FOURTH FORBEARANCE AGREEMENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT

FOURTH FORBEARANCE AGREEMENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of May 7, 2009 (this “ Agreement ”), by and among Haights Cross Operating Company (the “ Borrower ”), the entities listed as “Guarantors” on the signature pages hereto (the “ Guarantors ”), the entities listed as “Lenders” on the signature pages hereto (the “ Lenders ”), and DDJ Capital Management, LLC, as administrative agent and collateral agent for the Lenders (the “ Agent ”).

A.           The Borrower, the Guarantors, the Lenders and the Agent are parties to that certain Credit Agreement dated as of August 15, 2008 (as amended, and as the same may be further amended, modified, supplemented, extended, renewed, restated or replaced, the “ Credit Agreement ”), pursuant to which the Lenders made certain loans to the Borrower.

B.           The Borrower has advised the Agent that the Borrowers and the Guarantors (i) are not able to timely deliver the financial statements and/or other deliverables required to be delivered to the Agent and Lenders pursuant to Sections 6.1(a) and 6.1(d) of the Credit Agreement for the fiscal year ended December 31, 2008 and the fiscal quarter ended March 31, 2009 and/or deliver other materials in compliance with the provisions of Section 6.1(a) of the Credit Agreement for such periods (the “ Specified Financial Information ”), (ii) are not able to timely file with the SEC and/or timely deliver to certain other Persons, in each case, in accordance with the Senior Note Documents and the Discount Note Documents, the following reports (x) report on 10-K required to be filed with the SEC and otherwise delivered for the Borrower’s fiscal year ended December 31, 2008, (y) any current reports on 8-K required to be filed with the SEC and otherwise delivered after such 10-K is required to be filed with respect to the Borrower’s fiscal year ended December 31, 2008 and (z) report on 10-Q required to be filed with the SEC and otherwise delivered for the Borrower’s fiscal quarter ended March 31, 2009 (collectively, the “ Indenture Financial Reports ”), and (iii) believe that they are in compliance with the financial covenants in Section 7.10 of the Credit Agreements as of the test dates of September 30, 2008, December 31, 2008 and March 31, 2009 as set forth in the Compliance Certificates that the Borrower delivered to the Agent in accordance with the Credit Agreement for such periods (collectively, the “ Specified Financial Covenants ”), but understand that the Agent and the Lenders, upon further review and consideration, may decide that the Borrowers and Guarantors inappropriately calculated certain of the Specified Financial Covenants, and have requested that the Agent and the Lenders refrain from declaring a Default or Event of Default, if any is determined to exist, with respect to the Specified Financial Covenants solely during the Forbearance Period (any such Default or Event of Default that may be determined to exist as a result of the calculation of the Specified Financial Covenants, the “ Specified Financial Covenant Defaults ”).

C.           The failure of the Borrower and the Guarantors to timely deliver the Specified Financial Information to the Agent and the Lenders pursuant to Section 6.1(a) of the Credit Agreement constitutes an Event of Default under Section 8.1(c) of the Credit Agreement (such Event of Default being referred to herein as the “ Specified Financial Information Defaults ”), and the failure of the Borrowers and the Guarantors to timely file and/or deliver the Indenture Financial Reports constitutes an Event of Default under Section 8.1(f) of the Credit Agreement (together with the Specified Financial Information Defaults, the “ Financial Reporting Defaults ”, and collectively with the Specified Financial Covenant Defaults, the “ Specified Forbearance Items ”).

D.           The Borrower previously requested that the Agent and the Lenders temporarily forbear from exercising their rights and remedies solely as a result of the Financial Reporting Defaults to enable the Borrower and the Guarantors to develop and present a proposed plan for restructuring certain of the obligations of Borrower and one or more of the Guarantors, including, the Obligations, and the Agent, the Lenders, the Borrower and the Guarantors entered into (i) a Forbearance Agreement dated April 15, 2009 (the “ Initial Forbearance Agreement ”), pursuant to which the Agent and the Lenders agreed, subject to the terms and conditions set forth in the Initial Forbearance Agreement, to temporarily forbear from exercising their rights and remedies solely as a result of the Financial Reporting Defaults until April 24, 2009, (ii) a Second Forbearance Agreement dated April 23, 2009 (the “ Second Forbearance Agreement ”), pursuant to which the Agent and the Lenders agreed, subject to the terms and conditions set forth in the Second Forbearance Agreement, to temporarily forbear from exercising their rights and remedies solely as a result of the Financial Reporting Defaults until May 1, 2009 and (iii) a Third Forbearance Agreement dated May 1, 2009, as amended (the “ Third Forbearance Agreement ” and, together with the Initial Forbearance Agreement and the Second Forbearance Agreement, the “ Prior Forbearance Agreements ”) pursuant to which the Agent and the Required Lenders agreed, subject to the terms and conditions set forth in the Third Forbearance Agreement, to temporarily forbear from exercising their rights and remedies solely as a result of the Financial Reporting Defaults until May 7, 2009.

E.           The Borrower has now requested that the Agent and the Lenders continue to temporarily forbear from exercising their rights and remedies solely as a result of the Financial Reporting Defaults and the Specified Financial Covenant Defaults to enable the Borrower and the Guarantors additional time to develop and present a proposed restructuring plan.

F.           The Agent and the Lenders are willing to continue to temporarily forbear from exercising their rights and remedies (other than as expressly set forth in this Agreement) solely as a result of the Financial Reporting Defaults and the Specified Financial Covenant Defaults for the period and on the terms and conditions specified in this Agreement.

G.           In consideration of the temporary forbearance by the Agent and the Lenders described in this Agreement, the Credit Parties have agreed with the Agent and the Lenders to amend the Credit Agreement to, among other things, increase the rate of interest payable thereunder and modify the dates on which accrued interest shall be due and payable thereunder, all as more particularly described in this Agreement.

NOW, THEREFORE, in consideration of the foregoing, and the respective agreements, warranties and covenants contained herein, the parties hereto agree, covenant and warrant as follows:

1.1             Defined Terms.   All capitalized terms used herein (including the recitals hereto) shall have the respective meanings assigned thereto in the Credit Agreement unless otherwise defined herein.

1.2             Prior Forbearance Agreements .  Upon the execution and delivery of the Second Forbearance Agreement, the Second Forbearance Agreement superseded the Initial Forbearance Agreement and the Initial Forbearance Agreement was deemed terminated, null and void and upon the execution and delivery of the Third Forbearance Agreement, the Third Forbearance Agreement superseded the Second Forbearance Agreement and the Second Forbearance Agreement was deemed terminated, null and void.  It is the intent of the parties hereto that upon execution and delivery of this Agreement, this Agreement shall supersede the Third Forbearance Agreement and the Third Forbearance Agreement shall be deemed terminated, null and void.

SECTION 2.                                ACKNOWLEDGEMENTS

2.1             Acknowledgement of Obligations.   The Borrower hereby acknowledges, confirms and agrees that as of the close of business on May 6, 2009, the Borrower is indebted to the Lenders in respect of the Loans in the principal amount of $108,200,000.  The Borrower and the Guarantors hereby jointly and severally acknowledge, confirm and agree that the Loans, together with all interest accrued and accruing thereon, and fees, costs, expenses and other charges now or hereafter payable by the Borrower to the Agent and the Lenders pursuant to the terms and provisions of the Loan Documents, are unconditionally owing by the Borrower, without offset, defense or counterclaim of any kind, nature or description whatsoever.

2.2             Acknowledgement of Security Interests.   The Borrower and the Guarantors hereby jointly and severally acknowledge, confirm and agree that the Agent, for the benefit of the itself and the Lenders, holds and shall continue to hold valid, enforceable and perfected first-priority Liens upon and security interests and mortgages, as applicable, in the Collateral heretofore granted to the Agent pursuant to the Loan Documents (subject to Permitted Liens).

2.3             Binding Effect of Loan Documents.   The Borrower and the Guarantors hereby jointly and severally acknowledge, confirm and agree that:  (a) each of the Loan Documents to which the Borrower or any Guarantor is a party has been duly executed and delivered by the Borrower or such Guarantor, as applicable, and each is in full force and effect as of the date hereof, (b) the agreements and obligations of the Borrower and the Guarantors contained in the Loan Documents and in this Agreement constitute the legal, valid and binding Obligations of the Borrower and the Guarantors, enforceable against the Borrower and the Guarantors in accordance with their respective terms, and neither the Borrower nor the Guarantors has any valid defense to the enforcement of such Obligations, in each case, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or law, and (c) subject to Section 3.2 hereof, the Agent and the Lenders are and shall be entitled to the rights, remedies and benefits provided for in the Loan Documents and applicable law.

