Document:

Form of First Amendment to Credit Agreement dated on or about June 4, 2003

 
Exhibit 10.1

 
FIRST AMENDMENT TO CREDIT AGREEMENT

 
THIS FIRST AMENDMENT TO CREDIT AGREEMENT
(“Amendment”), dated as of [May 27, 2003] (the “Amendment Date”), is among K2 Inc. and each of its Subsidiaries party hereto, each of the lending institutions from time to time party hereto (such
lending institutions, together with their respective successors and assigns, are referred to herein individually as a “Lender” and collectively as the “Lenders”), and Bank One, NA, a national banking association, as
contractual representative for the Lenders (the “Agent”), and acting through its London branch as the “U.K. Security Trustee”. 
 
RECITALS: 
 
A. The Obligated Parties, the Lenders, and the Agent have entered into that certain Credit Agreement dated as of March 25, 2003 (the
“Credit Agreement”) pursuant to which the Lenders have provided certain credit facilities to the Borrowers. 
 
B. The Obligated Parties have requested that the Lenders amend certain provisions of the Credit Agreement as provided hereinbelow.

 
C. Subject to satisfaction of the conditions set
forth herein, the Lenders are willing to amend the Credit Agreement as specifically provided herein. 
 
NOW, THEREFORE, BE IT RESOLVED, THAT, in consideration of the premises herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
 
ARTICLE 1 
 
DEFINITIONS 
 
Section 1.1 Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Credit Agreement, as amended hereby. 
 
ARTICLE 2 
 
AMENDMENTS 
 
Section 2.1 Amendment to Section 1.1 of the Credit
Agreement. Effective as of the Amendment Date, Section 1.1 of the Credit Agreement is hereby amended to add thereto, in alphabetical order, the following new definitions which shall each read in its entirety as follows: 
 
“2003 Convertible Notes”
means that certain unsecured Indebtedness in an aggregate principal amount not in excess of $75,000,000 issued by the Parent the terms of which are reasonably determined by the Agent and the Borrowers to be substantially the same as the terms
described in the draft of the Preliminary Offering Memorandum, dated [May 23, 2003], delivered to the Agent and the Lenders. 
 

 
“Unused Commitment Fee Adjustment Amount” means, as of any date of determination, the percentage per annum rate corresponding to the “Quarterly Average Aggregate Outstanding Revolving Credit Exposure”
specified below. 
 

	 QUARTERLY AVERAGE AGGREGATE OUTSTANDING
 REVOLVING CREDIT EXPOSURE

	    	 UNUSED COMMITMENT FEE
 ADJUSTMENT AMOUNT

	 Greater than or equal to $75,000,000
	    	 0.00%

	 Less than $75,000,000, but greater than or equal to $45,000,000
	    	 0.25%

	 Less than $45,000,000
	    	 0.50%

 
As used
in this definition, “Quarterly Average Aggregate Outstanding Revolving Credit Exposure” means, as of any date of determination, the daily average of the Aggregate Outstanding Revolving Credit Exposure for the immediately preceding three
calendar months ending on March 31, June 30, September 30, and December 31 of a calendar year. 
 
Section 2.2 Amendment to Section 2.10(a) of the Credit Agreement. Effective as of the Amendment Date, Section 2.10(a) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows: 
 
(a) Unused Commitment Fee. Subject to Section 2.9, until termination of the Aggregate Revolving Commitment, the U.S. Borrowers agree to pay to the Agent, for the account of the Lenders ratably in accordance with their
respective Revolving Pro Rata Shares, on each Payment Date from the Closing Date through and including the Facility Termination Date, an unused commitment fee (the “Unused Commitment Fee”) equal to (i) the Applicable Unused
Commitment Fee Rate, plus, during the period from May 31, 2003 through and including June 1, 2004, the Unused Commitment Fee Adjustment Amount, multiplied by (ii) the daily Aggregate Unused Revolving Commitment. Subject to Section
2.9, the Unused Commitment Fee shall be computed on the basis of a 360 day year for the actual number of days elapsed. For purposes of calculating the Unused Commitment Fee pursuant to this Section 2.10, any payment received by the Agent
(if received prior to 12:00 noon (Chicago, Illinois time)) shall be deemed to be credited to the Borrowers’ account on the Business Day following the date such payment is received by the Agent. 
 
