LIMITED WAIVER, CONSENT AND
FOURTH AMENDMENT TO CREDIT
AGREEMENT
THIS LIMITED
WAIVER, CONSENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT (this
“ Fourth Amendment ”) is entered into as of
March 29, 2007 (the “ Fourth Amendment Effective
Date ”) among THE PRINCETON REVIEW, INC., a Delaware
corporation (“ Borrower ”), the other Loan
Parties signatory hereto, the Lenders a party hereto and Golub
Capital Incorporated, a New York corporation, as administrative
agent for the Lenders (“ Administrative Agent
”).
WHEREAS, Borrower,
the other Loan Parties, Lenders and Administrative Agent are
parties to that certain Credit Agreement dated as of April 10,
2006, pursuant to which Lenders extended a revolving credit
facility to Borrower in the amount of Six Million Dollars
($6,000,000), as amended by that certain First Amendment to Credit
Agreement dated as of May 25, 2006, pursuant to which Lenders
increased the revolving credit facility to Borrower to the amount
of Ten Million Dollars ($10,000,000), as further amended by that
certain Limited Waiver and Second Amendment to Credit Agreement
dated as of November 3, 2006, pursuant to which Lenders
temporarily increased the revolving credit facility to Fifteen
Million Dollars ($15,000,000), as further amended by that certain
Limited Waiver, Consent and Third Amendment to Credit Agreement
dated as of February 16, 2007, pursuant to which Lenders,
among other things, adjusted the revolving credit facility to
Twelve Million Dollars ($12,000,000) (the “ Credit
Agreement ”);
WHEREAS, Borrower
and Higher Edge Marketing Services, Inc., a California corporation
(the “ Licensee ”) intend to enter into a
Services and License Agreement dated on or about the date hereof in
the form attached hereto as Exhibit A (the “
License Agreement ”);
WHEREAS, the
License Agreement provides that the Licensee shall provide services
in connection with the management of the Borrower’s existing
marketing services business, as more fully provided therein (all
such transactions as provided in the License Agreement referred to
herein as the “ Transactions ”);
WHEREAS, the
Transactions are prohibited pursuant to Section 7.2 of
the Credit Agreement, which limits the making of loans by any Loan
Party to any Person, Section 7.4 of the Credit
Agreement, which limits certain transactions by any Loan Party with
its management or any Affiliate, and Section 7.8 of the
Credit Agreement, which limits the sale, transfer, conveyance,
assignment or other disposition by any Loan Party of certain of its
assets;
WHEREAS, in
connection with the Fletcher Preferred Stock Financing (as defined
in the Credit Agreement), pursuant to Section 6 of that
agreement to purchase preferred stock (“ Stock Purchase
Agreement ”), by and between the Borrower and Fletcher,
dated as of May 28, 2004 and Section 6 of the
Series B-1 Preferred Stock Certificate of Designations of the
Borrower, dated as of June 4, 2004 (the “Certificate of
Designations”), the holders of the Series B-1 Preferred
Stock of the Borrower retain the right to convert the
Series B-1 Preferred Stock to common stock of the
Borrower,
provided that the Borrower has the right to redeem the
Series B-1 Preferred Stock in cash, as more fully provided in
Section 6 of the Stock Purchase Agreement and Section 6
of the Certificate of Designations (the “ Redemption
”);
WHEREAS the
Redemption is currently prohibited by Section 7.14 of
the Credit Agreement, which prohibits certain Restricted
Payments;
WHEREAS, Borrower
has requested the Lenders and Administrative Agent (i) consent
to the Transactions and waive the provisions of
Sections 7.2 , 7.4 , and 7.8 of the
Credit Agreement solely for the purpose of completing the
Transactions and (ii) consent to the Redemption and waive
provisions of Section 7.14 of the Credit Agreement
solely for the purpose of completing the Redemption;
WHEREAS, in
addition to the foregoing consent, the parties to the Credit
Agreement desire to waive compliance with certain provisions of the
Credit Agreement and amend the terms of the Credit Agreement to
among other things, permit the Redemption on those terms and
conditions as more fully provided herein, and increase the
Revolving Loan Commitment to an amount of Fifteen Million Dollars
($15,000,000) for the purposes of funding working
capital;
NOW, THEREFORE, in
consideration of the mutual agreements, provisions and covenants
contained herein, the parties agree as follows:
1.
