Document:

Redemption and Repurchase Agreement

     

    EXHIBIT
      10.4

     

     

     

     

     

    REDEMPTION
      AND REPURCHASE AGREEMENT

     

     

    dated
      as
      of

     

     

    June 22,
      2005

     

    among

     

    

     

    WRC
      MEDIA
      INC.,

     

    SGC
      PARTNERS I LLC

     

    and

     

    EAC
      III
      L.L.C.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF
      CONTENTS

     

     

    

      
        	 	 	
                Page

                 

                 

              
	 	
                ARTICLE
                  I

                 

                Definitions

                 

              	 
	
                Section
                  1.01.

              	
                Definitions

              	
                1

              
	 	 	 
	 	
                ARTICLE
                  II

                 

                Redemption
                  and Repurchase

                 

              	 
	
                Section
                  2.01.

              	
                Redemption
                  and Repurchase

              	
                5

              
	
                Section
                  2.02.

              	
                Closing

              	
                5

              
	
                Section
                  2.03.

              	
                Call
                  Savings

              	
                6

              
	
                Section
                  2.04.

              	
                Sale
                  of Company

              	
                6

              
	 	 	 
	 	
                ARTICLE
                  III

                 

                Representations
                  and Warranties of WRC

                 

              	 
	
                Section
                  3.01.

              	
                Corporate
                  Existence and Power

              	
                7

              
	
                Section
                  3.02.

              	
                Corporate
                  Authorization

              	
                7

              
	
                Section
                  3.03.

              	
                Governmental
                  Authorization

              	
                7

              
	
                Section
                  3.04.

              	
                Noncontravention

              	
                7

              
	
                Section
                  3.05.

              	
                Capitalization
                  and Voting Rights of WRC

              	
                8

              
	
                Section
                  3.06.

              	
                Valid
                  Issuance of Exchange Shares

              	
                9

              
	
                Section
                  3.07.

              	
                Litigation

              	
                9

              
	
                Section
                  3.08.

              	
                Shareholder
                  Arrangements

              	
                9

              
	
                Section
                  3.09.

              	
                Disclosure;
                  Delivery of Documents

              	
                9

              
	
                Section
                  3.10.

              	
                Brokers’
                  or Finders’ Fees

              	
                9

              
	 	 	 
	 	
                ARTICLE
                  IV

                 

                Representations
                  and Warranties of the Initial Stockholder

                 

              	 
	
                Section
                  4.01.

              	
                Corporate
                  Existence and Power

              	
                10

              
	
                Section
                  4.02.

              	
                Authorization

              	
                10

              
	
                Section
                  4.03.

              	
                Governmental
                  Authorization

              	
                10

              
	
                Section
                  4.04.

              	
                Noncontravention

              	
                10

              

      

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    

      
        	
                Section
                  4.05.

              	
                The
                  Exchange Shares

              	
                11

              
	
                Section
                  4.06.

              	
                Brokers’
                  or Finders’ Fees

              	
                11

              
	 	 	 
	 	
                ARTICLE
                  V

                 

                Representations
                  and Warranties of the Exchanger

                 

              	 
	
                Section
                  5.01.

              	
                Existence
                  and Power

              	
                11

              
	
                Section
                  5.02.

              	
                Authorization

              	
                11

              
	
                Section
                  5.03.

              	
                Governmental
                  Authorization

              	
                12

              
	
                Section
                  5.04.

              	
                Acquisition
                  For Investment

              	
                12

              
	
                Section
                  5.05.

              	
                Private
                  Placement

              	
                12

              
	
                Section
                  5.06.

              	
                Litigation

              	
                12

              
	
                Section
                  5.07.

              	
                Brokers’
                  or Finders’ Fees

              	
                12

              
	 	 	 
	 	
                ARTICLE
                  VI

                 

                Covenants
                  of WRC

                 

              	 
	
                Section
                  6.01.

              	
                Covenants
                  of WRC

              	
                12

              
	 	 	 
	 	
                ARTICLE
                  VII

                 

                Conditions
                  to Closing

                 

              	 
	
                Section
                  7.01.

              	
                Conditions
                  to Obligations of the Exchanger

              	
                13

              
	
                Section
                  7.02.

              	
                Conditions
                  to Obligations of WRC

              	
                15

              
	
                Section
                  7.03.

              	
                Conditions
                  to Obligations of Each Party

              	
                15

              
	 	 	 
	 	
                ARTICLE
                  VIII

                 

                Survival;
                  Indemnification

                 

              	 
	
                Section
                  8.01.

              	
                Survival

              	
                16

              
	
                Section
                  8.02.

              	
                Indemnification

              	
                16

              
	
                Section
                  8.03.

              	
                Exclusivity

              	
                16

              

      

    

    
 

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

     

    

      
        	 	
                ARTICLE
                  IX

                 

                Termination

                 

              	 
	
                Section
                  9.01.

              	
                Grounds
                  For Termination

              	
                16

              
	
                Section
                  9.02.

              	
                Effect
                  of Termination

              	
                17

              
	 	 	 
	 	
                ARTICLE
                  X

                 

                Standstill

                 

              	 
	
                Section
                  10.01

              	
                Standstill

              	
                17

              
	 	 	 
	 	
                ARTICLE
                  XI

                 

                Miscellaneous

                 

              	 
	
                Section
                  11.01.

              	
                Notices

              	
                18

              
	
                Section
                  11.02.

              	
                Amendments
                  and Waivers

              	
                19

              
	
                Section
                  11.03.

              	
                Expenses;
                  Other Payments

              	
                19

              
	
                Section
                  11.04.

              	
                Consent
                  and Waiver

              	
                19

              
	
                Section
                  11.05.

              	
                Successors
                  and Assigns

              	
                19

              
	
                Section
                  11.06.

              	
                Governing
                  Law

              	
                20

              
	
                Section
                  11.07.

              	
                Jurisdiction

              	
                20

              
	
                Section
                  11.08.

              	
                WAIVER
                  OF JURY TRIAL

              	
                20

              
	
                Section
                  11.09.

              	
                Counterparts;
                  Third Party Beneficiaries

              	
                20

              
	
                Section
                  11.10.

              	
                Entire
                  Agreement

              	
                20

              
	
                Section
                  11.11.

              	
                Captions

              	
                20

              
	
                Section
                  11.12.

