quarters prior to the Separation or the Fiscal Quarter in which the Separation occurs, the compliance calculations required by this clause (y) shall be performed on a pro forma basis and presented in a form reasonably satisfactory to the Administrative Agent and certified as complete and correct in all material respects).”
(b)    Consent.  On the Separation Effective Date, the Administrative Agent and the Lenders consent to the Spin-Off or, if applicable, the Disposition. 
4.Conditions to the Initial Effective Date.  The amendments to and consents under the Credit Agreement set forth in Section 2 hereof shall become effective on the date (the “Initial Effective Date”) on which the following conditions precedent have been satisfied:
(a)     this Second Amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders; and
(b)     the condition set forth in Section 6 hereof.
5.Conditions to the Separation Effective Date.  The amendments to and consents under the Credit Agreement set forth in Section 3 hereof shall become effective on the date (the “Separation Effective Date”) on which the following conditions precedent have been satisfied:

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(a)     (i) the Borrower shall have completed the Spin-Off, and the Administrative Agent shall have received copies of the Separation and Distribution Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the Trademark License Agreement and the Transition Services Agreement (in each case, as defined in the Form 10) or (ii) the Borrower shall have consummated the Disposition, and the Administrative Agent shall have received copies of the purchase agreement or any other agreement pursuant to which such Disposition is effectuated, along with all schedules, exhibits and other attachments to such purchase agreement;
(b)     the Borrower shall have delivered to the Administrative Agent a pro forma consolidated balance sheet and related pro forma consolidated statement of income of the Borrower and its Subsidiaries as of and for the twelve-month period ending on the last day of the most recently completed Fiscal Year and the most recently completed interim period ended at least 45 days prior to the Spin-Off or the Disposition, as applicable, prepared after giving effect to the Spin-Off or the Disposition, as applicable, as if it had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of income), and none of the foregoing shall be materially inconsistent with the financial information contained in the Form 10; and
(c)    the condition set forth in Section 6 hereof.
6.Representation and Warranties. To induce the Administrative Agent and the Lenders to enter into this Second Amendment and as an additional condition precedent to each of the Initial Effective Date and the Separation Effective Date (each, a “Second Amendment Effective Date”), the Borrower represents and warrants to the Administrative Agent and each Lender that:
(a)    as of each Second Amendment Effective Date, and after giving effect to the amendments to and consents under the Credit Agreement to become effective on such Second Amendment Effective Date (and, in the case of the Separation Effective Date, the Separation), each of the representations and warranties made by the Borrower in or pursuant to the Credit Agreement is true and correct in all material respects as if made on and as of such date (it being understood and agreed that any representation or warranty that by its terms is made as of a specific date shall be required to be true and correct in all material respects only as of such specified date); and
(b)    as of each Second Amendment Effective Date, and after giving effect to the amendments to and consents under the Credit Agreement to become effective on such Second Amendment Effective Date (and, in the case of the Separation Effective Date, the Separation), no Default or Event of Default has occurred and is continuing.
7.Effect of Second Amendment.  
(a)    This Second Amendment shall not constitute an amendment or waiver of or consent to any provision of the Credit Agreement not expressly referred to herein and shall not be construed as an amendment, waiver or consent to any action on the part of the Borrower or any other Loan Party that would require an amendment, waiver or consent of the Administrative Agent or the Lenders except as expressly stated herein.  Except as expressly contemplated hereby, the provisions of the Credit Agreement are and shall remain in full force and effect in accordance with its terms.
(b)    On and after each Second Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import, and each reference to the Credit Agreement in any other document shall be deemed a reference to the Credit Agreement as amended on such Second Amendment Effective Date.

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8.Counterparts.  This Second Amendment may be executed by one or more of the parties to this Second Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of a signature page by facsimile or by electronic mail in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart.
9.Severability.  Any provision of this Second Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
10.Integration.  This Second Amendment represents the agreement of the Loan Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof or thereof not expressly set forth or referred to herein or in the Credit Agreement.
11.GOVERNING LAW.  THIS SECOND AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

THE McGRAW-HILL COMPANIES, INC.

By: /s/ Elizabeth O’Melia

Name: Elizabeth O’Melia
Title: Treasurer

[Signature Page to Second Amendment]

JPMORGAN CHASE BANK, N.A., 
as Administrative Agent and as a Lender

By: /s/ Goh Siew Tan

Name: Goh Siew Tan 
Title: Vice President

[Signature Page to Second Amendment]

Bank of America, N.A., as a Lender

By: /s/ Prayes Majmudar

Name: Prayes Majmudar 
Title: Vice President

[Signature Page to Second Amendment]

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

as a Lender

By: /s/ Jose Carlos

Name: Jose Carlos
Title: Director

[Signature Page to Second Amendment]