SECTION 3.                                FORBEARANCE IN RESPECT OF EVENTS OF DEFAULT

3.1             Acknowledgement of Events of Default .  The Borrower and the Guarantors hereby jointly and severally acknowledge and agree that (a) the Financial Reporting Defaults constitute “Events of Default” under the Credit Agreement, (b) the Specified Financial Information Default is not subject to cure, and (c) subject to Section 3.2 hereof, the Financial Reporting Defaults entitle the Agent and the Lenders to exercise their rights and remedies under the Loan Documents and applicable law.  The Borrower and the Guarantors hereby jointly and severally further represent and warrant that as of the date hereof no other Defaults or Events of Default exist under the Loan Documents.  The Borrower and the Guarantors hereby jointly and severally acknowledge and agree that, subject to Section 3.2 hereof, the Agent and the Lenders have the present right to exercise all remedies available under the Loan Documents and applicable law.

3.2           Forbearance.

(a)           In reliance upon the representations, warranties and covenants of the Borrower and the Guarantors contained in this Agreement, and subject to the terms and conditions of this Agreement and any documents or instruments executed in connection herewith, the Agent and the Lenders hereby agree to forbear from exercising, or causing the exercise of, their rights and remedies under the Loan Documents or applicable law solely in respect of or arising out of the Specified Forbearance Items (other than the right to charge interest at the then applicable Post-Default Rate for the period described in the first sentence of Section 5.5 of this Agreement) for the period (the “ Forbearance Period ”) commencing on April 15, 2009 and ending on the earliest to occur of: (i) 6:00 p.m. (Boston, Massachusetts time) on June 5, 2009, (ii) the occurrence or existence of any Event of Default, other than (x) the Financial Reporting Defaults and/or (y) the Specified Financial Covenant Defaults or any breach of the second sentence of Section 3.1 of this Agreement as a result thereof, and (iii) the occurrence or existence of any “Event of Default” (including, without limitation, any “Event of Default” arising out of, or related to, the failure of the Borrower and the Guarantors to timely file and/or deliver the Indenture Financial Reports) under and as such term is defined in the Senior Note Indenture and/or the Discount Note Indenture.

(b)           Upon the termination of the Forbearance Period, the agreement of the Agent and the Lenders to forbear from exercising their rights and remedies with respect to the Financial Reporting Defaults and any Specified Financial Covenant Defaults shall automatically and without further action terminate and be of no force and effect, it being expressly agreed that the effect of such termination will be to permit the Agent and the Lenders to exercise, or cause the exercise of, such rights and remedies immediately, without any further notice, passage of time or forbearance of any kind.

3.3           No Waivers; Reservation of Rights.

(a)           The Agent and the Lenders have not waived, and are not by the execution of this Agreement waiving, any Events of Default (including any of the Specified Forbearance Items) which may be continuing on the date hereof or any Events of Default which may hereafter occur (whether such Events of Default are the same as or similar to any of the Specified Forbearance Items or otherwise), and neither the Agent nor the Lenders have agreed to forbear with respect to any of their rights or remedies concerning any Events of Default (other than, during the Forbearance Period, solely with respect to the Specified Forbearance Items to the extent expressly set forth herein), which may have occurred or are continuing as of the date hereof or which may occur after the date hereof.

(b)           Subject to Section 3.2 above (solely with respect to the Specified Forbearance Items), the Agent and the Lenders reserve the right, in their discretion, to exercise, or cause the exercise of, any or all of their rights and remedies under the Credit Agreement, the other Loan Documents and applicable law as a result of any Events of Default which may be continuing on the date hereof or any Event of Default which may hereafter occur.

(c)           Without limiting the generality of the foregoing, the Borrower and the Guarantors will not claim that any prior action or course of conduct by the Agent or the Lenders, including, without limitation the execution and delivery of this Agreement or any Prior Forbearance Agreement, constitutes an agreement or obligation to continue such action or course of conduct in the future.  Each of the Borrower and the Guarantors acknowledges that the Agent and the Lenders have not made any commitment as to how or whether the Financial Reporting Defaults will be resolved upon termination or expiration of the Forbearance Period.

(d)           Except as set forth in Section 4 of this Agreement, nothing in this Agreement shall be construed as an amendment to the Credit Agreement or any other Loan Document.  The Credit Agreement and the other Loan Documents are in full force and effect, and shall remain in full force and effect unless and until an agreement modifying the Credit Agreement or another Loan Document is executed and delivered by the applicable parties, and then only to the extent such agreement actually modifies such documents.