              	
                Severability

              	
                20

              

      

    

    
 

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    

      Schedules

       

      
        	
                Schedule
                  3.04

              	
                Noncontravention

              
	
                Schedule
                  3.05(f)

              	
                Existing
                  Outstanding Shares and Repurchase Obligations

              
	
                Schedule
                  3.07

              	
                Litigation

              
	
                Schedule
                  3.08

              	
                Shareholder
                  Agreements

              

      

      

       

      Exhibits

       

      
        	
                Exhibit
                  A

              	
                Form
                  of New Stockholders Agreement

              
	
                Exhibit
                  B

              	
                Form
                  of Amendment to Existing Stockholders Agreement

              
	
                Exhibit
                  C

              	
                Copy
                  of Agreement for New Equity Investment

              
	
                Exhibit
                  D

              	
                Form
                  of Legal Opinion of Cravath, Swaine & Moore LLP 

              
	
                Exhibit
                  E

              	
                First
                  Lien Term Loan Term Sheet

              
	
                Exhibit
                  F

              	
                Form
                  of Amendment to WRC Certificate of Incorporation
                  

              

      

     

    

     

    
      
        
          

        

        
        

      

      
        iv

        
          

        

      

      
        
        

        
        

      

    

    REDEMPTION
      AND REPURCHASE AGREEMENT (as the same may hereafter be amended, supplemented
      or
      modified, this “Agreement”),
      dated
      as of June 22, 2005, among WRC MEDIA INC., a Delaware corporation (together
      with its successors and permitted assigns, “WRC”),
      SGC
      PARTNERS I LLC,
      a
      Delaware limited liability company (together with its successors and permitted
      assigns, the “Exchanger”),
      and
      EAC III L.L.C., a Delaware limited liability company (together with its
      successors and permitted assigns, the “Initial
      Stockholder”).

     

    RECITALS

    

    WHEREAS
      WRC desires to redeem all of the Exchanger’s shares of 18% Junior Participating
      Cumulative Convertible Preferred Stock, par value $0.01 per share (the
“Junior
      Preferred Stock”),
      of
      WRC, and the Exchanger is willing to have redeemed all of its shares of Junior
      Preferred Stock (the “Securities”),
      upon
      the terms and subject to the conditions hereinafter set forth (such
      transactions, collectively, the “Redemption”).

     

    WHEREAS
      WRC and the Initial Stockholder desire to amend certain terms of the Existing
      Stockholders Agreement, and the Exchanger is willing to amend such terms, along
      with the amendment of certain other terms of the Existing Stockholders Agreement
      (as defined below), as an inducement to the Redemption and Repurchase (as
      defined below).

     

    WHEREAS
      the Initial Stockholder desires to transfer certain shares of Common Stock
      to
      the Exchanger in connection with the Redemption and the amendment of the
      Existing Stockholders Agreement (such transfer, together with the Redemption,
      the “Redemption
      and Repurchase”).

     

    NOW
      THEREFORE, in consideration of the foregoing and the mutual promises herein
      contained, WRC and the Exchanger mutually agree as follows:

     

    ARTICLE
      I

     

    Definitions

     

     SECTION
      1.01.   Definitions.
      The
      following terms, as used herein, have the following meanings:

     

    “Affiliate”
      means,
      with respect to any Person, any other Person directly or indirectly controlling,
      controlled by, or under common control with such Person.

     

    “Agreement”
      has the
      meaning set forth in the introductory paragraph.

     

    “AGS”
      means
      American Guidance Service, Inc., a Minnesota corporation.

     

    “Board
      of Directors”
      means
      the board of directors of WRC or any committee thereof that, in the instance,
      shall have the lawful power to exercise the power and authority of such board
      of
      directors.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    “Call
      Savings”
      means
      the amount by which (1) the aggregate amount (principal, accrued but unpaid
      interest and the applicable repurchase or redemption premium) actually paid
      by
      WRC, the Purchaser or any of their respective Affiliates to purchase or redeem
      all outstanding Senior Subordinated Notes in the Note Redemption is less than
      (2) the aggregate amount (principal, accrued but unpaid interest and a 6.375%
      redemption premium) that would have been required to be paid to redeem all
      outstanding Senior Subordinated Notes at a 106.375% redemption price, assuming
      the Senior Subordinated Notes are redeemed on the date or dates when the actual
      purchases and/or redemptions occur.

     

    “Closing”
      has the
      meaning set forth in Section 2.01.

     

    “Closing
      Date”
      means
      the date of the Closing.

     

    “Common
      Stock”
      has the
      meaning set forth in Section 2.01.

     

    “Company
      Sale”  has
      the
      meaning set forth in Section 2.04.

     

    “Consideration”
      has the
      meaning set forth in Section 2.01.

     

    “Credit
      Agreement”
      means
      the Credit Agreement, dated as of March 29, 2004, among Weekly Reader,
      CompassLearning, WRC, Credit Suisse First Boston, Bank of America, N.A. and
      General Electric Capital Corporation.

     

    “Damages”
      has the
      meaning set forth in Section 8.02.

     

    “Encumbrance” 
      means,
      other than the Existing Stockholders Agreement, any: (a) mortgage, pledge,
      lien,
      security interest, charge, hypothecation, security agreement, security
      arrangement or encumbrance or other adverse claim of any kind; (b) purchase
      or
      option agreement or put arrangement; (c) subordination agreement; (d)
      (other than the issuance of the Initial Stockholder Exchange Shares) prior
      sale,
      transfer, assignment or participation; or (e) agreement to create or
      effect
      any of the foregoing.

     

    “Exchange
      Shares”
      has the
      meaning set forth in Section 2.01.

     

    “Exchanger”
      has the
      meaning set forth in the introductory paragraph.

     

    “Existing
      Management Agreements”  means,
      collectively, (i) the Management Agreement between Ripplewood Holdings L.L.C.
      and Weekly Reader Corporation, dated as of November 17, 1999, and (ii) the
      Management Agreement between Ripplewood Holdings L.L.C. and CompassLearning,
      dated as of November 17, 1999.

     

    “Existing
      Management Options” 
      means the options to purchase shares of Common Stock held by management of
      WRC
      and its Subsidiaries as of May 31,
      2005.

     

    “Existing
      Stockholders Agreement”
      has the
      meaning set forth in Section 3.08.

     

    “Existing
      Stockholders Agreement Amendment”
      has the
      meaning set forth in Section 2.02(d).

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Initial
      Stockholder” has the meaning set forth in the introductory
      paragraph.

     

    “Initial
      Stockholder Exchange Shares”
      has the
      meaning set forth in Section 2.01.

     

    “Junior
      Preferred Stock”
      has the
      meaning set forth in the Recitals.

     

    “Lien”
      means,
      with respect to any property or asset, any mortgage, lien, pledge, charge,
      security interest or encumbrance in respect of such property or
      asset.

     

    “New
      Equity Agreement”
      has the
      meaning set forth in Section 6.01(a).

     

    “New
      Equity Investment”
      has the
      meaning set forth in Section 6.01(a).

     

    “New
      Management Options”
      has the
      meaning set forth in Section 3.05(f). 

     

    “New
      Stockholders Agreement”
      means
      the Stockholders Agreement dated the date hereof among WRC, the Initial
      Stockholder and the holders of WRC’s 15% Senior Preferred Stock due 2011, in the
      form of Exhibit A hereto.

