Document:

EX-10.1

 

Exhibit 10.1

RECAPITALIZATION AGREEMENT

     This RECAPITALIZATION AGREEMENT (this “Agreement”), dated as of June 29, 2007, is made
between HAIGHTS CROSS COMMUNICATIONS, INC., a Delaware corporation (the “Company”), and the
parties listed on Schedule I hereto (the “Investors”).

WITNESSETH:

     WHEREAS, certain of the undersigned Investors (the “Series A/Common Investors”) hold
the shares of the Company’s Series A Preferred Stock, par value $0.001 per share (the “Series A
Preferred Stock”) and shares of the Company’s Common Stock, par value $0.001 per share (the
“Common Stock”), as set forth opposite their respective names under the column “Series A
Preferred Stock” on Schedule I hereto;

     WHEREAS, certain of the undersigned Investors (the “Series B Investors” and
collectively with the Series A/Common Investors, the “Investors”) hold the shares of the Company’s
Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), as
set forth opposite their respective names under the column “Series B Preferred Stock” on
Schedule I hereto;

     WHEREAS, the Investors and the Company have agreed to a recapitalization of the Company (the
“Recapitalization”) which will change all the outstanding shares of the Series A Preferred
Stock, Series B Preferred Stock and the Company’s Series C Preferred Stock, par value $0.001 per
share (the “Series C Preferred Stock”, and together with the Series A Preferred Stock and
the Series B Preferred Stock, the “Preferred Stock”), into shares of the Company’s common
stock, par value $0.001 per share (the “Common Stock”), and all of the currently authorized
and outstanding shares of Common Stock into one share of Common Stock;

     WHEREAS, upon execution of this Agreement, the Investors will vote in favor of the Certificate
of Amendment to the Company’s Second Amended and Restated Certificate of Incorporation (the
“Charter”) attached hereto as Exhibit A (the “Amendment No. 1”), providing
for, among other things, a mechanism for the automatic conversion of the Preferred Stock;

     WHEREAS, following the satisfaction of the closing conditions contained in Section 5 below,
the Investors will execute the Election to Convert (as hereinafter defined) and, if applicable,
vote in favor of the Certificate of Amendment to the Charter attached hereto as Exhibit B
providing for, among other things, the reclassification of the Common Stock, (the “Amendment
No. 2” and with Amendment No. 1, the “Charter Amendments”) and the other changes in the
capital stock of the Company set forth therein; and

     WHEREAS, following the consummation of the transactions contemplated by the clauses above, the
Investors will hold that number of shares of the Company’s issued and outstanding shares of Common
Stock as listed opposite their name under the column “Conversion Shares” on Schedule I
hereto (the “Conversion Shares”) and the capitalization of the Company shall be as set
forth on Schedule 2.4(ii).

 

 

     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

1. Charter Amendments; Recapitalization; Closing 

     1.1 Amendment No. 1. On the date hereof, the Investors are executing and delivering to the
Company, the shareholders’ consent attached hereto as Exhibit C consenting to the adoption
of Amendment No. 1. The Company hereby agrees to file with the Delaware Secretary of State
Amendment No. 1 promptly hereafter.

     1.2 Recapitalization. Based upon the representations and warranties set forth herein and
subject to the conditions set forth in Section 5 below, at the Closing each Investor agrees to
effect the Recapitalization of the Company contemplated hereby by executing the Election to Convert
and, if applicable, voting in favor of the adoption of Amendment No. 2. Upon the execution and
delivery of the Election to Convert by the requisite number of Investors and the filing of
Amendment No. 2 and immediately following the reclassification of Common Stock, in accordance with
Amendment No. 1 and Amendment No. 2:

          (a) each share of outstanding Series A Preferred Stock shall be converted into
fully-paid and non-assessable shares of Common Stock at the rate of one share of
Common Stock for each $31.481 of accrued liquidation value of Series A Preferred
Stock as of June 30, 2007;

          (b) each share of outstanding Series B Preferred Stock shall be converted into
4.09953 fully paid non-assessable shares of Common Stock;

          (c) each share of outstanding Series C Preferred Stock shall be converted into
fully-paid and non-assessable shares of Common Stock at the rate of one share of
Common Stock for each $31.481 of accrued liquidation value of Series A Preferred
Stock as of June 30, 2007;

          (d) all shares of outstanding Common Stock shall be converted into one share
of fully paid non-assessable shares of Common Stock;

          (e) Warrants to purchase shares of Common Stock and Series A Preferred Stock
shall be adjusted by the Recapitalization according to the terms and conditions of
such Warrants.

     1.3 Closing. The consummation of the transactions contemplated hereby (the “Closing”)
shall be held at the offices of Goodwin Procter LLP, Exchange Place, Boston,
Massachusetts on the third business day (the “Closing Date”) following satisfaction of the
conditions precedent in Sections 5(i) and 5(n) and upon the satisfaction of all conditions
precedent thereto set forth herein. On the Closing Date, the Investors shall deliver the Election
to Convert and the Company hereby agrees to file with the Delaware Secretary of State

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Amendment No. 2. Upon the delivery of the Election to Convert by the requisite number of Investors
and the filing of Amendment No. 2, the certificates, options or warrants with respect to the
previously outstanding capital stock shall represent only the right of such holder to receive the
appropriate certificate, option or warrant as provided in Amendment No. 1 or Amendment No. 2. At
the Closing or thereafter, the Investors shall deliver to the Company for cancellation certificates
representing their shares of Preferred Stock, duly endorsed for transfer, or their warrants, and
the Company shall deliver to the Investors duly executed certificates representing the Common Stock
or warrants for Common Stock in such name or names as shall be requested prior to the Closing Date
by such Investor. In lieu of delivering any certificate, option or warrant representing previously
outstanding rights required to be delivered by this paragraph, Amendment No. 1 or Amendment No. 2,
the holder may execute and deliver an affidavit that such certificate has been lost, stolen or
destroyed and an agreement to indemnify the Company for any loss incurred by it in connection
therewith.

2. Representations and Warranties of the Company

     In order to induce the Investors to enter into this Agreement and consummate the transactions
contemplated hereby, the Company hereby makes to the Series B Investors the representations and
warranties contained in this Section 2.

     2.1 Organization and Corporate Power. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. The Company has all required corporate
power and authority to carry on its business as presently conducted, to enter into and perform this
Agreement and the agreements contemplated hereby to which it is a party and to carry out the
transactions contemplated hereby and thereby, including the issuance of the Conversion Shares. The
Company is duly qualified to do business and in good standing as a foreign corporation where
required to be qualified and it is not required to be licensed or qualified to conduct its business
or own its property in any other jurisdiction, except where failure to be so licensed or qualified
does not now have and is not reasonably expected to have a Material Adverse Effect on the Company.
A “Material Adverse Effect” means, with respect to the Company, any change, event, effect,
or set of circumstances that, when taken together with all other adverse changes, events, effects,
or sets of circumstances that have occurred, is or is reasonably likely to be materially adverse to
the business, operations, properties, condition (financial or otherwise), prospects or assets of
the Company and its subsidiaries taken as a whole, except for any such change, event, effect or set
of circumstances resulting from (a) changes in conditions (including changes in law or general
accepted accounting principles) affecting similar businesses, the United States of America or
global economy, (b) this Agreement, the transactions contemplated hereby or the announcement
thereof, (c) the commencement, continuation or escalation of a war, material armed hostilities or
other material international or national calamity or act of terrorism directly or indirectly
involving or affecting the Unites States of America or (d) earthquakes, hurricanes, other natural
disasters or acts of God, which, in the case of each of clause (a), (b), (c) and (d) do not affect
the Company or its subsidiaries, taken as a whole, in a materially disproportionate manner relative
to other participants in similar businesses.