Citibank, N.A. as a Lender

By: /s/ Elizabeth M. Gonzalez

Name: ELIZABETH M. GONZALEZ
Title: VICE PRESIDENT & MANAGING DIRECTOR

[Signature Page to Second Amendment]

DEUTSCH BANK AG NEW YORK BRANCH,
as a Lender

By: /s/ Heidi Sandquist

Name: Heidi Sandquist
Title: Director

By: /s/ Ming K. Chu

Name: Ming K. Chu
Title: Vice President

[Signature Page to Second Amendment]

Lloyds TSB Bank, plc, as a Lender

By: /s/ Stephen Giacolone

Name: Stephen Giacolone
Title: Assistant Vice President (G011)

By: /s/ Julia R Franklin

Name: Julia R Franklin
Title: Vice President (F014)

[Signature Page to Second Amendment]

Morgan Stanley Bank, N.A., as a Lender

By: /s/ Daniel Sweeney

Name: Daniel Sweeney
Title: Authorized Signatory

[Signature Page to Second Amendment]

THE NORTHERN TRUST COMPANY, as a Lender

By: /s/ Daniel J. Boote

Name: Daniel J. Boote
Title: Senior Vice President

[Signature Page to Second Amendment]

 
THE ROYAL BANK OF SCOTLAND PLC, as a Lender

By: /s/ Matthew Pennachio

Name: Matthew Pennachio
Title: Director

[Signature Page to Second Amendment]

The Bank of Nova Scotia, as a Lender

By: /s/ David Schwartzbard

Name: David Schwartzbard
Title: Director

[Signature Page to Second Amendment]

U.S. Bank National Association, as a Lender

By: /s/ Susan Bader

Name: Susan Bader
Title: Vice President

[Signature Page to Second Amendment]

Wells Fargo Bank, N.A., as a Lender

By: /s/ Joe Mynatt

Name: Joe Mynatt
Title: Managing Director

[Signature Page to Second Amendment]MHP-EX10.23.1-2012.12.31-Q4

EXHIBIT E

Amendment
To
The McGraw-Hill Companies, Inc. 401(k) Savings and Retirement Plan Supplement

The McGraw-Hill Companies, Inc. 401(k) Savings and Retirement Plan Supplement (the "MH
401 (k) Supplement"), as amended and restated as of January 1, 2010, is amended effective
January 1, 2013, except as otherwise provided below, as follows:

		
	1.
	Section 2.01 is deleted in its entirety and replaced with the following:

Section 2.01 "Account" means the Matching Contribution Account, Profit
Sharing Account or, effective January 1, 2014, the Participant Deferral Account
established for each Participant under the Plan.

		
	2.
	Section 2.27 is deleted in its entirety and replaced with the following:

Section 2.27 "Participant" means each employee who participates in the
Plan, as provided in Article IV of the Plan, and includes a Severance Plan Participant.
Effective as of January 1, 2013, no employee in the Education Group may be a
Participant.

		
	3.
	A new Section 2.40 is added to read as follows:

Section 2.40 "Education Group" means "Education Group" as defined in
the purchase and sale agreement (the "PSA"), dated as of November 26, 2012, by and
among the Company and certain other entities set forth in Schedule I thereto, McGrawHill
Education LLC, and MHE Acquisition, LLC.

		
	4.
	A new Section 2.41 is added to read as follows:

Section 2.41 "Participant Deferral Account" means the participant deferral
account established under the Plan on and after January 1, 2014.

		
	5.
	Section 4.02 is deleted in its entirety and replaced with the following:

Section 4.02 New Participants. Any employee of the Employer (other
than a Participant described in Section 4.01 of the Plan or, effective as of January 1,
2013, an employee in the Education Group) who is selected by the Plan Administrator to
be eligible to participate in the Plan shall become a Participant as of the first day of the
month coinciding with or next following his selection.

		
	6.
	Sections 5.01(a) and (b) are deleted in their entirety and replaced with the

following:

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Section 5.01 Credits to Matching Contribution Account.