Section 2.3 Amendment to Section 6.14 of the Credit
Agreement. Effective as of the Amendment Date, Section 6.14 of the Credit Agreement is hereby amended by deleting the word “and” at the end of clause (h), amending and restating clause (i) to read in its entirety as
follows, and adding thereto, a new clause (j) which shall read in its entirety as follows: 
 
(i) the 2003 Convertible Notes; and 
 
(j) guaranties of Indebtedness permitted pursuant to clause (b) through clause (i) preceding.

 

 
Section 2.4
Amendment to Section 6.15 of the Credit Agreement. Effective as of the Amendment Date, clause (a) of Section 6.15 of the Credit Agreement is amended and restated in its entirety to read “(a) the Obligated Parties may enter into
Contingent Obligations with respect to Indebtedness permitted pursuant to Section 6.14”. 
 
Section 2.5 Amendment to Section 6.33 of the Credit Agreement. Effective as of the Amendment Date, Section 6.33 and restated to
read in its entirety as follows: 
 
Section 6.33 Amendments to Agreements. No Obligated Party will amend or terminate (a) the Rawlings Acquisition Agreement, (b) the Convertible Subordinated Debentures, other than in connection with the amendment and restatement
thereof on [June 30, 2003], (c) the Securities Purchase Agreement entered into in connection with the Convertible Subordinated Debentures, or (d) any agreement, certificate, document, or instrument entered into or delivered in
connection with any of the agreements referenced in clause (a) through clause (c) preceding, other than such agreements as required in connection with amendment and restatement of the Convertible Subordinated Debentures on [June 30,
2003]. 
 
Section 2.6 Amendment to Schedule
5.22 of the Credit Agreement. Effective as of the Closing Date, Schedule 5.22 of the Credit Agreement is amended and restated in its entirety to read as set forth in Schedule 5.22 of this Amendment. 
 
ARTICLE 3 
 
CONDITIONS 
 
Section 3.1 Conditions Precedent. The effectiveness of
this Amendment is subject to the satisfaction of each of the following conditions precedent. 
 
(a) The Agent shall have received all of the following, each dated the date of this Amendment (unless otherwise indicated), in form and substance satisfactory to the Agent: 
 
(i) this amendment, duly executed;

 
(ii) such additional documents,
instruments, and information as the Agent may reasonably request to effect the transactions contemplated hereby; 
 
(iii) a draft dated as of [May 23, 2003] of the Preliminary Offering Memorandum for the 2003 Convertible
Notes certified by an Authorized Officer; 
 
(iv) a certified copy of all agreements, certificates, documents, and instruments to be executed and delivered in connection with amendment and restatement of the Convertible Subordinated Debentures; and 
 
(v) payment by the Borrowers of (A) an
amendment fee, to the Agent for the benefit of the Lenders approving this Amendment in accordance with their Revolving Pro Rata Share, equal to $125,000 and (B) all costs and expenses 
 

(including legal fees and expenses) owed to and/or incurred by the Agent in connection
with the Credit Agreement or this Amendment. 
 
(b)
All corporate proceedings taken in connection with the transactions contemplated by this Amendment and all other agreements, documents, and instruments executed and/or delivered pursuant hereto, and all legal matters incident thereto, shall be
satisfactory to Agent. 
 
(c) No Default or Event
of Default shall be in existence after giving effect to this Amendment. 
 
ARTICLE 4 
 
MISCELLANEOUS 
 
Section 4.1 Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Credit Agreement and, except as expressly modified and
superseded by this Amendment, the terms and provisions of the Credit Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. Each Obligated Party, the Agent, and each Lender agrees that the
Credit Agreement as amended hereby and the other Loan Documents shall continue to be legal, valid, binding, and enforceable in accordance with their respective terms. 
 
Section 4.2 Representations and Warranties. Each Obligated Party hereby represents and warrants to the
Agent and the Lenders that, as of the date of and after giving effect to this Amendment, (a) the execution, delivery, and performance of this Amendment and any and all other Amendment Documents executed and/or delivered in connection herewith have
been authorized by all requisite action on the part of such Obligated Party and will not violate such Obligated Party’s Organization Certificate or Management Agreement, (b) the representations and warranties contained in the Credit Agreement
and in the other Loan Documents are true and correct on and as of the date hereof, in all material respects, as if made again on and as of the date hereof except for such representations and warranties limited by their terms to a specific date, and
(c) after giving effect to this Amendment, no Default or Event of Default exists. 
 
Section 4.3 Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other Loan Document, including any Loan Document furnished in connection
with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by the Agent or any Lender, or any closing, shall affect the representations and warranties or the right of the Agent
and the Lenders to rely upon them. 
 