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     2.2 Subsidiaries. Except as set forth in the Company’s Form 10-K filed with the SEC on March 22,
2006, the Company has no subsidiaries and does not own any shares of capital stock or control
directly or indirectly any corporation or any partnership, joint venture or other non-corporate
business entity. All of the subsidiaries are wholly-owned by the Company.

     2.3 Authorization and Non-Contravention. This Agreement and all agreements, documents and
instruments executed and delivered by the Company pursuant to this Agreement are valid and binding
obligations of the Company, enforceable in accordance with their respective terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the rights of creditors generally and subject to the rules of law governing (and all limitations
on) specific performance, injunctive relief and other equitable remedies. The execution, delivery
and performance of this Agreement and all agreements, documents and instruments executed and
delivered by the Company pursuant hereto, including the issuance and delivery of the Conversion
Shares, have been duly authorized by all necessary corporate action of the Company. The execution
and delivery of this Agreement and all agreements, documents and instruments executed and delivered
by the Company pursuant this Agreement, the issuance and delivery of the Conversion Shares, and the
performance of the transactions contemplated by this Agreement and such other agreements, documents
and instruments do not and will not (i) violate, conflict with or result in a default (whether
after the giving of notice, lapse of time or both) or loss of benefit under any contract or
obligation to which the Company is a party or by which its assets are bound, or any provision of
the Company’s Charter, as amended, or By-laws, or cause the creation of any liens, claims or
encumbrances upon any of the assets of the Company; (ii) violate or result in a violation of, or
constitute a default (whether after the giving of notice, lapse of time or both) under, any
provision of any law, regulation or rule, or any order of, or any restriction imposed by, any court
or other governmental agency applicable to the Company; (iii) require from the Company any notice
to, declaration or filing with, or consent or approval of any governmental authority or other third
party (that has not already been obtained); or (iv) violate or result in a violation of, or
constitute a default (whether after the giving of notice, lapse of time or both) under, accelerate
or create any obligation under, or give rise to a right of termination of, any agreement, permit,
license or authorization to which the Company is a party or by which the Company is bound.

     2.4 Capitalization.

          (a) The current capitalization of the Company is set forth on Schedule 2.4(i).
The issuance of all of such issued and outstanding shares was duly authorized and
all such shares are fully paid and nonassessable, were issued in compliance with
applicable Federal and state securities laws, and were not issued in violation of
any person’s preemptive rights.

          (b) Except as set forth on Schedule 2.4(ii), immediately after the Closing,
there will be no (i) outstanding or authorized subscriptions, warrants, options or
other rights granted by the Company to purchase or acquire, or preemptive rights
with respect to the issuance or sale of, the capital stock of the Company, or which
obligate or may obligate the Company to issue any

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additional shares of its capital stock or any securities convertible into or
evidencing the right to subscribe for any shares of its capital stock, (ii) other
securities of the Company directly or indirectly convertible into or exchangeable
for shares of capital stock of the Company, or (iii) other rights relating to the
Company’s capital stock. No “phantom” stock, stock appreciation rights or
agreements or similar rights or agreements exist which are intended to confer on
any person rights similar to any rights accruing to owners of the Company’s capital
stock.

          (c) Immediately following the Closing Date, the capitalization of the Company
shall be as set forth on Schedule 2.4(ii).

     2.5 Reporting Status. Except as set forth on Schedule 2.5, the Company has filed in a
timely manner all documents that the Company was required to file under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) during the twelve (12) months preceding the date
of this Agreement. The following documents complied as to form in all material respects with the
requirements of the Securities and Exchange Commission’s (the “SEC”) and the information
contained therein as of the date thereof did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made not misleading:

          (a) all Forms 10-K, 10-Q and 8-K (including any and all amendments thereto)
filed since January 1, 2006;

          (b) all other documents, if any, filed by the Company with the SEC since
January 1, 2006; and

          (c) The draft Form 10-K dated May 15, 2007 for the period ended December 31,
2006 and Form 10-Q for the period ended March 31, 2007 (the “First Quarter 10-Q”)
(including any and all amendments thereto), but such forms did not comply with
their respective filing dates. Copies of such forms have been provided to the
Series B Investors.

     The documents listed under 2.5(a) and 2.5(b) complied in all material respects with SEC’s
requirements with respect to their filing dates.

     2.6 Compliance with Laws; Permits. The Company is not in violation of any applicable statute,
rule, regulation, order or restriction of any domestic or foreign government or any instrumentality
or agency thereof in respect of the conduct of its business or the ownership of its properties
which violation would reasonably be expected to have a Material Adverse Effect on the Company. No
governmental orders, permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance and delivery of the Conversion Shares, except such as
have been duly and validly obtained or filed, or with

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respect to any filings that may be made after the Closing, as will be filed in a timely manner.
The Company has all franchises, permits, licenses and any similar authority necessary for the
conduct of its business as currently conducted by it and as presently proposed to be conducted,
except the lack of which would not reasonably be expected to have a Material Adverse Effect on the
Company.

     2.7 Absence of Undisclosed Liabilities. Except as set forth on Schedule 2.7, the Company has
no liabilities of any nature, whether accrued, absolute, contingent or otherwise (including without
limitation liabilities as guarantor or otherwise with respect to obligations of others, or
liabilities for taxes due or then accrued or to become due), except: (a) liabilities stated or
adequately reserved against on the balance sheet presented in the First Quarter 10-Q, (b)
liabilities incurred since March 31, 2007 in the ordinary course of business consistent with past
practices (none of which is a claim for breach of contract, breach of duty, breach of warranty,
tort, or infringement of an intellectual property right), and (c) liabilities disclosed on Schedule
2.7 hereto.

     2.8 Conduct of Business; Absence of Certain Changes.

     Since March 31, 2007, except as disclosed on Schedule 2.8, the Company has conducted the
business of the Company only in the ordinary course of business, consistent with prior practices
and, whether or not in the ordinary course of business, there has not been any Material Adverse
Effect on the Company. Without limiting the generality of the foregoing, except as set forth in
Schedule 2.8 and as contemplated by this Agreement and the transactions set forth herein, since
March 31, 2007, neither the Company, nor any subsidiary, has directly or indirectly, done any of
the following:

          (a) entered into any agreement with an affiliate, including its stockholders,
officers and directors;

          (b) issued, sold, disposed of or encumbered or authorized the issuance, sale,
disposition or encumbrance of, or granted or issued any option, warrant or other
right to acquire or made any agreement with respect to, any shares of its capital
stock or any other of its securities or any security convertible or exercisable
into or exchangeable for any such shares or securities, or altered any term of any
of its outstanding securities or made any change in its outstanding shares of
capital stock or its capitalization, whether by reason of a reclassification,
recapitalization, stock split, combination, exchange or readjustment of shares,
stock dividend or otherwise;

          (c) declared, set aside, made or paid any dividend or other distribution to
any shareholder with respect to its capital stock;

          (d) redeemed, purchased or otherwise acquired any of its capital stock;

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          (e) made any change in the compensation or other amounts payable or to become
payable by the Company to any of its officers, employees or agents; or any change
in any bonus, pension or profit sharing payment, entitlement or arrangement made to
or with any of such officers, employees or agents; or any grant of any loans or
severance or termination pay; or any entrance into or variation of the terms of any
employment agreement, including retention agreements, or adoption of or increase
in, the benefits under any benefit plan;

          (f) adopted or (except as otherwise required by law) amended or made any
unscheduled contribution to any employee benefit plan for or with employees, or
entered into any collective bargaining agreement;

          (g) made any loan or advance to any person other than travel and other similar
routine advances in the ordinary course of business consistent with past practice,
or acquired any capital stock or other securities or any ownership interest in, or
substantially all of the assets of, any other business enterprise; or

          (h) entered into any commitment to do any of the foregoing, or any action
which would make any of the representations or warranties of the Company contained
in this Agreement untrue or incorrect in any material respect (subject to the
knowledge and materiality limitations set forth therein) or caused any covenant,
condition or agreement of the Company in this Agreement not to be complied with or
satisfied in any material respect.

     2.9 Litigation. Except as set forth in Schedule 2.9, there is no action, suit, claim,
proceeding, investigation or arbitration proceeding pending (or, to the knowledge of the Company,
threatened) against or otherwise involving the Company or any of the Company capital stock or any
of the officers, directors, former officers or directors, employees, shareholders or agents of the
Company (in their capacities as such) and there are no outstanding Court Orders to which the
Company is a party or by which any of its assets are bound, any of which (a) question this
Agreement or any action to be taken hereby or affect the transactions contemplated hereby, or (b)
materially restrict the present business properties, operations, prospects, assets or condition,
financial or otherwise, of the Company or (c) if successfully prosecuted against the Company, would
result in any materially adverse change in the business, properties, operations, prospects, assets
or the condition, financial or otherwise, of the Company. The Company has no reason to believe
that any such action, suit, proceeding, investigation or arbitration proceeding may be brought
against the Company.

     2.10 Broker Fees. Except as set forth in Schedule 2.10, there are no other agreements between
the Company and any broker, finder, investment banker or financial advisor.

     2.11 Certain Relationships. Except as set forth on Schedule 2.11, no officer, director or
stockholder of the Company has any contract, agreement or arrangement (written or oral) with

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the Company, and all such agreements are on arms-length terms. Schedule 2.11 lists all
contracts, agreements and arrangements (written or oral) related to the compensation arrangements
of the Company’s executive officers.

     2.12 Disclosure of Material Information. Neither this Agreement, the financial statements
(including the footnotes thereto), or any schedule, exhibit, document or certificate delivered by
or on behalf of the Company pursuant hereto, including pursuant to Section 4.2 hereof, contains any
untrue statement of a material fact or omits to state a material fact necessary to make the
statements herein or therein not misleading. Other than general economic conditions, there is no
fact that materially adversely affects, or may in the future (so far as can now be reasonably
foreseen) materially adversely affect, the business, properties, operations or conditions of the
Company which has not been specifically disclosed herein, in a schedule hereto or will not be
disclosed pursuant to Section 4.2 hereof.

     2.13 Employee Waivers. The Company has received waivers from Peter J. Quandt and Paul J.
Crecca that no “change of control” provisions of their employment agreements each dated January 31,
2007 (the “Quandt Employment Agreement” and the “Crecca Employment Agreement”,
respectively) shall be triggered by any of the transactions contemplated by this Agreement. Copies
of such waivers have been provided to the Investors.

3. Representation and Warranties of the Investors

     In order to induce the Investors to enter into this Agreement and consummate the transactions
contemplated hereby, each of the Stockholders, individually and not jointly, hereby makes to the
other Stockholders the representations and warranties contained in this Section 3.

     3.1 Authority and Non-Contravention. The Investor has full right, authority and power under its
charter, by-laws or governing partnership or limited liability agreement, as applicable, to enter
into this Agreement and all agreements, documents and instruments executed by the Investor pursuant
to this Agreement and to carry out the transactions contemplated hereby and thereby. This
Agreement and all agreements, documents and instruments executed by the Investor pursuant to this
Agreement are valid and binding obligations of the Investor enforceable in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of creditors generally and subject to the rules of
law governing (and all limitations on) specific performance, injunctive relief and other equitable
remedies. The execution, delivery and performance of this Agreement and all agreements, documents
and instruments executed by the Investor pursuant to this Agreement have been duly authorized by
all necessary action under the Investor’s charter, by-laws or governing partnership or limited
liability agreement, as applicable. The execution, delivery and performance by the Investor of
this Agreement and all agreements, documents and instruments to be executed and delivered by the
Investor pursuant to this Agreement do not and will not: (i) violate or result in a violation of,
conflict with or constitute or result in a default (whether after the giving of notice, lapse of
time or both) under, accelerate any obligation under, or give rise to a right of termination of,
any material contract, agreement, obligation, permit, license or authorization to which the
Investor is a party or by which the Investor or its assets is

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bound, or any provision of the Investor’s organizational documents; (ii) violate or result in a
violation of, or constitute a default (whether after the giving of notice, lapse of time or both)
under, any provision of any law, regulation or rule, or any order of, or any restriction imposed
by, any court or governmental agency applicable to the Investor; (iii) require from the Investor
any notice to, declaration or filing with, or consent or approval of, any governmental authority or
other third party (that has not already been obtained) or (iv) violate or result in a violation of,
or constitute a default (whether after the giving of notice, lapse of time or both) under,
accelerate any obligation under, or give rise to a right of termination of any agreement, permit,
license or authorization to which the Stockholder is a party or by which the Stockholder is bound.

     3.2 Title to Shares. The Investor is the beneficial owner of, and has good and marketable title
to, the shares of Preferred Stock Investor as set forth opposite its name on Schedule I
hereto, free and clear of all security interests, claims, liens or other encumbrances.

     3.3 Investment Representations. The Investor understands that the Conversion Shares have not been
registered or qualified under the Securities Act of 1933, as amended (the “Securities Act”)
or the Exchange Act (together with the Securities Act, the “Acts”). The Conversion Shares
are being offered pursuant to an exemption from registration and/or qualification contained in the
Acts by reason of specific exemptions from the registration and/or qualification provisions of the
Acts which depend upon, among other things, the bona fide nature of the investment intents and the
accuracy of the Investor ‘s representations as expressed in this Section 3.3.

          (a) Stockholder Bears Economic Risk. The Investor understands that
the Conversion Shares will be “restricted securities” under applicable securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations the
Conversion Shares may be resold without registration and/or qualification under the
Acts only in certain limited circumstances. The Investor acknowledges that the
Conversion Shares must be held indefinitely unless subsequently registered and/or
qualified under the Acts or an exemption from such registration and/or
qualification in available. The Investor understands that no public market now
exists for any of the securities issued by the Company and that there is no
assurance that a public market will ever exist for the securities.

          (b) Acquisition for Own Account. The Investor is acquiring the
Conversion Shares for investment for its own account, not as a nominee or agent,
and not with a view to, or for resale in connection with, any distribution thereof,
and the Stockholder has no present intention of selling, granting any participation
in, or otherwise distributing the same. The Investor further represents that such
Investor does not have a contract, understanding, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
party with respect to any of the Conversion Shares. In

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addition, the Investor is not aware of any publication of any advertisement in
connection with the transactions contemplated in this Agreement.

          (c) Investor Experience. The Investor has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits and
risks of its investment in the Company and has the capacity to protect its own
interests.

          (d) Economic Risk. The Investor understands that the Conversion
Shares are a highly speculative investment. The Investor is able, without
impairing the Investor’s financial condition, to hold the Conversion Shares for an
indefinite period of time and to suffer a complete loss of the Investor’s
investment.

          (e) Accredited Investor or Investment Advisor. The Investor
represents that it is either (i) an “accredited investor” within the meaning of SEC
Rule 501 of Regulation D, as presently in effect or (ii) an investment adviser
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940.

          (f) Due Diligence. Each Investor has made, either alone or together
with its advisors, such independent investigation of the Company, its management
and related matters as it deems to be, or as such advisors have advised to be,
necessary or advisable in connection with an investment in the Conversion Shares;
and the Investor and its advisors have received all information and data that it
and such advisors believe to be necessary in order to reach an informed decisions
as to the advisability of an investment in the Conversion Shares, including that
certain Offering Memorandum dated June 28, 2007, bearing in mind (among other
factors, without limitation) that Investor may not be able to dispose of the
Conversion Shares for the indefinite future.

          (g) Residence. If the Investor is an individual, then Investor
resides in the state or province identified in the address of such Stockholder set
forth on Schedule I hereto; if the Investor is a partnership, corporation,
limited liability company or other entity, then the office or offices of the
Investor in which its investment decisions was made is located at the address or
addresses of such Investor set forth on Schedule I hereto.

4. Covenants

     4.1 Cooperation; Approvals, Filings and Consents; Further Assurances.

          (a) Upon the terms and subject to the conditions set forth in this Agreement,
each party hereto shall use its reasonable best efforts to take, or

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cause to be taken, all actions, and do, or cause to be done, and to assist and
cooperate with the other party or parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Recapitalization and the other transactions contemplated hereby
and to satisfy or cause to be satisfied all of the conditions precedent that are
set forth in this Agreement, as applicable to each of them. Each party hereto, at
the reasonable request of another party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be necessary
or desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.

          (b) Each of the Company and the Investors shall use reasonable efforts to
obtain the authorizations, consents, orders and approvals and to make filings from
or with any governmental authority or other third party necessary for their
execution and delivery of, and the performance of their obligations pursuant to,
this Agreement. The parties hereto will not knowingly take any action that will
have the effect of delaying, impairing or impeding the receipt of any required
approvals and shall promptly respond to any requests for additional information
from any governmental authority. The Company hereby covenants and agrees to use
its reasonable best efforts to secure the Bondholder Consents (as defined in
Section 5(i)) and shall keep the Investors apprised of its progress. Each of the
Company and the Investors hereby covenants and agrees to use its reasonable best
efforts to secure termination of any waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the “HSR Act”) or any other
applicable domestic or foreign law, as applicable, for the Recapitalization and the
other transactions contemplated hereby. Notwithstanding the foregoing, nothing
herein shall require the Company, in connection with the receipt of any regulatory
approval, to agree to sell, divest or license any assets or business or agree to
restrict any business conducted by or proposed to be conducted by the Company, or
to litigate or formally contest any proceedings relating to any regulatory approval
process in connection with the Recapitalization.

     4.2 Access to Information. For a period of ten (10) days (the “Due Diligence Period”)
upon reasonable notice, the Company shall cause each of its officers, directors, employees, agents,
representatives, accountants, consultants and counsel to: (i) afford to the officers, employees,
accountants, counsel and other representatives of the Series B Investors reasonable access during
normal working hours to the offices, properties, books, contracts and records of the Company for
the purpose of conducting a due diligence investigation of the Company and (ii) furnish to the
officers, employees and authorized agents, accountants, counsel and other representatives of the
Series B Investors such additional financial and operating data and other information regarding the
Company as the Series B Investors may reasonably request during the Due Diligence Period in
connection with the purpose described above, including but not limited to a presentation (the
“Presentation”) to the Series B Investors by the Company’s management and advisors that
covers, at a minimum: (a) valuation of the Company; (b) analysis

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regarding a sale of the Company; (c) strategic alternatives for the Company; and/or (d)
delivery of, and assessment or evaluation of, the Company’s business plan. During the Due
Diligence Period, the Company (directly and/or through its advisors) will provide the Series B
Investors with an assessment (both in detail and in summary) of the Company’s ability to utilize
its net operating losses (“NOLs”), including but not limited to confirmation of the amount
of existing NOLs, any existing limitations on such NOLs, and ability (and limitations thereon) to
utilize the NOLs (including expected net unrealized built in gain or net unrealized built in loss)
after the Recapitalization. The Due Diligence Period shall commence on the date of the
Presentation. All requests for access to the officers, employees, accountants, counsel and other
representatives of the Company or any information concerning its business, properties, books,
contracts, records and personnel shall be submitted or directed by the Series B Investors
exclusively to any of the Chief Executive Officer, the Chief Financial Officer of the Company, or
the Company’s counsel or advisors. The Series B Investors shall hold in confidence all such
information on the terms and subject to the conditions contained in a confidentiality agreement in
the form attached hereto as Exhibit D.

     4.3 Release of Litigation Claims. At the Closing, the Company and the Investors will execute
and deliver to the Company and the other Investors a release in the form attached hereto as
Exhibit E.

     4.4 Conduct of Business. From the date hereof until the Closing, the Company shall, and shall
cause each of its subsidiaries to, conduct its business in the ordinary course and consistent with
past practices and use all commercially reasonable efforts to preserve intact its present business
organization. Without limiting the generality of the foregoing, the Company shall not, and the
Company shall not permit any subsidiary to, except as contemplated by this Agreement, directly or
indirectly, do, or propose to do, any of the following without the prior written consent of holders
owning a majority of the outstanding shares of Series B Stock then held by the Series B Major
Investors, in their sole and absolute discretion (a “Majority Vote of the Series B
Investors”), which consent may be withheld in their sole and absolute discretion:

          (a) enter into any agreement with an affiliate, including its stockholders,
officers and directors;

          (b) issue, sell, dispose of or encumber or authorize the issuance, sale,
disposition or encumbrance of, or grant or issue any option, warrant or other right
to acquire or make any agreement with respect to, any shares of its capital stock
or any other of its securities or any security convertible or exercisable into or
exchangeable for any such shares or securities, or alter any term of any of its
outstanding securities or make any change in its outstanding shares of capital
stock or its capitalization, whether by reason of a reclassification,
recapitalization, stock split, combination, exchange or readjustment of shares,
stock dividend or otherwise;

          (c) declare, set aside, make or pay any dividend or other distribution to any
shareholder with respect to its capital stock;

12

 

          (d) redeem, purchase or otherwise acquire any of its capital stock;

          (e) make any change in the compensation or other amounts payable or to become
payable by the Company to any of its officers, employees or agents; or any change
in any bonus, pension or profit sharing payment, entitlement or arrangement made to
or with any of such officers, employees or agents; or any grant of any loans or
severance or termination pay; or any entrance into or variation of the terms of any
employment agreement, including retention agreements, or adoption of or increase
in, the benefits under any benefit plan;

          (f) adopt or (except as otherwise required by law) amend or make any
unscheduled contribution to any employee benefit plan for or with employees, or
enter into any collective bargaining agreement;

          (g) make any loan or advance to any person other than travel and other similar
routine advances in the ordinary course of business consistent with past practice,
or acquire any capital stock or other securities or any ownership interest in, or
substantially all of the assets of, any other business enterprise;

          (h) enter into any new contract with any existing broker, finder, investment
banker or financial advisor or modify any existing contract, or enter into any
other contract with any broker, finder, investment banker or financial advisor; or

          (i) enter into any commitment to do any of the foregoing, or any action which
would make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect in any material respect (subject to the
knowledge and materiality limitations set forth therein) or cause any covenant,
condition or agreement of the Company in this Agreement not to be complied with or
satisfied in any material respect.