     

    “1933
      Act”
      means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

    “1934
      Act”
      means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Notes” 
      means
      the
      definitive notes evidencing the Second Lien Term Loans delivered to the
      Exchangers (as defined in the Senior Preferred Redemption and Repurchase
      Agreement) in connection with the Senior Preferred Redemption and
      Repurchase.

     

    “Note
      Redemption”  has
      the
      meaning set forth in Section 7.01(g).

     

    “Person”
      means
      an individual, corporation, partnership, limited liability company, association,
      trust or other entity or organization, including a government or political
      subdivision or an agency or instrumentality thereof.

     

    “Preferred
      Stock”
      has the
      meaning set forth in Section 3.05(a).

     

    “Purchaser”
      means
      Pearson Education, Inc.

     

    “Redemption
      and Repurchase”
      has the
      meaning set forth in the recitals hereto.

     

    “Refinancing”
      means
      the refinancing of (i) the Credit Agreement, dated as of March 29, 2004,
      among Weekly Reader, CompassLearning, WRC, Credit Suisse First Boston, Bank
      of
      America, N.A. and General Electric Capital Corporation and (ii) the
      Second
      Lien Credit Agreement, dated as of March 29, 2004, among Weekly Reader,
      CompassLearning, WRC, Credit Suisse First Boston, Banc of America Securities
      LLC, General Electric Capital Corporation and Bank of America, N.A.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Ripplewood Junior
      Preferred Stock” 
      shall mean the shares of Junior Preferred Stock held by the Initial
      Stockholder.

     

    “Sale”
      means
      the sale of all or substantially all of the capital stock of AGS.

     

    “Sale
      Agreement”
      means
      the Stock Purchase Agreement dated as of June 22, 2005 between Weekly
      Reader and the Purchaser, providing for the Sale, to be entered into
      contemporaneously with the execution of this Agreement. 

     

    “Sale
      Transaction”
      has the
      meaning set forth in Section 10.01.

     

    “Second
      Lien Term Loans”
      means
      second lien term indebtedness having the terms set forth in Schedule 2.01 of
      the
      Senior Preferred Redemption and Repurchase Agreement, as in effect on the date
      hereof.

     

    “Securities”
      has the
      meaning set forth in the recitals hereto.

     

    “Senior
      Preferred Redemption and Repurchase”
      shall
      mean the redemption and repurchase transactions contemplated by the Senior
      Preferred Redemption and Repurchase Agreement.

     

    “Senior
      Preferred Redemption and Repurchase Agreement”
      means
      the Redemption and Repurchase Agreement, dated as of the date hereof, among
      WRC
      and the holders of the Senior Preferred Stock, to be entered into
      contemporaneously with the execution of this Agreement.

     

    “Senior
      Preferred Stock”  means
      the
      15% Senior Preferred Stock, par value $0.01, of WRC due 2011

     

    “Senior
      Subordinated Notes”
      means
      the 12 3/4% Senior Subordinated Notes due 2009 issued pursuant to the Indenture
      dated as of November 17, 1999 among WRC, Weekly Reader, CompassLearning and
      the
      Note Guarantors signatories thereto.

     

    “Subsidiary”
      means
      any entity of which securities or other ownership interests having ordinary
      voting power to elect a majority of the board of directors or other persons
      performing similar functions are directly or indirectly owned by
      WRC.

     

    “Transactions”
      means,
      collectively, the Sale, the Refinancing, the New Equity Investment, the Senior
      Preferred Redemption and Repurchase, the conversion of the Ripplewood Junior
      Preferred Stock as required by Section 7.01(b) hereof, the Redemption and
      Repurchase and the amendments effected by the Existing Stockholder Agreement
      Amendment.

     

    “Weekly
      Reader”
      means
      Weekly Reader Corporation, a Delaware corporation and Subsidiary of
      WRC.

     

    “WRC”
      has the
      meaning set forth in the introductory paragraph.

     

    “WRC
      Exchange Shares”
      has the
      meaning set forth in Section 2.01.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II  

     

    Redemption
      and Repurchase

     

    SECTION
      2.01.   Redemption
      and Repurchase.
      Upon the
      terms and subject to the conditions of this Agreement, (i) WRC agrees to redeem
      from the Exchanger and the Exchanger agrees to surrender for redemption to
      WRC,
      all of the Securities at the closing of the Redemption and Repurchase (the
      “Closing”)
      and
      (ii) the Initial Stockholder agrees to transfer certain shares of common stock,
      par value $0.01 per share (the “Common
      Stock”),
      of WRC
      in connection therewith and the amendment of the Existing Stockholders
      Agreement. The aggregate consideration to be paid or delivered to the Exchanger
      (the “Consideration”)
      as
      part of the Closing is (a) at the Closing, from WRC, the number of newly issued
      shares of Common Stock (the “WRC
      Exchange Shares”),
      free
      and clear of any Encumbrances, into which the Securities are then convertible
      at
      the option of the holder, (b) at the Closing, from the Initial Stockholder,
      the number of shares of Common Stock (free and clear of any Encumbrances),
      which
      shares shall then have been newly issued by WRC to the Initial Stockholder
      in
      connection with the New Equity Investment (the “Initial
      Stockholder Exchange Shares”
      and,
      together with the WRC Exchange Shares, the “Exchange
      Shares”),
      to be
      determined such that upon the closing of the Sale, after giving effect to the
      Transactions and all related transactions (including the Note Redemption),
      the
      Exchange Shares would, when taken together with the 1,694,039 shares of Common
      Stock already held by the Exchanger and the shares of Common Stock issued to
      it
      pursuant to clause (a) above, constitute an aggregate of 8.3074 % of
      the
      outstanding Common Stock, calculated on a fully diluted basis prior to the
      issuance of New Management Options, and (c) from WRC, thereafter, promptly
      following any purchase or redemption of any Senior Subordinated Notes by WRC,
      the Purchaser or any of their respective Affiliates, 24% of the Call Savings
      attributable to such purchase or redemption. The Consideration shall be paid
      or
      delivered, as applicable, as provided in Section 2.02 and Section
      2.03.

     

    SECTION
      2.02.   Closing.
      The
      Closing shall take place at the offices of Cravath, Swaine & Moore LLP,
      Worldwide Plaza, 825 Eighth Avenue, New York, New York, concurrently
      with the consummation of the Sale, or at such other time or place as WRC and
      the
      Exchanger may agree. At the Closing:

     

    (a)
        WRC
      shall
      deliver, or cause to be delivered, to the Exchanger, in immediately available
      funds, 24% of the Call Savings realized at or prior to the Closing, if any,
      by
      wire transfer (or other means acceptable to the Exchanger) to an account of
      Exchanger with a bank in New York City designated by Exchanger by notice to
      WRC
      prior to the Closing;

     

    (b)
        WRC
      shall
      issue and deliver, and the Initial Stockholder shall deliver, or cause to be
      delivered, to the Exchanger, certificates or other appropriate documentation
      for
      the Exchange Shares, in accordance with their respective obligations set forth
      in Section 2.01, registered in the name of the Exchanger and bearing
      appropriate legends; and

     

    (c)
        The
      Exchanger shall deliver, or cause to be delivered, to WRC, certificates or
      other
      appropriate documentation for the Securities, duly endorsed in blank or
      accompanied by instruments of transfer executed in blank;
      and

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (d)
      The
      Exchanger, WRC and the Initial Stockholder shall enter into an amendment to
      the
      Existing Stockholders Agreement substantially in the form of Exhibit B hereto
      (the “Existing
      Stockholders Agreement Amendment”).

