Document:

Exhibit 10.205.1

 

Exhibit 10.205.1

STATEMENT OF EXTENSION OF WARRANT EXERCISE DATE

On November 3, 2006 the Company and its Board of Directors unilaterally extended the expiration
date of the 6,000,000 second tranche warrants issued in connection with the Company’s 2006 Private
Placement Offering to March 1, 2007. The second tranche warrants previously were set to expire
November 30, 2006.

Before the Company’s December 2006 1-for-100 reverse stock split, these warrants had been
exercisable for 600,000,000 shares of common stock.Exhibit 10.205.2

 

Exhibit 10.205.2

STATEMENT OF EXTENSION OF WARRANT EXERCISE DATE

On February 26, 2007 the Company and its Board of Directors unilaterally extended the expiration
date of the 6,000,000 second tranche warrants issued in connection with the Company’s 2006 Private
Placement Offering to March 30, 2007. The second tranche warrants previously were set to expire
March 1, 2007.

Before the Company’s December 2006 1-for-100 reverse stock split, these warrants had been
exercisable for 600,000,000 shares of common stock.Exhibit 10.205.3

 

Exhibit 10.205.3

STATEMENT OF WARRANT EXERCISE INDUCEMENT AND PRICE PROTECTION

In March 2007 the Company unilaterally
offered a Warrant Exercise and Price Protection arrangement
to second tranche warrant holders of the 2006 Private Placement. The Warrant Exercise Price
Protection arrangement included a special warrant exercise inducement whereby (i) the warrant
holder would receive 2.5 shares of our common stock for each $2.00 of warrant exercise price paid
to us (this equates to an effective price of $0.80 per share) and (ii) the warrant holder would
receive short-term ratchet-style price protection (through
September 30, 2007) on March 2007 warrant exercises.EX-10.1

 

EXECUTION COPY

LIMITED WAIVER, CONSENT AND FOURTH AMENDMENT TO CREDIT

AGREEMENT 

     THIS LIMITED WAIVER, CONSENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Fourth
Amendment”) is entered into as of March 29, 2007 (the “Fourth Amendment Effective
Date”) among THE PRINCETON REVIEW, INC., a Delaware corporation (“Borrower”), the other
Loan Parties signatory hereto, the Lenders a party hereto and Golub Capital Incorporated, a New
York corporation, as administrative agent for the Lenders (“Administrative Agent”).

W I T N E S S E T H:

     WHEREAS, Borrower, the other Loan Parties, Lenders and Administrative Agent are parties to
that certain Credit Agreement dated as of April 10, 2006, pursuant to which Lenders extended a
revolving credit facility to Borrower in the amount of Six Million Dollars ($6,000,000), as amended
by that certain First Amendment to Credit Agreement dated as of May 25, 2006, pursuant to which
Lenders increased the revolving credit facility to Borrower to the amount of Ten Million Dollars
($10,000,000), as further amended by that certain Limited Waiver and Second Amendment to Credit
Agreement dated as of November 3, 2006, pursuant to which Lenders temporarily increased the
revolving credit facility to Fifteen Million Dollars ($15,000,000), as further amended by that
certain Limited Waiver, Consent and Third Amendment to Credit Agreement dated as of February 16,
2007, pursuant to which Lenders, among other things, adjusted the revolving credit facility to
Twelve Million Dollars ($12,000,000) (the “Credit Agreement”);

     WHEREAS, Borrower and Higher Edge Marketing Services, Inc., a California corporation (the
“Licensee”) intend to enter into a Services and License Agreement dated on or about the
date hereof in the form attached hereto as Exhibit A (the “License Agreement”);

     WHEREAS, the License Agreement provides that the Licensee shall provide services in connection
with the management of the Borrower’s existing marketing services business, as more fully provided
therein (all such transactions as provided in the License Agreement referred to herein as the
“Transactions”);

     WHEREAS, the Transactions are prohibited pursuant to Section 7.2 of the Credit
Agreement, which limits the making of loans by any Loan Party to any Person, Section 7.4 of
the Credit Agreement, which limits certain transactions by any Loan Party with its management or
any Affiliate, and Section 7.8 of the Credit Agreement, which limits the sale, transfer,
conveyance, assignment or other disposition by any Loan Party of certain of its assets;