     4.5 Expenses. The Company has previously reimbursed the Series B Investors $50,000 of Covered
Expenses (as hereafter defined). The Company will promptly following execution of this Agreement
reimburse the Series B Investors an additional $50,000 of Covered Expenses. At the Closing, the
Company will reimburse the Series B Investors for any Covered Expenses they will have incurred in
excess of $100,000. “Covered Expenses” shall mean the reasonable legal fees and expenses
incurred by the Series B Investors in connection with their retention of Brown Rudnick Berlack
Israels LLP relating to the Series B Investors’ interests in the Company, including the matters
that led to that certain lawsuit encaptioned Glenview Capital Partners, L.P. et al v. Haights Cross
Communications, Inc. Court of Chauncey, State of Delaware (C.A. No. 2757 VCS) (the “Current
Lawsuit”), the commencement and prosecution of the Current Lawsuit, the negotiation and drafting of
the letter of intent dated June 6, 2007 and this Agreement and all the matters relating to the
Recapitalization.

13

 

     4.6 Consent to Amendment No. 2. At the Closing, each applicable Investor shall execute and
deliver to the Company the stockholder consent adopting and approving Amendment No. 2 attached
hereto as Exhibit F required under the General Corporation Law of the State of Delaware and
the Company’s Second Amended and Restated Certificate of Incorporation, as amended.

     4.7 Shareholders Agreement. At the Closing, each Investor shall execute and deliver the
Shareholders’ Agreement attached hereto as Exhibit G (the “Shareholders’
Agreement”).

     4.8 Election to Convert. At the Closing, each Investor shall execute and deliver the Election
to Convert attached hereto as Exhibit H (“Election to Convert”).

     4.9 Title. Each of the Investors that are also holders of indebtedness of the Company for
which waivers will be sought as provided in Section 5(i) hereof shall vote in favor of any
Bondholder Consents (as defined herein) that are a condition to Closing provided that the Company
shall offer the Senior Discount Note holders a consent fee of 0.25 of 1% for each $1,000 of
Accreted Value (as defined in the 2004 Indenture, defined below) with respect to the applicable
Senior Discount Note.

     4.10 Suspension of Litigation. Subsequent to the execution of this Agreement and pending the
Closing or termination of this Agreement as provided for in paragraph 7.2, the plaintiffs (the
“Plaintiffs”) in that certain action captioned Glenview Capital Partners, L.P. et al. v.
Haights Cross Communications, Inc., Court of Chancery, State of Delaware (C.A. No. 2757 VCS) (the
“Current Lawsuit”), and the Company agree to suspend further discovery or other
activity in the Current Lawsuit except to the extent required by the Court.

     4.11 8-K filing. Four days after signing of this Agreement, the Company will file with the
SEC on a Form 8-K, this Agreement.

     4.12 Board of Directors. At or prior to the Closing, the Investors shall provide the Company
with the names of the directors that will constitute their board designees. At or prior to the
Closing, the Series A/Common Investors shall (i) cause the board of directors of the Company to be
reconstituted so that the directors shall, upon the Closing, be those persons named in the
Shareholders’ Agreement and (ii) cause the amendment to the Bylaws of the Company attached hereto
as Exhibit I to be adopted.

     4.13 Board of Directors. At or prior to the Closing, the Board of Directors shall
establish the Deadlocks Committee and appoint its members.

5. Conditions to Closing of the Investors

     The obligations of each of the Investors to consummate the Closing are subject to the
satisfaction of each of the following conditions:

14

 

          (a) no provision of any applicable law or regulation and no judgment, injunction, order or
decree shall prohibit the consummation of the Closing;

          (b) the representations and warranties of each Investor contained in this Agreement at the
time of its execution and delivery by each of the Investors shall be true and correct in all
material respects at and as of the Closing Date as if made at and as of such date, and without
regard to qualifications concerning materiality or material adverse effect;

          (c) the representations and warranties of the Company contained in this Agreement at the time
of execution and delivery by the Company shall be true and correct in all material respects at and
as of the Closing Date as if made at and as of such date, and without regard to qualifications
concerning materiality or material adverse effect;

          (d) the Company shall have performed all of its obligations hereunder required
to be performed by it on or prior to the Closing Date;

          (e) each other Investor shall have performed all of its obligations hereunder
required to be performed by it on or prior to the Closing Date;

          (f) The Investors shall have received:

               (i) A copy of the Company’s Certificate of Incorporation, as amended by the Charter
Amendments, certified by the Secretary of State of the State of Delaware, a copy of the resolutions
of the Board of Directors and the stockholders of the Company evidencing the approval, and subject
to Stockholder approval, the adoption of the Charter Amendments, the approval of this Agreement,
the issuance of the Conversion Shares and the other matters contemplated hereby, all of which shall
have been certified by the Secretary of the Company to be true, complete and correct, and certified
copies of all documents evidencing other necessary corporate or other action and governmental
approvals, if any, with respect to this Agreement and the Conversion Shares;

               (ii) A certificate of the Secretary of the Company that shall certify the names of the
officers of the Company authorized to sign this Agreement, the certificates for the Shares and the
other documents, instruments or certificates to be delivered pursuant to this Agreement by the
Company or any of its officers, together with the true signatures of such officers;

               (iii) Certificate of Good Standing for the Company from the Secretary of State of the State of
Delaware shall have been provided to counsel to the Series B Investors for the Company and its
subsidiaries; and

               (iv) The opinions of Richards Layton & Finger, dated the Closing Date, in the forms of
Exhibit J.

15

 

          (g) the waiting period (and any extension thereof) applicable to the
consummation of the Recapitalization under the HSR Act shall have expired or been
terminated;

          (h) the Investors shall have received the opinion of Goodwin Procter LLP,
dated as of the Closing Date in the form of Exhibit K.

          (i) the Company shall have received the requisite consents of: (i) the holders
of the Company’s 12.5% Senior Discount Notes due 2011 and Haights Cross Operating
Company’s 11 3/4% Senior Notes due 2011 to waive the requirement to offer to
repurchase the indebtedness under Section 4.15 of the Haights Cross Communications,
Inc. 12 1/2% Senior Discount Notes Due 2011 Indenture (“2004 Indenture”)
dated as of February 2, 2004 and the Haights Cross Operating Company 11 3/4% Senior
Notes Due 2011 Indenture (“2003 Indenture” and with the 2004 Indenture,
the “Indentures”) dated as of August 20, 2003, respectively; (ii) the
Lenders of the Company’s $100,000,000 term loan and the Lenders of Haights Cross
Operating Company’s $30,000,000 term loan to waive the requirement to prepay the
indebtedness under Section 6.13 of the $100,000,000 Term Loan Agreement among
Haights Cross Operating Company, as Borrower, the Several Lenders from Time to Time
Parties thereto, and Bear Stearns Corporate Lending Inc. as Administrative Agent
dated as of August 20, 2003 and the $30,000,000 Term Loan Agreement among Haights
Cross Operating Company, as Borrower, the Several Lenders from Time to Time Parties
thereto, and Bear Stearns Corporate Lending Inc. as Administrative Agent dated as
of December 10, 2004, respectively; and (iii) the Lenders of Haights Cross
Operating Company’s $30,000,000 revolving line of credit to waive any default under
Section 8(k) of the $30,000,000 Revolving Credit Agreement among Haights Cross
Operating Company, as Borrower, the Several Lenders from Time to Time Parties
thereto, Bear Stearns Corporate Lending Inc. as Syndication Agent and Bank of New
York as Administrative Agent dated as of August 20, 2003 (the “Bondholder
Consents”); provided, that the condition to close requiring receipt of
Bondholder Consents for one or both of the Indentures shall be deemed satisfied if
one or more of the Series B Investors, or affiliates thereof (together, the
“Tendering Investors”), provides the Company with written notification (within 5
business days of the Company’s written notice to the Series B Investors of the
Company’s intent to terminate this Agreement for failure of this condition) to
offer to fulfill the obligations of Section 4.15(c)(1) of such Indenture. The
Tendering Investors and the Company agree to cooperate with each other in good
faith to allow the Company to confirm that the Tendering Investors will be able to
adequately fulfill the requirements of Section 4.15(c)(1) of the applicable
Indenture(s). If after such good faith cooperation the Company is not reasonably
satisfied that the Tendering Investors will be able to fulfill such obligations,
the Company may decline (in writing) the Tendering Investors’ offer and the
condition to close shall not be deemed satisfied.