     

    SECTION
      2.03.   Call
      Savings.
      If WRC,
      the Purchaser or any of their respective Affiliates purchases or redeems any
      Senior Subordinated Notes, WRC shall deliver, or cause to be delivered, to
      the
      Exchanger, in immediately available funds, 24% of the portion of any Call
      Savings attributable to such purchase or redemption, by wire transfer (or other
      means acceptable to the Exchanger) to the account of the Exchanger with a bank
      in New York City designated by the Exchanger by notice to WRC prior to the
      Closing, it being understood that none of WRC, the Purchaser or any of their
      respective Affiliates shall have any obligation to take any action to realize
      any Call Savings in connection with such purchase or redemption.

     

    SECTION
      2.04.   Sale
      of Company.
      If a
      sale of WRC (a “Company
      Sale”)
      occurs
      within 12 months of the Closing (as defined in the Sale Agreement), the Initial
      Stockholder shall deliver, or cause to be delivered, (free and clear of any
      Encumbrances) to the Exchanger promptly after receipt following the closing
      of
      the Company Sale, a portion of consideration for such Company Sale received
      by
      the Initial Stockholder or its successors or assigns equal to, if positive,
      (x)
      the consideration that the Exchanger would have received in respect of its
      Securities in connection with the Company Sale (for clarity, disregarding the
      sale of any Securities prior to the closing of such Company Sale) if the
      Exchanger had not exchanged the Securities for the Exchange Shares pursuant
      to
      this Agreement or otherwise (but, for clarification, all the other Transactions
      had occurred at the Closing) minus (y) the consideration that the Exchanger
      receives in connection with such Company Sale in respect of its Exchange Shares;
      provided
      that, if
      any Exchange Shares are disposed of by the Exchanger prior to the closing of
      the
      Company Sale, (i) such Exchange Shares shall nonetheless be deemed to
      have
      instead been sold by the Exchanger in the Company Sale and therefore shall
      be
      counted in clause  (y) and (ii) the amount of consideration for
      any
      such Exchange Shares in clause (y) shall instead be the amount actually
      received by the Exchanger in its actual pre-Company Sale disposition of such
      Exchange Shares if such amount is less than the amount it would have received
      for such Exchange Shares in the Company Sale. As used in this paragraph, a
      sale
      of WRC shall be deemed to occur if all or substantially all of the Common Stock
      or voting stock, or all or substantially all of WRC’s assets, are sold, directly
      or indirectly, whether by merger (including any merger in which the pre-merger
      stockholders of WRC no longer own a majority of WRC immediately after the
      merger), consolidation, sale of stock or assets or any other form, in each
      case
      in a transaction or series of related transactions, and entry into definitive
      documentation therefor shall constitute a sale. For purposes of clarification
      and without limiting the effect of the foregoing, this Section 2.04 does not
      create any obligation of WRC or any of its Subsidiaries; only the Initial
      Stockholder shall be obligated to deliver (or cause to be delivered, other
      than
      by WRC or any of its Subsidiaries) the payment contemplated by this
      Section 2.04.

     

    ARTICLE
      III  

     

    Representations
      and Warranties of WRC

     

    WRC
      represents and warrants to the Exchanger as of the date hereof and as of the
      time of Closing that:

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.01.   Corporate
      Existence and Power.
      WRC is a
      corporation duly incorporated, validly existing and in good standing under
      the
      laws of Delaware and has all corporate powers and all material governmental
      licenses, authorizations, permits, consents and approvals required to carry
      on
      its business as now conducted and as proposed to be conducted.

     

    SECTION
      3.02.   Corporate
      Authorization.
      The
      execution, delivery and performance by WRC of each of this Agreement, the
      Existing Stockholder Agreement Amendment, the Notes, the Note Agreement and
      the
      New Stockholders Agreement and the consummation by WRC of the transactions
      contemplated hereby and thereby (including the issuance of the Exchange Shares
      and the Note Redemption) are within the corporate powers of WRC and have been
      duly authorized by all necessary corporate action on the part of WRC. This
      Agreement and the New Stockholders Agreement each constitutes, and each Note
      and
      the Note Agreement and the Existing Stockholders Agreement, as amended by the
      Existing Stockholders Agreement Amendment, when executed will constitute, a
      valid and binding agreement of WRC, each enforceable against WRC in accordance
      with its terms, except (i) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, fraudulent transfer and other laws of general
      application affecting enforcement or creditors’ rights generally; (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies; or (iii) as limited by general principles
      of
      equity, including without limitation, concepts of materiality, reasonableness,
      good faith and fair dealing, regardless of whether considered in a proceeding
      in
      equity or at law.

     

    SECTION
      3.03.   Governmental
      Authorization.
      The
      execution, delivery and performance by WRC of each of this Agreement, the
      Existing Stockholders Agreement Amendment, the Notes, the Note Agreement and
      the
      New Stockholders Agreement and the consummation of the transactions contemplated
      hereby and thereby require no order, license, consent, authorization or approval
      of, or exemption by, or action by or in respect of, or notice to, or filing
      or
      registration with, any governmental body, agency or official to be obtained
      or
      made by, or with respect to, WRC, except (i) as have been obtained or made
      (or
      are not required to be obtained or made until after the Closing), (ii) as
      required pursuant to the Securities Exchange Act of 1934 and (iii) filings
      of
      termination statements, mortgage releases, financing statements, mortgages
      and
      other notices in connection with the Refinancing and the Second Lien Term
      Loans.