     WHEREAS, in connection with the Fletcher Preferred Stock Financing (as defined in the Credit
Agreement), pursuant to Section 6 of that agreement to purchase preferred stock (“Stock
Purchase Agreement”), by and between the Borrower and Fletcher, dated as of May 28, 2004 and
Section 6 of the Series B-1 Preferred Stock Certificate of Designations of the Borrower, dated as
of June 4, 2004 (the “Certificate of Designations”), the holders of the Series B-1 Preferred Stock
of the Borrower retain the right to convert the Series B-1 Preferred Stock to common stock of the

 

 

Borrower, provided that the Borrower has the right to redeem the Series B-1 Preferred Stock in
cash, as more fully provided in Section 6 of the Stock Purchase Agreement and Section 6 of the
Certificate of Designations (the “Redemption”);

     WHEREAS the Redemption is currently prohibited by Section 7.14 of the Credit
Agreement, which prohibits certain Restricted Payments;

     WHEREAS, Borrower has requested the Lenders and Administrative Agent (i) consent to the
Transactions and waive the provisions of Sections 7.2, 7.4, and 7.8 of the
Credit Agreement solely for the purpose of completing the Transactions and (ii) consent to the
Redemption and waive provisions of Section 7.14 of the Credit Agreement solely for the
purpose of completing the Redemption;

     WHEREAS, in addition to the foregoing consent, the parties to the Credit Agreement desire to
waive compliance with certain provisions of the Credit Agreement and amend the terms of the Credit
Agreement to among other things, permit the Redemption on those terms and conditions as more fully
provided herein, and increase the Revolving Loan Commitment to an amount of Fifteen Million Dollars
($15,000,000) for the purposes of funding working capital;

     NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained
herein, the parties agree as follows:

     1. Defined Terms. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Credit Agreement.

     2. Limited Waiver and Consent.

          a. At the Borrower’s request, the Lenders hereby waive the Borrower’s violation of the
covenant set forth in Section 7.10(b) of the Credit Agreement for the period beginning
April 1, 2007 and ending January 1, 2008, and after which time such covenant shall be in full force
and effect.

          b. Subject to the conditions set forth in Section 4 hereof, the Lenders and Administrative
Agent hereby (i) consent to the Transactions, and solely in connection therewith, waive the terms
of Sections 7.2, 7.4 and 7.8 of the Credit Agreement and (ii) consent to
the Redemption, and solely in connection therewith, waive the terms of Section 7.14 of the
Credit Agreement.

     3. Amendments to Credit Agreement. Upon satisfaction of the conditions set forth in
Section 4 hereof, the Credit Agreement is hereby amended as follows:

(i) Schedule 1.1 (Definitions) of the Credit Agreement is hereby amended by:

(a) deleting the definition of “Commitments” in its entirety and replacing it as
follows:

” ‘Commitments’ shall mean (a) as to any Lender, the aggregate of
such Lender’s Revolving Loan Commitment as set forth on the signature page

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to the Fourth Amendment (as adjusted to reflect any assignments as permitted
hereunder) and (b) as to all Lenders, the aggregate of all Lenders’
Revolving Loan Commitments which aggregate commitment shall be fifteen
million dollars ($15,000,000).”

(b) deleting the definition of “Revolving Loan Commitment” in its entirety and
replacing it as follows:

“ ‘Revolving Loan Commitment’ shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances as set
forth in the signature page to the Fourth Amendment (as adjusted to reflect
any assignments as permitted hereunder) and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Revolving Credit Advances, which
aggregate commitment shall be fifteen million dollars ($15,000,000)
beginning on the Fourth Amendment Effective Date and at all times
thereafter.”

(c) inserting the following definitions in appropriate alphabetical order:

“ ‘Fourth Amendment’ shall mean that certain Fourth Amendment to
Credit Agreement, by and among Borrower, the other Loan Parties thereto,
Administrative Agent and the Lenders, dated as of March 29,
2007.’ ”

“ ‘Fourth Amendment Effective Date’ has the meaning given to such
term by the Fourth Amendment.’ ”

(ii) The fourth sentence of Section 2.1(a)(i) of the Credit Agreement is deleted in its
entirety and the following is substituted therefor:

“The aggregate amount of Revolving Credit Advances outstanding shall not exceed at
any time the lesser of (A) the Maximum Amount and (B) the Borrowing Base plus five
million dollars ($5,000,000) (“Borrowing Availability”).”