3.4             Restructuring Transactions; Indicative Term Sheet .  The Agent, the Lenders and the Credit Parties have been discussing the terms of a proposed plan for restructuring certain of the obligations of the Credit Parties, including the Obligations, and the Agent has distributed to the Borrower and the Lenders a draft Restructuring Transaction Term Sheet dated May 7, 2009 (the “ Restructuring Term Sheet ”), which Restructuring Term Sheet reflects a summary of the preliminary indicative terms and conditions that the Agent, the Lenders and the Credit Parties are considering in connection with the possible restructuring of certain Indebtedness of the Credit Parties (the “ Restructuring Transactions ”).  The parties to this Agreement acknowledge and agree that the Restructuring Term Sheet is for discussion purposes only and does not constitute a commitment by the Credit Parties, the Agent or any Lender to enter into the Restructuring Transactions or to consent or agree to any restructuring of the Term Loans.  Without limiting the generality of the foregoing:  (i) the Restructuring Term Sheet does not constitute a commitment by the Agent or any Lender to make additional Loans or enter into any other transaction;  and (ii) if the Agent and the Lenders agree, in their sole discretion, to issue any commitment with respect to the Restructuring Transactions, the issuance of such commitment shall be subject to the satisfaction of certain conditions, which conditions shall include, without limitation:

(a)           receipt by the Agent and the Lenders of a quality of earnings analysis (the “ Quality of Earnings Report ”) prepared by CTS Capital Advisors, or such other advisor reasonably satisfactory to the Required Lenders (the “ Quality of Earnings Report Preparer ”);

(b)           receipt by the Agent and the Lenders of evidence reasonably satisfactory to the Agent and the Lenders that (i) the Indenture Financial Reports have been filed with the SEC and (ii) any defaults under the Senior Note Documents and the Discount Note Documents arising from the failure by the Credit Parties to file the Indenture Financial Reports have been cured; and

(c)           receipt by the Agent and the Lenders of weekly updates (which updates may be made by telephonic meeting) with respect to the status of the Restructuring Transactions, including, without limitation, the status of the Credit Parties’ discussions with holders of the Senior Discount Notes.

It is understood that the foregoing list of conditions and the terms and conditions set forth in the Restructuring Term Sheet are neither intended to constitute all of the conditions applicable to any issuance of a commitment with respect to the Restructuring Transactions, nor intended to constitute all of the terms and conditions applicable to the Restructuring Transactions.

SECTION 4.                                AMENDMENTS TO CREDIT AGREEMENT

Effective as of the date of this Agreement, the Credit Agreement is hereby amended as follows:

4.1             Amendments to Section 1.1 of Credit Agreement.   Section 1.1 of the Credit Agreement is hereby amended by (a) deleting the defined term “ Applicable Margin ” and replacing such defined term with the following new defined term “Applicable Margin” and (b) inserting the following new defined term “ First Amendment Effective Date ” in the appropriate alphabetical order:

“ Applicable Margin ” means (a) for Base Rate Loans, 11.00% per annum and (b) for LIBOR Loans, 12.25% per annum.

“ First Amendment Effective Date ” means May 7, 2009, the effective date of that certain Fourth Forbearance Agreement and Amendment No. 1 to Credit Agreement, amending this Agreement.

4.2             Amendment to Section 2.1(b) of Credit Agreement .  Section 2.1(b) of the Credit Agreement is hereby amended and restated in its entirety, as follows:

(b)            Interest on the Term Loans .

(i)           Subject to Section 2.2 hereof, the outstanding principal amount of the Term Loans shall bear interest at a rate per annum equal to either (x) the Adjusted Base Rate plus the Applicable Margin or (y) the Three Month LIBOR Rate plus the Applicable Margin, as the Borrower may elect in accordance with Section 2.2(a).  Notwithstanding the foregoing, (i) any portion of the Term Loans which is not paid when due or within any applicable grace or cure period shall automatically bear interest until paid in full at the Post-Default Rate, (ii) during the period when any Event of Default of the type described in clauses (g), (h) or (i) of Section 8.1 shall have occurred and be continuing, the outstanding principal balance of the Term Loans shall automatically bear interest, after as well as before judgment, at the Post-Default Rate, (iii) if there shall occur and be continuing any Event of Default (other than an Event of Default of the type described in clauses (g), (h) or (i) of Section 8.1), following written notice delivered to the Borrower from the Agent at the request of the Required Lenders, the outstanding principal balance of the Term Loans shall bear interest, after as well as before judgment, at the Post-Default Rate during the period beginning on the date such Event of Default first occurred, and ending on the date such Event of Default is cured or waived.  Except as otherwise expresssly permitted under clause (ii) of this Section 2.1(b), accrued interest on the outstanding principal balance of the Term Loans, whether constituting Base Rate Loans or LIBOR Loans, shall be payable in cash in arrears on the last Business Day of each month; provided that interest accrued at the Post-Default Rate shall be payable on deman