Section 4.4
Reference to Credit Agreement. Each of the Loan Documents, including the Credit Agreement, the Amendment Documents, and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Credit Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Credit Agreement, whether direct or indirect, shall mean a reference to the Credit Agreement as amended
hereby. 
 

 
Section 4.5
Severability. Any provision in this Amendment that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions
in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of this Amendment are declared to be severable. 
 
Section 4.6 Applicable Law. THIS AMENDMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF CALIFORNIA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 
 
Section 4.7 Successors and Assigns. This Amendment is
binding upon and shall inure to the benefit of the Obligated Parties, the Agent, and the Lenders and their respective successors and assigns, except no Obligated Party may assign or transfer any of its respective rights or obligations hereunder
without the prior written consent of the Lenders or as otherwise may be permitted pursuant to Section 12.1 of the Credit Agreement. 
 
Section 4.8 Counterparts. This Amendment may be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may execute this Amendment by signing any such counterpart and a telecopy of any such executed signature page shall be valid as an original. This Amendment shall be effective when it has been
executed by the Obligated Parties, the Agent, and the Lenders and each party has notified the Agent by facsimile transmission or telephone that it has taken such action. 
 
Section 4.9 Headings. The headings, captions, and arrangements used in this Amendment are for
convenience only and shall not affect the interpretation of this Amendment. 
 
Section 4.10 Entire Agreement. This Amendment embodies the entire agreement and understanding among the Obligated Parties, the Agent, the U.K. Security Trustee, and the Lenders relating to the
subject matter hereof and supersedes all prior agreements and understandings among the Borrowers, the Agent, and the Lenders relating to the subject matter hereof. 
 
Section 4.11 Consent of Term Loan B Lenders. By its signature below, each of the Lenders holding a
portion of the Term Loan B hereby acknowledges and consents that, notwithstanding anything in the Credit Agreement to the contrary, after giving effect to the terms of this Amendment, the Borrowers will not be required to apply the proceeds of the
2003 Convertible Notes to repayment of the Term Loan B. This acknowledgement and consent will survive the execution of this Amendment and apply regardless of any date of closing of the 2003 Convertible Notes. 
 
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Exhibit 4.1    
    

October 9th,
2000 

Peter
Jovanovich

355 Locust Avenue

Rye

New York 10580

United States 

Further
to Marjorie Scardino's letter to you dated August 24th, 2000, I am writing to confirm the amended terms of your employment agreement. 

Role  

	1.
	Your
position is that of Chief Executive Officer of Pearson Education Inc. ("Pearson Education" or the "Company"). In this capacity you report to Marjorie Scardino as Chief
Executive of Pearson plc ("Pearson") and are a member of the Pearson Management Committee. 

Compensation  

	2.
	Your
salary is $785,000 per annum, less applicable withholdings and deductions payable biweekly, or such higher amount as may be determined by Pearson at its discretion. This salary
will be reviewed with effect from January 2001 and annually thereafter. You will be expected to devote your full working time and effort to the affairs of Pearson Education and Pearson.

	3.
	In
addition to salary, you will participate in an annual incentive bonus plan of Pearson Education, under which your maximum bonus opportunity will be 100% of base salary. Targets will
be set and bonus paid based on Pearson Education and Pearson financial results. You are eligible to participate in the Pearson Annual Bonus Share Matching Plan under which you may take part of this
bonus in Pearson shares, which if held and if Pearson performance targets are met over time, will be matched by the Company.

	4.
	At
the discretion of the Personnel Committee of Pearson, you are eligible to participate in such long-term incentive plans as Pearson may establish, including the Pearson
Reward Plan, subject to the rules applicable to such plans or as amended from time to time.

	5.
	You
will be awarded a bonus equivalent in value to 58,343 Pearson shares based on the market price of Pearson shares on the date the bonus is awarded. (58,343 Pearson shares being
worth £1m (gross) based on the market price of Pearson shares on August 24th, 2000 of £17.14 per share.) The net amount of your bonus, after deduction of
income tax at your personal tax-withholding rate of 48.4%, will be used to acquire 30,105 Pearson shares under the Annual Bonus Share Matching Plan. Your own shares will be held under the
plan and you will be entitled to receive all dividends payable in respect of such shares and will have the rights commonly enjoyed by a beneficial owner of Pearson shares. Subject to a Pearson
performance condition being met, these shares will be matched by the Company on a gross basis on the basis of one share for every two held after three years and a further
one-for-two (a total of one-for-one) after five years. 

Severance  

	6.
	Your
employment commenced on August 4th 1997 and continued under this Agreement from August 25th, 1997, and shall continue until terminated by
either party at any time. However, if your employment is terminated by the Company without cause:

	(a)
	within
30 days of such termination, you will be paid, as severance pay, an amount equal to two times your then current annual base salary and target bonus. For this purpose,
target bonus will be defined as 50% of the then current maximum bonus referred to in paragraph 3;

	(b)
	you
will retain your entitlement to the full amount of Pearson Equity Incentives ("PEIs") granted to you in 1999 and 2000 under the Pearson Reward Plan without any scaling back by
reference to the period of employment in the relevant performance periods. In addition, any shares that vest (if and to the extent that the relevant performance conditions are met) may be called for
immediately and will not be subject to the two-year PEI retention period. 

You
recognise that item (b) is dependent on the exercise of discretion in your favour by the Pearson board at the time of cessation of employment. The decision of the board at the time cannot
be fettered by statements in this Agreement or decision of the board at this stage. However, the executive directors of Pearson will use their reasonable best efforts to recommend that such discretion
is exercised at the time. 

This
payment is provided you execute (and do not revoke) appropriate waivers and releases, consistent with this Agreement, required of you by Pearson Education at that time. 

	7.
	If
you are terminated for cause, defined as wilful refusal to perform your duties, gross misconduct, negligence, commission of any felony or any crime involving the Company, no
severance will be payable.

	8.
	If
you voluntarily leave your employment with Pearson Education, in which case no severance will be payable, the notice you would be required to give the Company will be three months. 

Benefits  

	9.
	You
will be eligible to participate in all the Company-sponsored benefit plans including the health, retirement and 401(k) plans in accordance with the plan rules, subject to the
Company's right to amend and/or terminate such plans in its sole discretion.

	10.
	Pearson
Education will reimburse you for all reasonable expenses incurred by you in the performance of your duties, including travel expenses and business entertainment expenses
provided you give a satisfactory accounting of all such expenses to the Company.

	11.
	You
will be provided with a company car and a driver will be available to you for business purposes as reasonably required. 

Obligations  

	12.
	You
agree that except for your duties on behalf of the Company, during your employment by the Company and for 12 months following the date upon which you cease to be an
employee of the Company, whichever is later, you will not directly or indirectly induce any executive or editor of, or author providing services to, any Pearson group company to terminate employment
or the provision of services to such Pearson group company or assist any other person or entity in identifying, soliciting, hiring or contracting with any such executive, editor or author. Activities
of other employees of any entity by which you may be employed following termination of your employment hereunder shall not be attributed to you unless specifically directed by you with knowledge of
violation of the foregoing. 

	13.
	You
acknowledge that in the course of employment by the Company you will receive and/or be in possession of confidential information of the Company and other members of the Pearson
group of companies relating to products, methods and style of operations, and to persons, firms and corporations which are customers of such companies. You agree that you will not, without the written
consent of the Company, during the term of your employment or thereafter, disclose or make use of any such confidential information except as may be required in the course of your employment
hereunder. Upon termination of your employment for any reason whatsoever, you shall immediately surrender to the Company all confidential information and property of the company in your possession.

	14.
	It
is agreed that the commitments contained in paragraphs 12 and 13 are an important and material part of this Agreement, and that the Company is entitled to seek injunctive
protection in the event of their breach or threatened breach, since damages for such breach are extremely difficult to measure.

	15.
	You
shall not be required to change your primary residence from the New York Metropolitan area, it being acknowledged that the performance of your duties will require frequent travel
to Upper Saddle River, New Jersey and other locations of the Company.

	16.
	Any
controversy or claim arising out of or relating to your employment of this Agreement or the breach of this Agreement (except that any action for injunctive relief permitted
hereunder pursuant to paragraphs 12 and 13 shall not be subject to this paragraph 16) that cannot be resolved by you and the company shall be submitted to arbitration in New York City in
accordance with the rules of the American Arbitration Association.

	17.
	This
Agreement contains the entire agreement between the parties and supersedes all prior agreements, written or oral, with respect thereto, including the Agreement dated
July 30th, 1997.

	18.
	This
Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law. 

Please
indicate your agreement to these arrangements by signing below. 

Yours
sincerely 

David Bell  

Director for People  

	 	Agreed:	 	
 Peter Jovanovich
	 	 	 	 
	 	 	 	 
	 	Date:	 	

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Exhibit 4.1

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