16

 

          (j) each of Peter Quandt and Paul Crecca shall have executed a Management
Stock Purchase Agreement in the form attached hereto as Exhibit L pursuant
to which they shall acquire shares of the Company’s Common Stock;

          (k) since the date of this Agreement, there shall have occurred no changes,
events or circumstances which would, individually or in the aggregate, constitute a
Material Adverse Effect;

          (l) all equity incentive plans of the Company shall have been terminated;

          (m) the Series B Investors shall have received a certificate signed on behalf
of the Company by the Chief Executive Officer and the Chief Financial Officer of
the Company certifying that the conditions specified in Sections 5(c), (d), (i)
and (k) shall be true and correct as of the Closing Date with the same effect as
though made on and as of that date, and that such covenants have been fulfilled;

          (n) the period during which the Series B Investors could terminate this
Agreement pursuant to Section 6.1 hereof shall have expired;

6. Termination Prior to Closing

     6.1 Termination by Series B Investors after Due Diligence. This Agreement
may be terminated prior to the Closing by a Majority Vote of the Series B
Investors, within three (3) business day of the expiration of the Due Diligence
Period, if the Series B Investors are not satisfied for any reason, in their sole
and absolute discretion, with their due diligence investigation of the Company.
For the avoidance of doubt, the Series B Investors’ right to terminate shall exist
notwithstanding any prior diligence or knowledge obtained by the Series B Investors
prior to the Diligence Period.

     6.2 Termination. At any time prior to the Closing, this Agreement may be terminated

          (a) by consent of the Company, the Series A Investors, which consent shall be
given by holders owning a majority of the outstanding shares of Series A Preferred
Stock then held by the Series A Investors (a “Majority Vote of the Series A
Investors”), and the Series B Investors, which consent shall be given by a
Majority Vote of the Series B Investors;

          (b) by the Majority Vote of the Series B Investors or by the Majority Vote of
the Series A Investors if the conditions stated in Article 5 have not been
satisfied at or prior to the Closing provided that the right to terminate

17

 

shall not be available to any party whose breach of any provision of this
Agreement;

          (c) by a Majority Vote of the Series B Investors or the Majority Vote of the
Series A Investors if any condition in Section 5 has not been satisfied on or
before the one hundred twentieth day from the date hereof or if satisfaction of
such a condition by the one hundred twentieth day from the date hereof is or
becomes impossible provided that the right to terminate shall not be available to
any party whose breach of any provision of this Agreement.

     6.3 Effect of Termination. In the event of any termination of this Agreement, there shall be
no further liability or obligations hereunder on the part of any party hereto or their respective
affiliates except for the obligations of the parties pursuant to this Section 6.3; provided,
however, that nothing herein shall relieve either party from liability for any breach of this
Agreement existing at the time of such termination.

7. Miscellaneous

     7.1 Governing Law. This Agreement shall be deemed to be a contract made under, and shall
be construed in accordance with, the laws of the State of Delaware, without giving effect to
conflict of laws principles thereof.

     7.2 Legend on Securities. The Company and the Investors acknowledge and agree that the
following legend shall be typed on each certificate evidencing any of the securities issued
hereunder held at any time by any of the Investors.

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933 (THE “ACT”), OR ANY UNITED STATES STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER THE ACT OR (2)
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF
SECURITIES AND (3) IN ACCORDANCE WITH APPLICABLE STATE SECURITIES AND BLUE SKY LAWS

     7.3 Survival of Representations and Covenants. All representations, warranties, covenants,
agreements and obligations made herein or in any schedule, exhibit, notice, certificate or other
document executed in connection herewith or delivered by any party to another party incident hereto
shall be deemed to have been relied upon by the other party hereto and survive the execution and/or
delivery thereof, and all statements contained in any such schedules, exhibit, notice, certificate
or other document delivered by the Company hereunder or in connection herewith shall be deemed to
constitute representations and warranties made by the Company herein.

18

 

     7.4 Counterparts. This Agreement may be executed simultaneously in any number of
counterparts, each of which when so executed and delivered shall be taken to be an original; but
such counterparts shall together constitute but one and the same document.

     7.5 Consideration. Each party hereto acknowledges that it will benefit from the transactions
contemplated hereby and such transactions are sufficient consideration for every promise, duty,
release, obligation, agreement and right contained in this Agreement.

     7.6 Amendment and Waiver. Any provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either retroactively or
prospectively), only by the written consent of (a) the Company and (b) each of the Shareholders.
Any amendment or waiver effected in accordance with this Section 7.6 shall be binding upon the
Company and each Shareholder, and their respective successors and assigns.

     7.7 Entire Agreement. This Agreement, the exhibits and schedules hereto, the Shareholders’
Agreement, the certificates and the other documents delivered pursuant hereto constitute the entire
agreement among the parties relative to the specific subject matter hereof and thereof. Any
previous agreement among the parties relative to the specific subject matter hereof is superseded
by this Agreement.

     7.8 Remedies; Severability. It is specifically understood and agreed that any breach of the
provisions of this Agreement by any party subject hereto will result in irreparable injury to the
other parties hereto, that the remedy at law alone will be an inadequate remedy for such breach,
and that, in addition to any other legal or equitable remedies which they may have, such other
parties shall be entitled to specific performance of this Agreement and to such other injunction or
other equitable relief as may be granted by a court of competent jurisdiction.

In the event that any one or more of the provisions contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired thereby, it being intended
that all of the rights and privileges of the parties hereto shall be enforceable to the fullest
extent permitted by law.

     7.9 Consent to Jurisdiction. Each of the parties hereto consents to the exclusive
jurisdiction, service of process and venue in the Delaware Court of Chancery of the State of
Delaware for any claim, suit or proceeding arising under this Agreement, or in the case of a third
party claim in the court where such claim is brought. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 7.10 shall be deemed effective service of process on
such party.

     7.10 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified; (b) when sent

19

 

by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then on the next business
day; (c) five days after having been sent by registered or certified mail, the return receipt
requested, postage prepaid; or (d) the next business day after deposit with a nationally recognized
overnight courier, specifying next day deliver, with written certification of receipt. All
communications shall be sent to the Company at the address or facsimile number set forth on its
signature page hereto and to each Investor at the address or facsimile number set forth on
Schedule I hereto or at such other address as the Company or each Investor may designate by
10 days’ advance written notice to the other parties hereto.

     7.11 Successors and Assigns. The provisions hereof shall insure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.

     7.12 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this Agreement.

[SIGNATURE PAGE TO FOLLOW]

20

 

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first
written above.

	 	 	 	 	 
	 	COMPANY:

Haights Cross Communications, Inc. 