     

    SECTION
      3.04.   Noncontravention.
      Except
      as set forth on Schedule 3.04 hereto, the execution, delivery and
      performance by WRC of each of this Agreement, the Existing Stockholders
      Agreement Amendment, the Notes, the Note Agreement and the New Stockholders
      Agreement and the consummation of the transactions contemplated hereby and
      thereby do not and will not (i) violate WRC’s certificate of incorporation
      or bylaws, (ii) violate any applicable law, rule, regulation, judgment,
      injunction, order or decree, (iii) require any consent or other action
      by
      any Person under, constitute a default under (with due notice or lapse of time
      or both), or give rise to any right of termination, cancellation or acceleration
      of any right or obligation of WRC or to a loss of any benefit to which WRC
      is
      entitled under any provision of any material agreement or other instrument
      binding upon WRC or any of WRC’s assets or properties or (iv) result in the
      creation or imposition of any material Lien on any of WRC’s properties or
      assets.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.05.   Capitalization
      and Voting Rights of WRC. (a)
      The
      authorized capital stock of WRC as of May 31, 2005 consists of 20,000,000 shares
      of Common Stock and 20,000,000 shares of preferred stock, par value $0.01 per
      share (the “Preferred
      Stock”),
      and
      the outstanding capital stock of WRC as of May
      31,
      2005 consists of 7,008,406 shares of Common Stock and 3,547,980 shares of
      Preferred Stock.
      As of
      the Closing, the authorized capital stock of WRC will consist of 400,000,000
      shares of Common Stock and 20,000,000 shares of Preferred Stock.

     

    (b)
        Immediately
      following the Closing and after giving effect to the Transactions and the other
      transactions contemplated by this Agreement, the Exchange Shares will in the
      aggregate constitute 8.3074% of the outstanding Common Stock, calculated on
      a
      fully diluted basis prior to the issuance of New Management Options, and WRC
      will have no outstanding shares of Preferred Stock.

     

    (c)
        As
      of May
      31, 2005, (i) the Initial Stockholder owned 4,870,494 shares of Common Stock
      representing 69.5% of the outstanding Common Stock and the Exchanger’s 1,694,039
      shares of Common Stock represented 24.2% of the outstanding Common
      Stock.

     

    (d)
        The
      Initial Stockholder owns all of the outstanding shares of Junior Preferred
      Stock, other than the outstanding shares of Junior Preferred Stock owned by
      the
      Exchanger.

     

    (e)
         All
      of
      the outstanding shares of Senior Preferred Stock are owned by the “Exchangers,”
      as such term is defined in the Senior Preferred Redemption and Repurchase
      Agreement. 

     

    (f)
        All
      of
      the outstanding shares of capital stock of WRC have been duly authorized and
      validly issued and are fully paid and non-assessable. Except for (1) the
      Existing Management Options and options to be issued to management of WRC and
      its Subsidiaries representing the right to purchase up to 15% of the outstanding
      shares of Common Stock after giving effect to the transactions contemplated
      hereby at an exercise price that is no less than the fair market value of one
      share of Common Stock at the time of issuance of such options as determined
      in
      good faith by the Board of Directors (the “New
      Management Options”),
      (2) the 7,008,406 shares of Common Stock outstanding on the date hereof,
      (3) the shares of Common Stock to be issued in connection with the
      Redemption and Repurchase, (4) the shares of Common Stock to be issued
      pursuant to the Senior Redemption and Repurchase Agreement, (5) the
      shares
      of Common Stock to be issued in connection with the New Equity Investment and
      (6) as set forth in Schedule 3.05(f) hereto, the shares of Common
      Stock issued in connection with the Senior Preferred Redemption and Repurchase,
      the shares of Common Stock issued in connection with the New Equity Investment,
      and as set forth in Schedule 3.05(f) hereto, there are, and immediately after
      the Closing and after giving effect to the transactions contemplated hereby
      there will be, no (i) outstanding shares of capital stock or voting securities
      of WRC, (ii) securities of WRC convertible into or exchangeable for shares
      of
      capital stock or voting securities of WRC, (iii) options or other rights to
      acquire from WRC, or other obligation of WRC to issue, any capital stock, voting
      securities or securities convertible into or exchangeable for capital stock
      or
      voting securities of WRC or (iv) other than as expressly permitted in
      this
      Agreement, the Existing Stockholders Agreement or the New Stockholders
      Agreement, obligations of WRC and its Subsidiaries to repurchase or otherwise
      acquire or retire any shares

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    of
      capital stock or voting securities or any convertible or exchangeable
      securities, options or other rights of the type described in (i), (ii), or
      (iii).

     

    SECTION
      3.06.   Valid
      Issuance of Exchange Shares.
      The
      Exchange Shares have been duly and validly authorized and, when issued and
      delivered to the Exchanger in accordance with the terms of this Agreement,
      will
      be fully paid and non-assessable.
      The WRC
      Exchange Shares are being issued and delivered to the Exchanger, and the Initial
      Stockholder Exchange Shares are being issued and delivered to the Initial
      Stockholder, free and clear of any Encumbrances.

     

    SECTION
      3.07.   Litigation.
      Except
      as set forth in Schedule 3.07, as of the date of this Agreement, there is no
      action, suit, investigation or proceeding pending against or, to the knowledge
      of WRC, threatened against or affecting WRC or any of its properties before
      any
      court or arbitrator or any governmental body, agency or official which in any
      manner challenges or seeks to prevent, enjoin, alter or materially delay any
      of
      the Transactions or which could reasonably be expected to have a material
      adverse effect on the business, financial condition, properties or operations
      of
      WRC.

     

    SECTION
      3.08.   Shareholder
      Arrangements.
      Other
      than the New Stockholders Agreement, the Amended and Restated Stockholders
      Agreement dated as of November 17, 1999 (the “Existing
      Stockholders Agreement”),
      among
      WRC, SGC Partners I LLC (previously SGC Partners II LLC) and EAC III, L.L.C.,
      the Senior Preferred Redemption and Repurchase Agreement, other agreements
      entered into between Exchanger and WRC, the agreements listed on Schedule 3.08
      and this Agreement, WRC is not party to or bound by any agreement with any
      of
      its stockholders or any of their respective Affiliates.

     

    SECTION
      3.09.   Disclosure;
      Delivery of Documents.
      WRC has
      provided to the Exchanger true and complete copies of agreements or
      understandings (including written forms of any oral agreements or
      understandings) entered into by WRC or any of its Affiliates or, to the
      knowledge of WRC, otherwise by any stockholders of WRC or any of their
      respective Affiliates, in each case in connection with the Transactions, and,
      as
      a result, all terms of the Transactions, including terms related to the payment
      of any fees in connection with the Transactions, have been disclosed to the
      Exchanger. In connection with the Transactions, no management agreements, other
      than the Existing Management Agreements, or similar arrangements are being
      entered into and the only fees being paid in connection with the Transactions
      to
      any WRC stockholder (or any of their respective Affiliates) by WRC or any of
      its
      Affiliates are reimbursement of out-of-pocket expenses and the payments set
      forth in Schedule 3.09, and there are not any other arranging or transaction
      fees.

     

    SECTION
      3.10.   Brokers’
      or Finders’ Fees.
      There
      is no investment banker, broker, finder or other intermediary which has been
      retained by, will be retained by or is authorized to act on behalf of WRC who
      might be entitled to any fee or commission from the Exchanger upon consummation
      of the transactions contemplated by this Agreement. 

