EXECUTION COPY
LETTER AMENDMENT NO. 3
Dated as of November 28, 1997
To the banks, financial institutions
and other institutional lenders
(collectively, the "Banks") parties
to the Loan Agreement referred to
below and to Citibank, N.A., as agent
(the "Agent") for the Banks
Ladies and Gentlemen:
We refer to the Amended and Restated Loan Agreement dated as of April 11,
1995 (as amended, supplemented or otherwise modified through the date hereof,
the "Loan Agreement") among the undersigned and you. Capitalized terms not
otherwise defined in this Letter Amendment have the same meanings as specified
in the Loan Agreement.
The Loan Agreement is, effective as of the date of this Letter Amendment,
hereby amended as follows:
(a) Section 1.01 is amended by replacing ", whether
actual or implied, of the commercial paper" in the
definition of "Applicable LIBO Rate" with "of the
senior unsecured long-term debt", and by replacing
the table in that section with the following table:
"Senior Unsecured
Long-Term Applicable Applicable
Rating LIBO Margin Commitment
S&P/Moody's Rate Fee Rate
------------------- ----------------- ------------
A-/A3 0.325% 0.10%
BBB/Baa2 0.375% 0.15%
BBB-/Baa3 0.55% 0.2125%
BB+/Ba1 1.00% 0.375%
Lower than BB+/Ba1
or not rated 1.25% 0.50%"
(b) Section 6.01(a) is amended by replacing the ratio
".55:1" in clause (ii) with the ratio ".58:1", and by
replacing the period at the end of clause (iii) with
the following:
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"; (iv) during the fourth quarter of the fiscal
year ending May 31, 1998, the Borrowers shall
maintain a Consolidated Debt Ratio of not more than
.55:1;
(v) during the first quarter of the fiscal year
ending May 31, 1999, the Borrowers shall maintain a
Consolidated Debt Ratio of not more than .58:1; and
(vi) during the second quarter of the fiscal year
ending May 31, 1999, the Borrowers shall maintain a
Consolidated Debt Ratio of not more than .58:1."
(c) Section 6.01(b) is amended as follows:
(i) Clause (v) of the proviso to Section 6.01(b) is
amended by removing the word "and" at the end thereof
and by replacing the ratio "3.10:1" with the ratio
"2.50:1".
(ii) Clause (vi) of the proviso to Section 6.01(b) is
amended by replacing the period at the end thereof
with a semi-colon and by replacing the ratio "3.25:1"
with the ratio "2.50:1".
(iii) Section 6.01(b) is further amended by adding
the following to the end of clause (vi) of the
proviso thereof:
"(vii) during the fourth quarter of the
fiscal year ending May 31, 1998, the
Borrower shall maintain a Consolidated
Interest Coverage Ratio of not less than
3.50:1;
(viii) during the first quarter of the
fiscal year ending May 31, 1999, the
Borrower shall maintain a Consolidated
Interest Coverage Ratio of not less than
3.50:1; and
(ix) during the second quarter of the fiscal
year ending May 31, 1999, the Borrower shall
maintain a Consolidated Interest Coverage
Ratio of not less than 3.50:1."
(d) Section 6.03(b)(ii) is amended by replacing the date
"May 31, 1998" with the date "May 31, 2000."
This Letter Amendment shall become effective as of the date first above
written when, and only when, on or before November 28, 1997, the Agent shall
have received counterparts of this Letter Amendment executed by the undersigned
and the Majority Banks or, as to any of the Banks, advice satisfactory to the
Agent that such Bank has executed this Letter Amendment PROVIDED, HOWEVER, that
part (a) of this Letter Amendment shall only become effective when the Agent
shall have received counterparts of this Letter Amendment executed by all of the
Banks, or as to any of the Banks, advice
3
satisfactory to the Agent that such Bank has executed this Letter Amendment.
This Letter Amendment is subject to the provisions of Section 8.11 of the Loan
Agreement.
On the effective date of this Letter Amendment, the undersigned shall pay
to the Agent for the account of each Bank executing this Letter Amendment on or
before the date hereof (the "Signing Banks") an amendment fee of eight basis
points on each Signing Bank's Commitment.
On and after the effectiveness of this Letter Amendment, each reference in
the Loan Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Loan Agreement, and each reference in the Notes and each
of the other Loan Instruments to "the Loan Agreement", "thereunder", "thereof"
or words of like import referring to the Loan Agreement, shall mean and be a
reference to the Loan Agreement, as amended by this Letter Amendment.
The Loan Agreement, the Notes and each of the other Loan Instruments, as
specifically amended by this Letter Amendment, are and shall continue to be in
full force and effect and are hereby in all respects ratified and confirmed. The
execution, delivery and effectiveness of this Letter Amendment shall not, except
as expressly provided herein, operate as a waiver of any right, power or remedy
of any Bank or the Agent under any of the Loan Instruments, nor constitute a
waiver of any provision of any of the Loan Instruments.
If you agree to the terms and provisions hereof, please evidence such
agreement by executing and returning at least three counterparts of this Letter
Amendment to Citibank, N.A., 399 Park Avenue, New York, NY 10043, Attn: Mr. Dale
Goncher.
This Letter Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Letter Amendment by telecopier shall be effective as
delivery of a manually executed counterpart of this Letter Amendment.
This Letter Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York.
Very truly yours,
SCHOLASTIC CORPORATION
By: /s/
----------------------
Name:
Title:
SCHOLASTIC INC.
By: /s/
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Name:
Title:
Agreed as of the date first above written:
CITIBANK, N.A., as Agent
By: /s/
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Name:
Title:
BANKS
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CITIBANK, N.A.
By: /s/
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Name:
Title:
THE CHASE MANHATTAN BANK, N.A.
By: /s/
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Name:
Title:
BANK OF BOSTON, N.A. (formerly known as
The First National Bank of Boston)
By: /s/
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Name:
Title:
MARINE MIDLAND BANK
By: /s/
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Name:
Title:
UNITED JERSEY BANK
By: /s/
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Name:
Title: