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EXHIBIT 10.1
[NORWEST BANK LOGO] NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION FIRST AMENDMENT
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This First Amendment (the "First Amendment") dated as of December 18, 1998 is
between Norwest Bank Wisconsin, National Association (the "Bank") and Advantage
Learning Systems, Inc. (the "Borrower").
BACKGROUND
The Borrower and the Bank entered into a Credit Agreement (the "Agreement")
dated December 31, 1997, pursuant to which the Bank extended to the Borrower a
$7,500,000.00 revolving line of credit (the "Line"). The advances under the Line
are evidenced by a revolving note dated the same date as the Agreement (the
"1997 Revolving Note").
The Borrower has requested that the Bank increase the amount of the Line to
$10,000,000.00 and extend the maturity date of the Line to March 31, 2000. The
Bank is willing to grant these requests subject to the terms and conditions of
this First Amendment. Capitalized terms not otherwise defined in this First
Amendment shall have the meaning given them in the Agreement.
In consideration of the premises, the Bank and the Borrower agree that the
Agreement is hereby amended as follows:
1. Section 1.1 of the Agreement is amended by deleting the amount of
"Seven Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00)" and
substituting the amount of "Ten Million and No/l00 Dollars ($10,000,000.00)".
2. Section 1.2 of the Agreement is hereby amended by deleting the date of
"December 31, 1998" and substituting the date of "March 31, 2000".
3. Simultaneously with the execution of this First Amendment, the Borrower
shall execute and deliver to the Bank a revolving note (the "Revolving Note") in
form and content acceptable to the Bank, which shall replace, but not be deemed
to satisfy, the 1997 Revolving Note. The initial balance of the Revolving Note
shall be the balance of the 1997 Revolving Note as of the date of this First
Amendment. Each reference in the Agreement to the Revolving Note shall be deemed
to refer to the Revolving Note dated as of the date of this First Amendment.
4. The Borrower hereby represents and warrants to the Bank as follows:
A. The Agreement as amended by this First Amendment remains in full
force and affect.
B. The Borrower has no knowledge of any default under the terms of the
Agreement or any note evidencing any of the obligations of the Borrower
that are documented in the Agreement, or of any event that with notice or
the lapse of time or both would constitute a default under the Agreement or
any such notes.
C. The execution, delivery and performance of this First Amendment and
the Revolving Note are within its corporate powers, have been duly
authorized and are not in contravention of law or the terms of the
Borrower's articles of incorporation or bylaws, or of any undertaking to
which the Borrower is a party or by which it is bound.
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D. The resolutions set forth in the Corporate Certificate of Authority
dated December 31, 1997 and delivered by the Borrower to the Bank have not
been amended or rescinded, and remain in full force and effect.
5. Except as modified by this First Amendment, the Agreement remains
unchanged and in full force and effect.
IN WITNESS WHEREOF, the Bank and Borrower have executed this First Amendment as
of the date and year first above written.
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION ADVANTAGE LEARNING SYSTEMS, INC.
By: /s/ Daniel G. Frazier By: /s/ Timothy Sherlock, CFO
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Its: Vice President Its:
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By: /s/ Michael H. Baum
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Its: Michael H. Baum, C.E.O.
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NORWEST BANK WISCONSIN,
[NORWEST BANK LOGO] NATIONAL ASSOCIATION REVOLVING NOTE
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$10,000,000.00 December 18, 1998
FOR VALUE RECEIVED, Advantage Learning Systems, Inc. (the "Borrower") promises
to pay to the order of Norwest Bank Wisconsin, National Association (the
"Bank"), at its principal office or such other address as the Bank or holder may
designate from time to time, the principal sum of Ten Million and No/l00 Dollars
($10,000,000.00), or the amount shown on the Bank's records to be outstanding,
plus interest (calculated on the basis of actual days elapsed in a 360-day year)
accruing each day on the unpaid principal balance at the annual interest rates
defined below. Absent manifest error, the Bank's records shall be conclusive
evidence of the principal and accrued interest owing hereunder.