		
	(a)
	As of December 31 of the year beginning on or after January 1, 2008

but prior to January 1, 2014, there shall be credited to the Participant's Matching
Contribution Account an amount equal to 4 1/2% (6% for the year beginning January 1,
2013) of the Participant's Earnings for such year in excess of the limitation on Earnings
under Section 401 (a)(17) of the Code (or any successor provision). As of December 31
of the year beginning on or after January 1, 2014, there shall be credited to the
Participant's Matching Contribution Account an amount equal to 100% of up to the first
6% of the Participant's Earnings for such year in excess of the limitation on Earnings
under Section 401(a)(17) of the Code (or any successor provision) that the Participant
elects to defer under the Plan pursuant to Section 5.06 herein. Notwithstanding the
foregoing, for years prior to January 1, 2014, no credit shall be made to the Matching
Contribution Account of a Participant for any year with respect to whom Tax-Deferred
Contributions were not made in an amount equal to the limitation on elective deferrals for
such year under Section 402(g) of the Code, unless such amount of Tax-Deferred
Contributions would have been made on the Participant's behalf in the absence of the
limitations of Section 415 of the Code (or any successor provision thereto) or any
provision of SPSP implementing such limitation. In addition, no credit shall be made to a
Participant's Matching Contribution Account with respect to (i) the year in which the
Participant's Employment Termination Date occurs, unless the Participant is eligible for
early or normal retirement under the Company's Employee Retirement Plan, is terminated
by an Employer through no fault of his own or has any salary continuation installment
due under a Severance Plan or (ii) the year after the year in which the Participant's
Employment Termination Date occurs for any reason or in which the Participant ceases
to have any salary continuation installment due under a Severance Plan, if later.

		
	(b)
	As of December 31 of the year beginning on or after January 1,

2008 but prior to January 1, 2014, there shall be credited to the Participant's Matching
Contribution Account an amount equal to 4 1/2% (6% for the year beginning January 1,
2013) of (A) any short-term incentive compensation for such year deferred by the
Participant under the Company's Key Executive Plan, and (B) any salary earned for such
year that is deferred by the Participant under any plan or arrangement of the Employer.
As of December 31 of the year beginning on or after January 1, 2014, with respect to a
Participant who was not given an opportunity to make a deferral election pursuant to
Section 5.06 herein, there shall be credited to the Participant's Matching Contribution
Account an amount equal to 6% of (A) any short-term incentive compensation for such
year deferred by the Participant under the Company's Key Executive Plan, and (B) any
salary earned for such year that is deferred by the Participant under any plan or
arrangement of the Employer. As of December 31 of the year beginning on or after
January 1, 2014, with respect to a Participant who makes a deferral election pursuant to
Section 5.06 herein, there shall be credited to the Participant's Matching Contribution
Account an amount equal to the deferral percentage elected by the Participant (up to a
maximum of 6%) multiplied by: (A) any short-term incentive compensation for such year
deferred by the Participant under the Company's Key Executive Plan, and (B) any salary
earned for such year that is deferred by the Participant under any plan or arrangement of

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the Employer. Any salary or short-term incentive compensation that is deferred by a
       Participant shall be excluded from Earnings in the year paid to the Participant. No credit
shall be made to a Participant's Matching Contribution Account with respect to any year
after the year in which the Participant's Employment Termination Date occurs or in
which the Participant ceases to have any salary continuation installment due under a
Severance Plan, if later.

7. Section 5.03 is amended to add a new subsection (d) to read as follows:

		
	(d)
	Effective January 1, 2014, with respect to Participant Deferral

Accounts, the additional amount shall be credited pursuant to procedures adopted by the
Plan Administrator in its sole discretion and shall equal an amount determined by the
Plan Administrator in its sole discretion.

8. Article V is amended to add a new Section 5.06 to read as follows:

Section 5.06 Credits to Participant Deferral Account.

		
	(a)
	As of December 31 of the year beginning on or after the later of

(i) January 1 of the year in which the Participant's participation in the Plan commenced or
(ii) January 1, 2012, subject to the terms herein stated, each Participant may make an
election to defer up to 6% of the Participant's Earnings in excess of the limitation on
Earnings under Section 401(a)(17) of the Code (or any successor provision) that are
expected to be earned in the year that is two years after the election.

		
	(b)
	A deferral election made pursuant to Section 5.06(a) must be made in

the form and manner prescribed by the Plan Administrator in its sole discretion during the
deferral election period adopted by the Plan Administrator in its sole discretion; provided,
however, that in no event will the last day of any deferral election period extend beyond
December 31st of the year that is two years prior to the year within which the Earnings
subject to the deferral election are paid. By way of example, the deferral election period
for Earnings that will be paid in 2014 must end on or prior to December 31, 2012.

		
	(c)
	A deferral election made pursuant to this Section 5.06 shall be

irrevocable as of the last day of the deferral election period adopted by the Plan
Administrator pursuant to Section 5.06(b).

		
	(d)
	Notwithstanding anything to the contrary in this Section 5.06, once

made, a deferral election shall automatically renew each succeeding year unless revoked
or otherwise modified by the Participant during the deferral election period for any such
succeeding year. Any deferral election that is automatically renewed pursuant to this
Section 5.06(d) shall be irrevocable with respect to the year for which the deferral
applies.
		
	(e)
	Earnings deferred pursuant to this Section 5.06 shall be credited to the

Participant's Deferral Account commencing with the first payroll for which Earnings in
excess of the limitation on Earnings under Section 401 (a)(17) of the Code (or any
successor provision) are paid.

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* * * *
Except as set forth herein, the MH 401(k) Supplement remains in full force and effect.

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