Defined Terms . Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Credit
Agreement.
2.
Limited Waiver and Consent .
a.
At the Borrower’s request, the Lenders hereby waive the
Borrower’s violation of the covenant set forth in
Section 7.10(b) of the Credit Agreement for the period
beginning April 1, 2007 and ending January 1, 2008, and
after which time such covenant shall be in full force and
effect.
b.
Subject to the conditions set forth in Section 4 hereof, the
Lenders and Administrative Agent hereby (i) consent to the
Transactions, and solely in connection therewith, waive the terms
of Sections 7.2 , 7.4 and 7.8 of the
Credit Agreement and (ii) consent to the Redemption, and
solely in connection therewith, waive the terms of
Section 7.14 of the Credit Agreement.
3.
Amendments to Credit Agreement . Upon satisfaction of the
conditions set forth in Section 4 hereof, the Credit Agreement
is hereby amended as follows:
(i) Schedule 1.1 (Definitions) of the
Credit Agreement is hereby amended by:
(a) deleting the definition of
“Commitments” in its entirety and replacing it as
follows:
” ‘
Commitments ’ shall mean (a) as to any Lender,
the aggregate of such Lender’s Revolving Loan Commitment as
set forth on the signature page
2
to the Fourth
Amendment (as adjusted to reflect any assignments as permitted
hereunder) and (b) as to all Lenders, the aggregate of all
Lenders’ Revolving Loan Commitments which aggregate
commitment shall be fifteen million dollars
($15,000,000).”
(b) deleting the definition of
“Revolving Loan Commitment” in its entirety and
replacing it as follows:
“ ‘
Revolving Loan Commitment ’ shall mean (a) as to
any Lender, the aggregate commitment of such Lender to make
Revolving Credit Advances as set forth in the signature page to the
Fourth Amendment (as adjusted to reflect any assignments as
permitted hereunder) and (b) as to all Lenders, the aggregate
commitment of all Lenders to make Revolving Credit Advances, which
aggregate commitment shall be fifteen million dollars ($15,000,000)
beginning on the Fourth Amendment Effective Date and at all times
thereafter.”
(c) inserting the following definitions in
appropriate alphabetical order:
“ ‘
Fourth Amendment ’ shall mean that certain Fourth
Amendment to Credit Agreement, by and among Borrower, the other
Loan Parties thereto, Administrative Agent and the Lenders, dated
as of March 29, 2007.’ ”
“ ‘
Fourth Amendment Effective Date ’ has the meaning
given to such term by the Fourth Amendment.’
”
(ii) The
fourth sentence of Section 2.1(a)(i) of the Credit Agreement
is deleted in its entirety and the following is substituted
therefor:
“The
aggregate amount of Revolving Credit Advances outstanding shall not
exceed at any time the lesser of (A) the Maximum Amount and
(B) the Borrowing Base plus five million dollars ($5,000,000)
(“ Borrowing Availability ”).”
(iii) Section 2.3(a) of the Credit
Agreement is hereby deleted in its entirety and the following is
substituted therefor:
“
Voluntary Prepayments . Borrower may at any time on at least
five (5) days’ prior written notice to Administrative
Agent voluntarily prepay all or part of the Revolving Loan and
permanently reduce (but not terminate) the Revolving Loan
Commitment; provided that (i) any such prepayments or
reductions shall be in a minimum amount of $250,000 and integral
multiples of $100,000 in excess of such amounts, and (ii) the
Revolving Loan Commitment shall not be reduced to an amount less
than $6,000,000. In addition, Borrower may at any time on at least
five (5) days’ prior written notice to Administrative Agent
terminate the Revolving Loan Commitment; provided that upon such
termination, the entire portion of the principal amount of the
Revolving Loan then outstanding and all Obligations
3
related thereto
shall be immediately due and payable in full. Any such voluntary
prepayment and any such reduction or termination of the Revolving
Loan Commitment must be accompanied by the payment of the fee
required by Section 2.9(c) , if any, plus the payment
of any LIBOR funding breakage costs in accordance with
Section 2.13(b) . Upon any such prepayment and
reduction or termination of the Revolving Loan Commitment,
Borrower’s right to request Revolving Credit Advances shall
simultaneously be permanently reduced or terminated, as the case
may be. For the avoidance of doubt, no voluntary
repayment
|