 	 
	 	By:  	/s/ Paul J. Crecca
 	 
	 	 	Name:  	Paul J. Crecca 	 
	 	 	Title:  	Executive Vice President and CFO 	 
	 
	 	INVESTORS:

SERIES A PREFERRED/COMMON 

SHAREHOLDERS

 	 
	 	/s/ Peter J. Quandt
 	 
	 	Peter J. Quandt      	 
	 	 	 
	 	Media/Communications Partners III Limited

Partnership

 	 
	 	By:  	M/C III L.L.C., its General Partner
 	 
	 	 	 	 
	 	By:  	                                                     /s/ Christopher S. Gaffney
 	 
	 	 	Name:  	Christopher S. Gaffney 	 
	 	 	Title:  	Manager 	 
	 
	 	M/C Investors L.L.C.

 	 
	 	By:  	/s/ Christopher S. Gaffney
 	 
	 	 	Name:  	Christopher S. Gaffney 	 
	 	 	Title:  	Manager 	 

1

 

	 	 	 	 	 
	 	SERIES B PREFERRED SHAREHOLDERS 

Columbia Funds Master Investment

Trust-Columbia High Income Master Portfolio

By: MacKay Shields LLC, its sub-advisor

 	 
	 	By:  	/s/ Lucille Protas
 	 
	 	 	Name:  	Lucille Protas 	 
	 	 	Title:  	Chief Operating Officer 	 
	 
	 	Columbia Funds Variable Insurance Trust 1 —

Columbia High Yield Fund, Variable Series

By: MacKay Shields LLC, its sub-advisor

 	 
	 	By:  	/s/ Lucille Protas
 	 
	 	 	Name:  	Lucille Protas 	 
	 	 	Title:  	Chief Operating Officer 	 
	 
	 	The Mainstay Funds on Behalf of its High Yield

Corporate Bond Fund

By: MacKay Shields LLC, its sub-advisor

 	 
	 	By:  	/s/ Lucille Protas
 	 
	 	 	Name:  	Lucille Protas 	 
	 	 	Title:  	Chief Operating Officer 	 
	 
	 	The Mainstay Funds on Behalf of its

Diversified Income Fund

By: MacKay Shields LLC, its sub-advisor

 	 
	 	By:  	/s/ Lucille Protas
 	 
	 	 	Name:  	Lucille Protas 	 
	 	 	Title:  	Chief Operating Officer 	 

2

 

	 	 	 	 	 
	 	Mainstay VP Series Fund, Inc. on Behalf of its

High Yield Corporate Bond Portfolio

By: MacKay Shields LLC, its sub-advisor

 	 
	 	By:  	/s/ Lucille Protas
 	 
	 	 	Name:  	Lucille Protas 	 
	 	 	Title:  	Chief Operating Officer 	 

3

 

	 	 	 	 	 
	 	Quadrangle Debt Recovery Income Fund LP

By: Quadrangle Debt Recovery Advisors LP

Its : Advisor

 	 
	 	By:  	/s/ Michael Weinstock
 	 
	 	 	Name:  	Michael Weinstock 	 
	 	 	Title:  	Managing Principal 	 
	 
	 	Quadrangle Debt Opportunities Fund LP

By: Quadrangle Debt Recovery Advisors LP

Its : Advisor

 	 
	 	By:  	/s/ Michael Weinstock
 	 
	 	 	Name:  	Michael Weinstock 	 
	 	 	Title:  	Managing Principal 	 
	 
	 	QDRF Master Ltd.

By: Quadrangle Debt Recovery Advisors LP

Its : Advisor

 	 
	 	By:  	/s/ Michael Weinstock
 	 
	 	 	Name:  	Michael Weinstock 	 
	 	 	Title:  	Managing Principal 	 
	 
	 	Quadrangle Debt Recovery Income Fund 

Master Ltd

By: Quadrangle Debt Recovery Advisors LP

Its : Advisor

 	 
	 	By:  	/s/ Michael Weinstock
 	 
	 	 	Name:  	Michael Weinstock 	 
	 	 	Title:  	Managing Principal 	 

4

 

	 	 	 	 	 
	 	Quadrangle Debt Opportunities Fund Master 

Ltd

By: Quadrangle Debt Recovery Advisors LP

Its : Advisor

 	 
	 	By:  	/s/ Michael Weinstock
 	 
	 	 	Name:  	Michael Weinstock 	 
	 	 	Title:  	Managing Principal 	 

5

 

	 	 	 	 	 
	 	Glenview Capital Master Fund, Ltd.

 	 
	 	By:  	/s/ Mark Horowitz
 	 
	 	 	Name:  	Mark Horowitz 	 
	 	 	Title:  	Chief Operating Officer of
Glenview Capital Management, LLC,
As Investment Adviser 	 
	 
	 	Glenview Institutional Partners, L.P.

 	 
	 	By:  	/s/ Mark Horowitz
 	 
	 	 	Name:  	Mark Horowitz 	 
	 	 	Title:  	Chief Operating Officer of
Glenview Capital Management, LLC,
As Investment Adviser 	 
	 
	 	Glenview Capital Partners, L.P.

 	 
	 	By:  	/s/ Mark Horowitz
 	 
	 	 	Name:  	Mark Horowitz 	 
	 	 	Title:  	Chief Operating Officer of
Glenview Capital Management, LLC,
As Investment Adviser 	 
	 
	 	Deephaven Distressed Opportunities 

Trading Ltd.

 	 
	 	By:  	/s/ Andy Greenberg
 	 
	 	 	Name:  	Andy Greenberg 	 
	 	 	Title:  	Managing Director 	 
	 

6EX-4.1

 

Exhibit 4.1

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

BIODEL INC.

     The undersigned, Solomon S. Steiner, Ph.D., in accordance with the provisions of Sections 242
and 245 of the Delaware General Corporation Law (“DGCL”) hereby certifies that:

     1. He is the duly elected and acting Chairman of the Board, President and Chief Executive
Officer of Biodel Inc., a Delaware corporation (the “Corporation”).

     2. The original name of this Corporation was Global Positioning Group, LTD. and the date of
filing of the original Certificate of Incorporation of this Corporation with the Secretary of State
of the State of Delaware was December 8, 2003.

     3. This Amended and Restated Certificate of Incorporation (the “Amended and Restated
Certificate”) has been duly approved and adopted by the Board of Directors of the Corporation (the
“Board”) in accordance with the applicable provisions of Sections 242 and 245 of the DGCL.

     4. This Amended and Restated Certificate has been duly approved and adopted by the
stockholders of the Corporation in accordance with the applicable provisions of Sections 228, 242
and 245 of the DGCL.

     5. The text of the Restated Certificate of Incorporation, as heretofore amended or
supplemented, is hereby amended and restated in its entirety to read as follows:

ARTICLE FIRST

     The name of this corporation is Biodel Inc. (the “Corporation”).

ARTICLE SECOND

     The address of the registered office of the corporation in the State of Delaware is 2711
Centerville Road, Suite 400, City of Wilmington, County of New Castle, 19808 and the name of the
registered agent of the Corporation in the State of Delaware at such address is the Corporation
Service Company.

ARTICLE THIRD

     The purpose of this Corporation is to engage in any lawful act or activity for which a
corporation may be organized under the DGCL.

 -1 -

 

ARTICLE FOURTH

     A. This Corporation is authorized to issue two classes of stock to be designated,
respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the
Corporation is authorized to issue is one hundred and fifty million (150,000,000) shares of which
one hundred million (100,000,000) shares shall be Common Stock, each having a par value of one cent
($.01), and fifty million (50,000,000) shares shall be Preferred Stock, each having a par value of
one cent ($.01).

     B. The Preferred Stock may be issued from time to time in one or more series. The Board
is hereby expressly authorized to provide for the issue of all or any of the remaining shares of
the Preferred Stock in one or more series, and to fix the number of shares and to determine or
alter for each such series, such voting powers, full or limited, or no voting powers, and such
designation, preferences, and relative, participating, optional, or other rights and such
qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board providing for the issuance of such shares and as may
be permitted by the DGCL. The Board is also expressly authorized to increase or decrease the number
of shares of any series subsequent to the issuance of shares of that series, but not below the
number of shares of such series then outstanding. In case the number of shares of any series shall
be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall
resume the status that they had prior to the adoption of the resolution originally fixing the
number of shares of such series. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of
the Preferred Stock, or of any series thereof, unless a vote of any such holders is required
pursuant to the terms of any certificate of designation filed with respect to any series of
Preferred Stock.

     C. Each outstanding share of Common Stock shall entitle the holder thereof to one vote
on each matter properly submitted to the stockholders of the Corporation for their vote; provided,
however, that, except as otherwise required by law, holders of Common Stock shall not be entitled
to vote on any amendment to this Amended and Restated Certificate of Incorporation (including any
certificate of designation filed with respect to any series of Preferred Stock) that relates solely
to the terms of one or more outstanding series of Preferred Stock if the holders of such affected
series of Preferred Stock are entitled, either separately or together as a class with the holders
of one or more other such series of Preferred Stock, to vote thereon by law or pursuant to this
Amended and Restated Certificate of Incorporation (including any certificate of designation filed
with respect to any series of Preferred Stock).

ARTICLE FIFTH

     For the management of the business and for the conduct of the affairs of the Corporation, and
in further definition, limitation and regulation of the powers of the Corporation, of its directors
and of its stockholders or any class thereof, as the case may be, it is further provided that:

     A. BOARD OF DIRECTORS

          1. The management of the business and the conduct of the affairs of the Corporation
shall be vested in the Board. The number of directors which shall constitute the Board shall be
fixed exclusively by resolutions adopted by a majority of the authorized number of directors
constituting the Board.

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          2. Subject to the rights of the holders of any series of Preferred Stock to elect
additional directors under specified circumstances, the directors shall be divided into three
classes designated as Class I, Class II and Class III, respectively. Directors shall initially be
assigned to each class in accordance with a resolution or resolutions adopted by the Board. At the
first annual meeting of stockholders following the date hereof, the term of office of the Class I
directors shall expire and Class I directors shall be elected for a full term of three years. At
the second annual meeting of stockholders following the date hereof, the term of office of the
Class II directors shall expire and Class II directors shall be elected for a full term of three
years. At the third annual meeting of stockholders following the date hereof, the term of office of
the Class III directors shall expire and Class III directors shall be elected for a full term of
three years. At each succeeding annual meeting of stockholders, directors shall be elected for a
full term of three years to succeed the directors of the class whose terms expire at such annual
meeting.

          3. Notwithstanding the foregoing provisions of this section, each director shall serve
until his or her successor is duly elected and qualified or until his or her death, resignation or
removal. No decrease in the number of directors constituting the Board shall shorten the term of
any incumbent director.

          4. Any director or the entire Board may be removed from office at any time, but only for
cause, and only by the affirmative vote of the holders of at least a majority of the voting power
of then outstanding shares of the capital stock of the Corporation entitled to vote generally in
the election of directors, voting together as a single class.

          5. Subject to the rights of the holders of any series of Preferred Stock, any vacancies
on the Board resulting from death, resignation, disqualification, removal or other causes and any
newly created directorships resulting from any increase in the number of directors, shall, unless
the Board determines by resolution that any such vacancies or newly created directorships shall be
filled by the stockholders, except as otherwise provided by law, be filled only by the affirmative
vote of a majority of the directors then in office, even though less than a quorum of the Board,
and not by the stockholders. Any director elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of the director for which the vacancy was created or
occurred and until such director’s successor shall have been elected and qualified.

          6. The directors of the Corporation need not be elected by written ballot unless the
Bylaws so provide.

     B. BYLAW AMENDMENTS. The Board is expressly empowered to adopt, amend or repeal the
Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the
Corporation by the Board shall require the approval of a majority of the authorized number of
directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the
Corporation, subject to any restrictions which may be set forth in this Amended and Restated
Certificate of Incorporation (including any certificate of designation that may be filed from time
to time); provided, however, that, in addition to any vote of the holders of any class or series of
stock of the Corporation required by law or by this Amended and Restated Certificate of
Incorporation, the affirmative vote of the holders of at least seventy-five percent (75%) of the
voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled
to vote generally in

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the election of directors, voting together as a single class, shall be
required to adopt, amend or repeal any provision of the Bylaws of the Corporation.

     C. STOCKHOLDER ACTION. No action shall be taken by the stockholders of the Corporation
except at an annual or special meeting of stockholders called in accordance with the Bylaws. No
action shall be taken by the stockholders by written consent or electronic transmission.

     D. SPECIAL MEETING. Special meetings of stockholders of the Corporation may be called
only by the Chairman of the Board, the Chief Executive Officer, the President or the Board acting
pursuant to a resolution adopted by a majority of the Board, and any power of stockholders to call
a special meeting of stockholders is specifically denied. Only such business shall be considered
at a special meeting of stockholders as shall have been stated in the notice for such meeting.

     E. ADVANCE NOTICE. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of the stockholders of
the Corporation shall be given in the manner provided in the Bylaws of the Corporation.

ARTICLE SIXTH

     A. The liability of a director of the Corporation for monetary damages shall be
eliminated to the fullest extent under applicable law. If the DGCL is amended to authorize
corporate action further eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated to the fullest extent permitted by
the DGCL, as so amended.

     B. The Corporation shall indemnify its directors and executive officers to the fullest
extent not prohibited by the DGCL or any other applicable law; provided, however, that the
Corporation may modify the extent of such indemnification by individual contracts with its
directors and executive officers; and, provided, further, that the Corporation shall not be
required to indemnify any director or executive officer in connection with any proceeding (or part
thereof) initiated by such person unless (i) such indemnification is expressly required to be made
by law, (ii) the proceeding was authorized by the Board, (iii) such indemnification is provided by
the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under the
DGCL or any other applicable law or (iv) such indemnification is required to be made under the
Bylaws of the Corporation.

     C. Any repeal or modification of this Article Sixth shall be prospective and shall not affect
the rights under this Article Sixth in effect at the time of the alleged occurrence of any act or
omission to act giving rise to liability or indemnification.

ARTICLE SEVENTH

     A. The Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, except as provided in paragraph B. of this Article Seventh, and all rights
conferred upon the stockholders herein are granted subject to this reservation.

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     B. Notwithstanding any other provisions of this Amended and Restated Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or series of the
Corporation required by law or by this Amended and Restated Certificate of Incorporation or any
certificate of designation filed with respect to a series of Preferred Stock, the Board acting
pursuant to a resolution adopted by a majority of the Board and the affirmative vote of the holders
of at least seventy-five percent (75%) of the voting power of all of the then-outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to alter, amend or repeal Articles Fifth, Sixth and
Seventh.

     IN WITNESS WHEREOF, BIODEL INC. has caused this Amended and Restated Certificate of
Incorporation to be signed on this 16th day of May, 2007 by the undersigned who affirms that the
statements made herein are true and correct.

	 	 	 
	/s/ Solomon S. Steiner

	 	 
	 

Solomon S. Steiner, Ph.D.

	 	 
	Chairman of the Board and Chief
	 	 
	Executive Officer
	 	 

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