LIMITED
WAIVER AND AMENDMENT, dated as of May 20, 2008 (this
“Limited Waiver and Amendment”), among CAMBIUM
LEARNING, INC., a Delaware corporation and successor to VSS-CAMBIUM
MERGER CORP. (“Borrower”), BARCLAYS BANK PLC, as
Administrative Agent, and the Required Lenders , in each case
listed on the signature pages hereto, to the Credit Agreement dated
as of April 12, 2007 (as amended, supplemented, amended and
restated or otherwise modified from time to time) (the
“Credit Agreement”) among Borrower, VSS-CAMBIUM
HOLDINGS, LLC, a Delaware limited liability company
(“Holdings”), the Subsidiary Guarantors, each
lender from time to time party thereto (collectively, the
“Lenders” and individually, a
“Lender”), CREDIT SUISSE SECURITIES
(USA) LLC as co-syndication agent (in such capacity,
“Co-Syndication Agent”), BNP PARIBAS, as
co-syndication agent (in such capacity, “Co-Syndication
Agent” and together with the other Co-Syndication Agent,
the “Syndication Agents”), TD Securities
(USA) LLC, as documentation agent (in such capacity,
“Documentation Agent”), and BARCLAYS BANK PLC,
as issuing bank (in such capacity, “Issuing
Bank”), as administrative agent (in such capacity,
“Administrative Agent”) for the Lenders and as
collateral agent (in such capacity, “Collateral
Agent”) for the Secured Parties and the Issuing Bank.
Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Credit Agreement.
WHEREAS,
the Administrative Agent previously notified Borrower on
April 15, 2008 (the “Notice”) that its
failure to timely deliver (i) pursuant to Section 5.01(a)
of the Credit Agreement, consolidated financial statements of
Holdings for the fiscal year ended December 31, 2007 (the
“Audited Financial Statements”) accompanied by
an opinion of Ernst and Young LLP, a management report, a narrative
report and management’s discussion and analysis and
(ii) pursuant to Section 5.01(c) and (d) of the Credit
Agreement, a Compliance Certificate and a report by Ernst and Young
LLP (the “ E&Y Certificate”) certifying that
in the course of its regular audit of the financial statements of
Holdings and its subsidiaries, which audit was conducted in
accordance with generally accepted auditing standards, Ernst and
Young LLP obtained no knowledge that any Default insofar as it
relates to financial or accounting matters has occurred and a
certificate setting forth any information required pursuant to the
Perfection Certificate (collectively, the Financial Reporting
Defaults”), constituted Defaults of Borrower’s
obligations under such sections of the Credit Agreement;
WHEREAS,
Borrower has not remedied the Financial Reporting Defaults by
May 14, 2008, the date upon which the Financial Reporting
Defaults matured into Events of Default under Section 8.01(e)
of the Credit Agreement; and
WHEREAS,
at the request of the Loan Parties, the Administrative Agent and
the Required Lenders have agreed to grant certain waivers and make
certain amendments to the Credit Agreement, but only on the terms
and conditions set forth in this Amendment.
NOW,
THEREFORE, in consideration of the premises and covenants contained
herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as
follows:
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Section 1. Waiver . Subject to the satisfaction
of the conditions set forth in Section 4 of this Limited
Waiver and Amendment, (A) with respect to the Financial
Reporting Defaults, the Required Lenders hereby waive the Financial
Reporting Defaults and extend the date upon which Borrower shall be
required to deliver to the Administrative Agent and Lenders the
Audited Financial Statements accompanied by an opinion of Ernst and
Young LLP, a management report, a narrative report and
management’s discussion and analysis, the Compliance
Certificate and the E&Y Certificate, in each case to
July 15, 2008; provided that the failure to deliver any
such documentation referred to above on or prior to July 15,
2008 shall constitute an immediate Event of Default under the
Credit Agreement irrespective of whether any relief has otherwise
been given by either Borrower or the Required Lenders and
(B) with respect to any other Defaults or Events of Default
set forth on Schedule I hereto (the “Schedule I
Defaults”, and together with the Financial Reporting
Defaults, the “Existing Defaults”), the Required
Lenders hereby waive such Defaults or Events of Default until the
Determination Date (as defined below). Notwithstanding the
foregoing, no Revolving Loans shall be made and no Letters of
Credit shall be issued under the Credit Agreement from the date
hereof until such time as the Lenders shall have determined in
their sole discretion that Revolving Loans may be made and Letters
of Credit issued pursuant to an effective amended and restated
credit agreement in form and substance satisfactory to the
Administrative Agent and the Required Lenders (which shall include,
without limitation, the Required Lenders satisfactory review of the
“FTI report” and Borrower’s revised financial
projections) (the “Amended and Restated Credit
Agreement”); provided that if the Amended and
Restated Credit Agreement is not effective on or prior to
July 15, 2008, all Existing Defaults waived hereby shall
immediately be reinstated under the Credit Agreement. The
“Determination Date” means the date that is the
earlier of (x) the date the Amended and Restated Credit
Agreement becomes effective and (y) July 15,
2008.
Section 2. Amendment to the Credit Agreement .
In connection with the Waiver, from the Effective Date (as defined
below) through but excluding the Determination Date, the Credit
Agreement shall be deemed modified to reflect the
following:
(i) Section 1.01
of the Credit Agreement is amended by including the following
defined terms therein in appropriate alphabetical order:
“Effective Date” shall mean May 20,
2008.”;
“Limited Waiver and Amendment” shall mean the
Limited Waiver and Amendment which amends this Agreement, dated as
of the Effective Date, among the Borrower, the Administrative Agent
and the Lenders party thereto.”
(ii) Section 2.06
(a) and (b) of the Credit Agreement shall be amended and
restated as follows:
“(a)
ABR Loans . Subject to the provisions of
Section 2.06(c) , the Loans comprising each ABR
Borrowing shall bear interest at a rate per annum equal to the
Alternate Base Rate plus the Applicable Margin in effect as of the
Effective Date, plus 2%.
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(b)
Eurodollar Loans . Subject to the pro
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