INTEREST RATE.
BASE RATE OPTION. Unless the Borrower chooses the LIBOR Interest Rate Option as
defined below, the principal balance outstanding under this Revolving Note shall
bear interest at an annual rate equal to the Base Rate, less 1.0% floating (the
"Base Rate Option"). Base Rate means the rate of interest established by the
Bank from time to time as its "base" or "prime" rate of interest at its
principal office in Milwaukee, Wisconsin.
LIBOR INTEREST RATE OPTION. Subject to the terms and conditions of the Agreement
the Borrower may elect that all or portions of the principal balance of this
Revolving Note bear interest at the LIBOR Interest Rate plus 1.25% (the "LIBOR
Interest Rate Option"). Specific reference is made to the Interest Rate Options
section of the Agreement for terms governing the designation of interest periods
and rate portions.
The LIBOR Interest Rate shall be computed in accordance with the following
formula.
LIBOR Interest Rate = London Interbank Offered Rate
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1.00 - Reserve Requirement
Where,
(i) "London Interbank Offered Rate" means the Bank's cost of funds as
determined by the Bank's Treasury Division, based upon the average
rate at which U.S. Dollar deposits with a term equal to the
applicable LIBOR Interest Rate Period and in an amount equal to the
LIBOR Interest Rate Portion are available to the Bank at the time or
determination on the London Interbank Market.
(ii) "Reserve Requirement" means the Federal Reserve System
requirement (expressed as a percentage) applicable to the dollar
deposits used in calculating the LIBOR Interest Rate above.
REPAYMENT TERMS
INTEREST. Interest accruing under the Base Rate Option shall be payable on the
last day of each month beginning January, 1999. Interest accruing under the
LIBOR Interest Rate Option shall be payable, as applicable, at the end of each
LIBOR Interest Rate Period.
PRINCIPAL. Principal, and all accrued but unpaid interest, shall be payable in a
single payment due on March 31, 2000.
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PREPAYMENT FEE. The Borrower may prepay advances of principal accruing interest
under the Base Rate Option at any time without penalty. Each prepayment of an
advance of principal accruing interest at the LIBOR interest rate option,
whether voluntary or by reason of acceleration, shall be accompanied by a
prepayment fee equal to the amount, if any, by which:
(i) the additional interest that would have been payable on the amount
prepaid, if it had not been paid until the last day of the applicable
interest period, exceeds
(ii) the interest that would have been recoverable by the Bank by
reinvesting the amount of principal prepaid from the prepayment date
to the last day of the applicable interest period in U.S. Government
Securities having a maturity date on or about that date.
ADDITIONAL TERMS AND CONDITIONS. This Revolving Note is issued pursuant to a
Credit Agreement dated December 31, 1997 between the Bank and the Borrower as
amended by a First Amendment of even date hereof (the "Agreement"). The
Agreement, and any future amendments or substitutions, contains additional terms
and conditions, including default and acceleration provisions, which are
incorporated into this Revolving Note by reference. Capitalized terms not
expressly defined herein shall have the meanings given them in the Agreement.
The Borrower agrees to pay all costs of collection, including reasonable
attorneys' fees and legal expenses incurred by the Bank if this Revolving Note
is not paid as provided above. This Revolving Note shall be governed by the
substantive laws of the State of Wisconsin.
WAIVER OF PRESENTMENT AND NOTICE OF DISHONOR. Borrower and any other person who
signs, guarantees or endorses this Revolving Note, to the extent allowed by law,
hereby waives presentment, demand for payment, notice of dishonor, protest, and
any notice relating to the acceleration of the maturity of this Revolving Note.
ADVANTAGE LEARNING SYSTEMS, INC.
By: /s/ Timothy Sherlock By: /s/ Michael H. Baum
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Its: CFO Its: Michael H. Baum, C.E.O.
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