(iii) Section 2.3(a) of the Credit Agreement is hereby deleted in its entirety and the
following is substituted therefor:

“Voluntary Prepayments. Borrower may at any time on at least five (5) days’
prior written notice to Administrative Agent voluntarily prepay all or part of the
Revolving Loan and permanently reduce (but not terminate) the Revolving Loan
Commitment; provided that (i) any such prepayments or reductions shall be in
a minimum amount of $250,000 and integral multiples of $100,000 in excess of such
amounts, and (ii) the Revolving Loan Commitment shall not be reduced to an amount
less than $6,000,000. In addition, Borrower may at any time on at least five (5)
days’ prior written notice to Administrative Agent terminate the Revolving Loan
Commitment; provided that upon such termination, the entire portion of the principal
amount of the Revolving Loan then outstanding and all Obligations

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related thereto shall be immediately due and payable in full. Any such voluntary
prepayment and any such reduction or termination of the Revolving Loan Commitment
must be accompanied by the payment of the fee required by Section 2.9(c), if
any, plus the payment of any LIBOR funding breakage costs in accordance with
Section 2.13(b). Upon any such prepayment and reduction or termination of
the Revolving Loan Commitment, Borrower’s right to request Revolving Credit Advances
shall simultaneously be permanently reduced or terminated, as the case may be. For
the avoidance of doubt, no voluntary repayment of all or part of the Revolving Loan
shall be deemed to be a prepayment under this Section 2.3 unless accompanied
by a notice of permanent reduction of the Revolving Loan Commitment.”

(iv) Section 2.3(b)(i) of the Credit Agreement is hereby deleted in its entirety and the
following is substituted therefor:

“If at any time, the outstanding balance of the aggregate Revolving Loan exceeds the
lesser of (A) the Maximum Amount and (B) the Borrowing Base plus five million
dollars ($5,000,000), Borrower shall, within five (5) days, repay the aggregate
outstanding Revolving Credit Advances to the extent required to eliminate such
excess.”

(v) Section 2.4 of the Credit Agreement is hereby deleted in its entirety and the following
is substituted therefor:

“Borrower shall utilize the proceeds of the Revolving Loan for the financing of
Borrower’s working capital.”

(vi) Section 2.9(a) of the Credit Agreement is hereby deleted in its entirety and the
following is substituted therefor:

“(a) Borrower shall have paid to Administrative Agent on the Closing Date a closing
fee in an amount equal to 1.00% of the aggregate amount of the Commitments on such
date (i.e. $60,000) and shall have paid to Administrative Agent on the First
Amendment Effective Date a closing fee in an amount equal to 1.00% of the aggregate
increase in the Commitments on such date (i.e. $40,000) and shall have paid to
Administrative Agent on the Second Amendment Effective Date a closing fee in an
amount equal to 2.00% of the New Commitment (i.e. $100,000) and shall pay to
Administrative Agent on the Fourth Amendment Effective Date a closing fee in an
amount equal to 2.00% of the aggregate increase in the Commitments on such date
(i.e. $60,000).”

(vii) Section 2.9(b) of the Credit Agreement is hereby deleted in its entirety and the
following is substituted therefor:

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“(b) Borrower shall pay to Administrative Agent a termination fee in the amount of
$100,000 in the event the Revolving Loan Commitment is reduced to an amount less
than $6,000,000 at any time prior to October 10, 2010.”

(viii) Section 7.14(c) of the Credit Agreement is hereby deleted in its entirety and the
following is substituted therefor:

“(c)(i) dividends to Fletcher pursuant to the Fletcher Preferred Stock Financing
pursuant to Section 3 of the Series B-1 Preferred Stock Certificate of Designations
of the Borrower dated as of June 4, 2004 (the “Certificate of Designations”) and
(ii) redemption in cash of the Series B-1 Preferred Stock of the Borrower pursuant
to Section 6 of the Stock Purchase Agreement dated as of May 28, 2004 by and between
Fletcher and the Borrower and Section 6 of the Certificate of Designations;
provided, that, in each case pursuant to clause (c)(i) and (c)(ii)
above, no Default or Event of Default shall have occurred or be continuing at the
time of such dividend, distribution or redemption”

     4. Conditions. The effectiveness of this Fourth Amendment is subject to the following
conditions:

a. The execution and delivery of this Fourth Amendment by Borrower and the other
Loan Parties, Lenders and Administrative Agent;

b. Administrative Agent shall have received a certificate from each Loan Party,
executed by such Loan Party’s corporate secretary or an assistant secretary, dated
as of the date of the Fourth Amendment Effective Date, (i) providing that that there
have been no amendments or other modifications to such Loan Party’s charter and/or
certificate of formation provided on the Closing Date and that such charter and/or
certificate of formation remain true, complete and in full force and effect, (ii)
providing that there have been no amendments or other modifications to such Loan
Party’s bylaws or operating agreement, as applicable, provided on the Closing Date
and that such bylaws or operating agreement, as applicable, remains true, complete
and in full force and effect, (iii) attaching resolutions of such Loan Party’s
Governing Body or members, as applicable, approving and authorizing the execution,
delivery and performance of the Fourth Amendment and the transactions to be
consummated in connection therewith, (iv) providing signature and incumbency
certificates of the officers of such Loan Party, (v) attaching bringdown
certificates, covering the period beginning on the Third Amendment Effective Date
and ending on the Fourth Amendment Effective Date, regarding the good standing of
such Loan Party (including verification of tax status) in its state of
incorporation/formation, (vi) attaching bringdown certificates, covering the period
beginning on the Third Amendment Effective Date and ending on the Fourth Amendment
Effective Date, regarding the good standing (including verification of tax status)
and certificates of qualification to conduct business in each of New York, Delaware,
California and Pennsylvania.

c. Administrative Agent shall have received a duly executed original legal

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opinion of Patterson Belknap Webb & Tyler LLP, counsel for the Loan Parties, in form
and substance satisfactory to Administrative Agent and its counsel, dated the Fourth
Amendment Effective Date.

d. Borrower shall have delivered to Administrative Agent such other certificates,
documents and agreements respecting any Loan Party as Administrative Agent may
reasonably request.

e. Borrower shall have paid to Administrative Agent a closing fee in the amount of
$60,000, and shall have reimbursed Administrative Agent and Lenders for all other
fees, costs and expenses, including without limitation, reasonable attorney fees and
expenses, as of the Fourth Amendment Effective Date.

f. Solely for purposes of Section 2(b)(i) herein, Administrative Agent shall have
received an executed copy of the License Agreement in form and substance
satisfactory to the Administrative Agent; provided that the form attached hereto as
Exhibit A shall be deemed satisfactory to the Administrative Agent, and upon
such receipt, such License Agreement shall not be amended, modified, or supplemented
without Administrative Agent’s consent.

     5. Representations and Warranties. Each Loan Party hereby represents and warrants to
Administrative Agent and each Lender as follows:

a. Except as provided on Exhibit 5A hereto, the representations and
warranties made by such Loan Party contained in the Loan Documents are true and
correct in all material respects as of the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date, and except to the extent
such representations and warranties are qualified by materiality, contain dollar
thresholds or have Material Adverse Effect qualifiers, in which case, such
representations and warranties shall be true and correct in all respects);

b. such Loan Party is a corporation or limited liability company, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, as applicable;

c. such Loan Party has the power and authority to execute, deliver and perform its
obligations under this Fourth Amendment and the Credit Agreement, as amended hereby;

d. the execution, delivery and performance by such Loan Party of this Fourth
Amendment and the Credit Agreement, as amended hereby, have been duly authorized by
all necessary action;

e. this Fourth Amendment and the Credit Agreement, as amended hereby, constitutes
the legal, valid and binding obligation of such Loan Party, enforceable against such
Person in accordance with their terms, except as enforceability may

6

 

be limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditor’s rights generally or by equitable principles relating to
enforceability; and

f. no Default or Event of Default exists (and the Loan Parties specifically
acknowledge that any misrepresentation of the provisions of this Section 4 shall
constitute such an Event of Default).

     6. No Modification. Except as amended hereby, the Credit Agreement and the other Loan
Documents remain unmodified and in full force and effect. All references in the Loan Documents to
the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby.

     7. Counterparts. This Fourth Amendment may be executed by one or more of the parties
to this Fourth Amendment and any number of separate counterparts, each of which when so executed,
shall be deemed an original and all said counterparts when taken together shall be deemed to
constitute but one and the same instrument.

     8. Successors and Assigns. This Fourth Amendment shall be binding upon and inure to
the benefit of Borrower and each Loan Party and their successors and assigns and Administrative
Agent and Lenders and their successors and assigns.

     9. Further Assurance. Borrower hereby agrees from time to time, as and when requested
by Administrative Agent or any Lender, to execute and deliver or cause to be executed and
delivered, all such documents, instruments and agreements and to take or cause to be taken such
further or other action as Administrative Agent or such Lender may reasonably deem necessary or
desirable in order to carry out the intent and purposes of this Fourth Amendment, the Credit
Agreement and the Loan Documents.

     10. GOVERNING LAW. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.

     11. Severability. Wherever possible, each provision of this Fourth Amendment shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Fourth Amendment shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Fourth Amendment.

     12. Reaffirmation. Each of the Loan Parties as debtor, grantor, pledgor, guarantor,
assignor, or in any other similar capacity in which such Loan Party grants liens or security
interests in its property or otherwise acts as accommodation party or guarantor, as the case may
be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or
otherwise, under each of the Loan Documents to which it is a party (after giving effect hereto)

7

 

and (ii) to the extent such Loan Party granted liens on or security interests in any of its
property pursuant to any such Loan Document as security for or otherwise guaranteed Borrower’s
Obligations under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and
grant of security interests and liens and confirms and agrees that such security interests and
liens hereafter secure all of the Obligations as amended hereby. Each of the Loan Parties hereby
consents to this Fourth Amendment and acknowledges that each of the Loan Documents remains in full
force and effect and is hereby ratified and reaffirmed. The execution of this Fourth Amendment
shall not operate as a waiver of any right, power or remedy of Administrative Agent or Lenders,
constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation of
the Obligations.

     13. Release. The Borrower hereby remises, releases, acquits, satisfies and forever
discharges the Lenders and Administrative Agent, their agents, employees, officers, directors,
predecessors, attorneys and all others acting or purporting to act on behalf of or at the direction
of the Lenders and Administrative Agent (“Releases”), of and from any and all manner of
actions, causes of action, suit, debts, accounts, covenants, contracts, controversies, agreements,
variances, damages, judgments, claims and demands whatsoever, in law or in equity, which any of
such parties ever had, now has or, to the extent arising from or in connection with any act,
omission or state of facts taken or existing on or prior to the date hereof, may have after the
date hereof against the Releases, for, upon or by reason of any matter, cause or thing whatsoever
through the date hereof. Without limiting the generality of the foregoing, the Borrower waives and
affirmatively agrees not to allege or otherwise pursue any defenses, affirmative defenses,
counterclaims, claims, causes of action, setoffs or other rights they do, shall or may have as of
the date hereof, including, but not limited to, the rights to contest any conduct of the Lenders
and Administrative Agent or other Releases on or prior to the date hereof.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

8

 

     IN WITNESS WHEREOF, each of the undersigned has executed this Limited Waiver, Consent and
Fourth Amendment as of the date set forth above.

	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 
	 	 	THE PRINCETON REVIEW, INC., a Delaware corporation
	 
	 	 	 	 
	 

	 	By:	 	/s/ Stephen Melvin
	 

	 	 	 	 
	 

	 	Name:
	 	Stephen Melvin
	 

	 	Title:
	 	Chief Financial Officer and Treasurer
	 
	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 
	 	 	PRINCETON REVIEW OPERATIONS, L.L.C., a Delaware limited
liability company
	 
	 	 	 	 
	 

	 	By:	 	/s/ Stephen Melvin
	 

	 	 	 	 
	 

	 	Name:
	 	Stephen Melvin
	 

	 	Title:
	 	Chief Financial Officer and Treasurer

[Signature Page to Fourth Amendment to Credit Agreement]

 

	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:
	 
	 	 	 	 
	 	 	GOLUB CAPITAL INCORPORATED
	 
	 	 	 	 
	 

	 	By:	 	/s/ Gregory W. Cashman
	 

	 	 	 	 
	 

	 	Name:	 	Gregory W. Cashman 
	 

	 	Title:	 	Chief Investment Officer 
	 
	 	 	 	 
	 	 	LENDERS:
	 
	 	 	 	 
	 	 	GOLUB CAPITAL CP FUNDING
	 
	 	 	 	 
	 

	 	By:	 	/s/ Gregory W. Cashman 
	 

	 	 	 	 
	 

	 	Name:	 	Gregory W. Cashman 
	 

	 	Title:	 	Chief Investment Officer 
	 
	 

	 	Revolving Loan
Commitment: $15,000,000.00

[Signature Page to Fourth Amendment to Credit Agreement]

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