     

    
      
        
        

      

      
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    ARTICLE
      IV  

     

    Representations
      and Warranties of the Initial Stockholder

     

    The
      Initial Stockholder represents and warrants to the Exchanger as of the date
      hereof and as of the time of Closing that:

     

    SECTION
      4.01.   Existence
      and Power.
      The
      Initial Stockholder is a limited liability company duly formed, validly existing
      and in good standing under the laws of Delaware and has all requisite limited
      liability company powers and all material governmental licenses, authorizations,
      permits, consents and approvals required to carry on its business as now
      conducted and as proposed to be conducted.

     

    SECTION
      4.02.   Authorization.
      The
      execution, delivery and performance by the Initial Stockholder of each of this
      Agreement, the Existing Stockholders Agreement Amendment and the New Equity
      Agreement and the consummation by the Initial Stockholder of the transactions
      contemplated hereby and thereby are within the limited liability company powers
      of the Initial Stockholder and have been duly authorized by all necessary
      limited liability company action on the part of the Initial Stockholder. This
      Agreement, the Existing Stockholders Agreement Amendment and the New Equity
      Agreement each constitutes a valid and binding agreement of the Initial
      Stockholder, each enforceable against the Initial Stockholder in accordance
      with
      its terms, except (i) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, fraudulent transfer and other laws of general
      application affecting enforcement or creditors’ rights generally; (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies; or (iii) as limited by general principles
      of
      equity, including without limitation, concepts of materiality, reasonableness,
      good faith and fair dealing, regardless of whether considered in a proceeding
      in
      equity or at law.

     

    SECTION
      4.03.   Governmental
      Authorization.
      The
      execution, delivery and performance by the Initial Stockholder of each of this
      Agreement, the Existing Stockholder Agreement as amended by the Existing
      Stockholders Agreement Amendment and the New Equity Agreement and the
      consummation of the transactions contemplated hereby and thereby require no
      order, license, consent, authorization or approval of, or exemption by, or
      action by or in respect of, or notice to, or filing or registration with, any
      governmental body, agency or official to be obtained or made by, or with respect
      to, the Initial Stockholder, except as have been obtained or made (or are not
      required to be obtained or made until after the Closing).

     

    SECTION
      4.04.   Noncontravention.
      The
      execution, delivery and performance by the Initial Stockholder of each of this
      Agreement, the Existing Stockholders Agreement Amendment and the New Equity
      Agreement and the consummation of the transactions contemplated hereby and
      thereby do not and will not (i) violate the Initial Stockholder’s
      certificate of formation, operating agreement or similar instrument, (ii)
      violate any applicable law, rule, regulation, judgment, injunction, order or
      decree, (iii) require any consent or other action by any Person under,
      constitute a default under (with due notice or lapse of time or both), or give
      rise to any right of termination, cancellation or acceleration of any right
      or
      obligation of the Initial Stockholder or to a loss of any benefit to which
      the
      Initial Stockholder is entitled under any provision of any material agreement
      or
      other instrument binding upon the Initial Stockholder

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    or
      any of
      the Initial Stockholder’s assets or properties or (iv) result in the
      creation or imposition of any material Lien on any of the Initial Stockholder’s
      properties or assets.

     

    SECTION
      4.05.   The
      Exchange Shares.
      When
      issued to the Initial Stockholder in connection with the New Equity Investment,
      the Initial Stockholder will have good and valid title to, and will be the
      sole
      legal and beneficial owner of, the Initial Stockholder Exchange Shares, free
      and
      clear of any Encumbrances. Assuming the Exchanger has the requisite power and
      authority to be the lawful owner of the Initial Stockholder Exchange Shares,
      upon delivery to the Exchanger at the Closing of certificates representing
      the
      Initial Stockholder Exchange Shares, duly endorsed by the Initial Stockholder
      for transfer to the Exchanger, good and valid title to the Initial Stockholder
      Exchange Shares will pass to Exchanger, free and clear of any Encumbrances,
      other than those arising from acts of the Exchanger or its Affiliates. Other
      than the Existing Stockholders Agreement, the Exchange Shares are not subject
      to
      any voting trust agreement or other contract or arrangement to which WRC or
      the
      Initial Stockholder (or any of its Affiliates) is a party, or by which any
      of
      them are otherwise bound, restricting or otherwise relating to the voting,
      dividend rights or disposition of such Exchange Shares. 

     

    SECTION
      4.06.   Brokers’
      or Finders’ Fees.
      There is
      no investment banker, broker, finder or other intermediary which has been
      retained by, will be retained by or is authorized to act on behalf of the
      Initial Stockholder who might be entitled to any fee or commission from the
      Exchanger upon consummation of the transactions contemplated by this Agreement.
      

     

    ARTICLE
      V

     

    Representations
      and Warranties of the Exchanger

     

    The
      Exchanger represents and warrants to WRC, as of the date hereof and as of the
      time of Closing that:

     

    SECTION
      5.01.   Existence
      and Power.
      The
      Exchanger is duly organized, validly existing and in good standing under the
      laws of its jurisdiction of organization and has all powers (corporate,
      partnership or otherwise) and all material governmental licenses,
      authorizations, permits, consents and approvals required to carry on its
      business as now conducted.

     

    SECTION
      5.02.   Authorization.
      The
      execution, delivery and performance by the Exchanger of this Agreement and
      the
      consummation of the transactions contemplated hereby are within the powers
      (corporate, partnership or otherwise) of the Exchanger and have been duly
      authorized by all necessary action (corporate, partnership or otherwise) on
      the
      part of the Exchanger. This Agreement constitutes a valid and binding agreement
      of the Exchanger, enforceable in accordance with its terms, except (i) as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium,
      fraudulent transfer and other laws of general application affecting enforcement
      or creditors’ rights generally; (ii) as limited by laws relating to the
      availability of specific performance, injunctive relief or other equitable
      remedies; or (iii) as limited by general principles of equity, including without
      limitation, concepts of materiality, reasonableness, good faith and fair
      dealing, regardless of whether considered in a proceeding in equity or at
      law.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    SECTION
      5.03.   Governmental
      Authorization.
      The
      execution, delivery and performance by the Exchanger of this Agreement, and
      the
      consummation of the transactions contemplated hereby, require no order, license,
      consent, authorization or approval of, or exemption by, or action by or in
      respect of, or notice to, or filing or registration with, any governmental
      body,
      agency or official to be obtained or made by, or with respect to, such
      Exchanger, other than routine regulatory filings in the ordinary
      course.

     

    SECTION
      5.04.   Acquisition
      For Investment.
      The
      Exchanger is acquiring the Exchange Shares it is receiving pursuant to this
      Agreement for investment for its own account and not with a view to, or for
      sale
      in connection with, any distribution thereof.

     

    SECTION
      5.05.   Private
      Placement. (a)
      The
      Exchanger understands that (i) the offering and sale of the Exchange
      Shares
      hereby is intended to be exempt from registration under the 1933 Act and
      (ii) there is no market for the Exchange Shares, and there can be no
      assurance that the Exchanger will be able to sell or dispose of the Exchange
      Shares to be acquired by the Exchanger.

     

    (b)
        The
      Exchanger’s financial situation is such that the Exchanger can afford to bear
      the economic risk of holding the Exchange Shares acquired hereunder for an
      indefinite period of time, and the Exchanger can afford to suffer the complete
      loss of the investment in the Exchange Shares.

     

    SECTION
      5.06.   Litigation.
      There is
      no action, suit, investigation or proceeding pending against or, to the
      knowledge of the Exchanger, threatened against or affecting the Exchanger before
      any court or arbitrator or any governmental body, agency or official which
      in
      any manner challenges or seeks to prevent, enjoin, alter or materially delay
      the
      transactions contemplated by this Agreement.

     

    SECTION
      5.07.   Brokers’
      or Finders’ Fees.
      There is
      no investment banker, broker, finder or other intermediary which has been
      retained by, will be retained by or is authorized to act on behalf of the
      Exchanger who might be entitled to any fee or commission from WRC or the
      Exchanger upon consummation of the transactions contemplated by this
      Agreement.

     

    ARTICLE
      VI

     

    Covenants
      of WRC

     

    SECTION
      6.01.   Covenants
      of WRC.
      In
      further consideration of the agreements of the Exchanger contained in this
      Agreement, WRC covenants with the Exchanger as follows:

     

    (a)
         During
      the period commencing on the date hereof and ending upon the earlier of the
      Closing or the termination of this Agreement, (i) WRC shall not, and
      shall
      not permit any of its Subsidiaries to, (A) amend or waive any of the
      provisions of the letter agreement (the “New
      Equity Agreement”)
      relating to the purchase of Common Stock (the “New
      Equity Investment”)
      by the
      Initial Stockholder, a copy of which is attached hereto as Exhibit C, the Senior
      Preferred Redemption and Repurchase Agreement or the New Stockholders Agreement
      or any other agreement related to the Transactions, including,
      without

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    limitation
      any such agreements referred to in Section 3.09, or (B) enter
      into any
      other agreement or arrangement with any of WRC’s stockholders or any of their
      respective Affiliates (other than agreements or arrangements with employees
      of
      WRC or any of its Subsidiaries in their capacity as such), in each case without
      the prior written consent of the Exchanger and (ii) WRC shall not, and
      shall not permit any of its Subsidiaries to, amend or waive any material term
      of
      the Sale Agreement that would have an adverse effect on the interests of the
      Exchanger (it being understood that any reduction in the purchase price payable
      under the Sale Agreement would be a change of a material term that
      would have an adverse effect on the interests of the Exchanger) without
      the prior written consent of the Exchanger;

     

    (b)
        WRC
      shall
      comply with its obligations under the Sale Agreement, if any, to cause the
      consummation of the Sale to occur;

     

    (c)
        WRC
      and
      the Initial Stockholder agree to use their reasonable commercial efforts
      (x) to obtain all consents and to take all other actions necessary to
      ensure that the consummation of the Transactions does not violate or result
      in a
      default under any of the agreements or instruments listed on Schedule 3.04
      and
      (y) to take all other actions necessary or desirable to consummate and
      to
      give full effect to the transactions contemplated by this Agreement; 

     

    (d)
        WRC
      shall
      comply with its obligation under the Sale Agreement, if any, to obtain, and
      cooperate in obtaining, consents from third parties in connection with
      consummating the Sale;

     

    (e)
        During
      the period commencing on the date hereof and ending upon the earlier of the
      Closing or the termination of this Agreement, WRC shall not permit the exercise
      price of the Existing Management Options or New Management Options to be reduced
      and shall not permit the exercise price of any New Management Options issued
      after the date hereof to be less than the fair market value of one share of
      Common Stock at the time of issuance of such New Management Options as
      determined in good faith by the Board of Directors; 

     

    ARTICLE
      VII

     

    Conditions
      to Closing

     

    SECTION
      7.01.   Conditions
      to Obligations of the Exchanger.
      The
      obligations of the Exchanger to consummate the Closing are subject to the
      satisfaction of the following conditions:

     

    (a)
        WRC
      shall
      have received at least $26,000,000 in aggregate gross cash proceeds from the
      New
      Equity Investment;

     

    (b)
        Contemporaneously
      with the Closing, the Senior Preferred Redemption and Repurchase will occur
      in
      accordance with the terms of the Senior Preferred Redemption and Repurchase
      Agreement without any waiver or modification and the Ripplewood Junior Preferred
      Stock will be converted into Common Stock pursuant to its terms;

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (c)
        The
      holder of the Ripplewood Junior Preferred Stock shall have waived in writing
      the
      application of Paragraph 5 of the Certificate of Designations, Preferences
      and
      Rights of the Junior Preferred Stock to the transactions contemplated by this
      Agreement, and WRC shall have provided the Exchanger with a true and complete
      copy of such written waiver;

     

    (d)
        In
      addition to the waiver specified in Section 7.01(c), WRC and its Subsidiaries
      shall have received in writing all material (or, with respect to contracts
      and
      arrangements with any stockholder of WRC, all) third-party consents and waivers
      necessary for WRC and its Subsidiaries to consummate the Closing and the other
      Transactions, and WRC shall have provided the Exchanger with true and complete
      copies of all such written consents and waivers;

     

    (e)
        WRC
      shall
      own 100% of the outstanding common stock of Weekly Reader (other than the
      5.1% of outstanding common stock of Weekly Reader held by PRIMEDIA Inc.)
      and CompassLearning;

     

    (f)
        Immediately
      following the Closing, WRC shall have no outstanding equity securities other
      than its Common Stock, the Existing Management Options and the New Management
      Options;

     

    (g)
        Either
      (i) WRC shall have issued a notice of redemption or offered to purchase all
      outstanding Senior Subordinated Notes pursuant to the terms on the indenture
      therefor, and deposited with the trustee therefor a sum sufficient to pay all
      accrued but unpaid interest and the applicable redemption or purchase price
      for
      such notes on the redemption or purchase date or (ii) the Purchaser
      shall
      have become the “Issuer” of the outstanding Senior Subordinated Notes pursuant
      to Section 5.02 of the indenture therefor (the “Note
      Redemption”);

     

    (h)
        Upon
      the
      closing of the Transactions (and after giving effect to the Note Redemption),
      the total indebtedness of WRC shall not exceed (i) with respect to first-lien
      indebtedness, $82,500,000 of term debt plus
      a
      revolving credit facility with loan commitments not to exceed $25,000,000 in
      the
      aggregate, and (ii) with respect to the Second Lien Term Loans,
      $30,000,000;

     

    (i)
        The
      terms
      contained in the definitive agreements for the Refinancing shall be
      substantially the terms reflected in the term sheets therefor, except for
      additions or deviations that do not materially and adversely affect the
      interests of the Exchanger;

     

    (j)
        Each
      of
      WRC and the Initial Stockholder shall have performed in all material respects
      all of its respective obligations hereunder required to be performed by it
      on or
      prior to the Closing Date, the representations and warranties of each of WRC
      and
      the Initial Stockholder contained in this Agreement not qualified as to
      materiality shall be true in all material respects when made and at and as
      of
      the time of Closing, as if made at and as of such time, and the representations
      and warranties of each of WRC and the Initial Stockholder contained in this
      Agreement containing a materiality exception shall be true when made and at
      and
      as of the time of Closing, as if made at and as of such time;

     

    (k)
        The
      Exchanger shall have received an opinion from Cravath, Swaine & Moore LLP,
      counsel for WRC and the Initial Stockholder, in form and substance substantially
      as set forth in Exhibit D;

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (l)
        WRC
      shall
      have paid in full all costs and expenses, including any out-of-pocket expenses,
      of the Exchanger then due and required to be paid by WRC pursuant to Section
      10.03 hereof;

     

    (m)
        The
      Exchanger shall have received all documents it may reasonably request (i)
      relating to the existence of WRC and the Initial Stockholder and the authority
      of WRC and the Initial Stockholder to enter into this Agreement and the Existing
      Stockholder Agreement Amendment and (ii) relating to or evidencing the
      satisfaction of any condition to Closing pursuant to this Article VII, all
      in
      form and substance reasonable satisfactory to the Exchanger; 

     

    (n)
        All
      material actions by or in respect of, or filings with, any governmental body,
      agency, official or authority required to permit the consummation of the Closing
      shall have been taken, made or obtained;

     

    (o)
        The
      Sale
      shall have been consummated (or shall be consummated concurrently with the
      Closing); and

     

    (p)
        There
      is
      no action, suit, investigation or proceeding pending against or affecting WRC
      or
      the Initial Stockholder or any of their respective properties before any court
      or arbitrator or any governmental body, agency or official which in any manner
      challenges or seeks to prevent, enjoin, alter or materially delay the
      transactions contemplated by this Agreement.

     

    SECTION
      7.02.   Conditions
      to Obligation of WRC.
      The
      obligation of WRC to consummate the Closing is subject to the satisfaction
      of
      the following conditions:

     

    (a)
        The
      Sale
      shall have been consummated (or shall be consummated concurrently with the
      Closing);

     

    (b)
        The
      Exchanger shall have performed in all material respects all of its obligations
      hereunder required to be performed by it at or prior to the Closing Date, the
      representations and warranties of the Exchanger contained in this Agreement
      not
      qualified as to materiality shall be true in all material respects when made
      and
      at and as of the time of Closing, as if made at and as of such time, and the
      representations and warranties of the Exchanger contained in this Agreement
      containing a materiality exception shall be true when made and at and as of
      the
      time of Closing, as if made at and as of such time.

     

    SECTION
      7.03.   Conditions
      to Obligations of Each Party.
      The
      obligation of each party to consummate the Closing is subject to the
      satisfaction of the following condition:

     

    (a)
        The
      first
      lien term loan as contemplated by the term sheet dated June 22, 2005, a copy
      of
      which is attached hereto as Exhibit E, shall have been funded and the
      revolving credit facility contemplated therein shall be available for drawdown;
      and

     

    (b)
        A
      duly
      authorized and adopted amendment in the form of Exhibit F attached hereto to
      the
      Certificate of Incorporation of WRC shall have been filed with the Secretary
      of
      State of Delaware and shall have become effective.

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VIII

     

    Survival;
      Indemnification

     

    SECTION
      8.01.   Survival.
      The
      representations and warranties of the parties hereto contained in this Agreement
      or in any certificate delivered pursuant hereto or in connection herewith shall
      survive the Closing (for the purpose of Section 8.02 only). A breach of any
      representation or warranty made in this Agreement shall not affect in any manner
      whatsoever the relative rights and obligations of the parties to and under
      the
      Existing Stockholders Agreement.

     

    SECTION
      8.02.   Indemnification. (a)
      WRC
      hereby indemnifies the Exchanger and its Affiliates, limited partners, general
      partners, members, directors, officers and employees against, and agrees to
      hold
      each of them harmless from, any and all damage, loss, liability and expense
      (including, without limitation, reasonable expenses of investigation and
      reasonable attorneys’ fees and expenses in connection with any action, suit or
      proceeding) (“Damages”)
      incurred or suffered by any such party arising out of any misrepresentation
      or
      breach of warranty, covenant or agreement made or to be performed by WRC
      pursuant to this Agreement.

     

    (b)
        The
      Exchanger hereby indemnifies WRC and its, Affiliates, limited partners, general
      partners, members, directors, officers and employees against, and agrees to
      hold
      each of them harmless from, any and all Damages incurred or suffered by any
      such
      party arising out of any misrepresentation or breach of warranty, covenant
      or
      agreement made or to be performed by the Exchanger pursuant to this
      Agreement.

     

    (c)
        The
      Initial Stockholder hereby indemnifies the Exchanger and its Affiliates, limited
      partners, general partners, members, directors, officers and employees against,
      and agrees to hold each of them harmless from, any and all Damages incurred
      or
      suffered by any such party arising out of any misrepresentation or breach of
      warranty, covenant or agreement made or to be performed by the Initial
      Stockholder pursuant to this Agreement. If the Initial Stockholder or any of
      its
      successors or assigns shall (i) consolidate with or merge into any other
      Person and shall not be the continuing or surviving corporation or entity of
      such consolidation or merger or (ii) transfer all or substantially all of its
      properties and assets to any Person, then, and in each such case, proper
      provisions shall be made so that the successors and assigns of the Initial
      Stockholder (or acquiror of such assets), as the case may be, shall assume
      all
      of the obligations of the Initial Stockholder set forth in this
      Section 8.02.

     

    SECTION
      8.03.   Exclusivity.
      After
      the Closing, Section 8.02 will provide the exclusive remedy for any
      misrepresentation or breach of warranty or other claim arising out of this
      Agreement or the transactions contemplated hereby.

     

    ARTICLE
      IX

     

    Termination

     

    SECTION
      9.01.   Grounds
      For Termination.
      This
      Agreement may be terminated at any time prior to the Closing:

     

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (a)
        by
      mutual
      written agreement of WRC and the Exchanger; 

     

    (b)
        by
      the
      Exchanger if WRC or the Initial Stockholder shall be in material breach of
      any
      of its representations, warranties or covenants contained in this
      Agreement;

     

    (c)
        by
      WRC or
      the Exchanger if the Sale Agreement or the Senior Preferred Redemption and
      Repurchase Agreement is terminated in accordance with its terms; 

     

    (d)
        by
      WRC or
      the Exchanger if consummation of the transactions contemplated hereby would
      violate any non-appealable final order, decree or judgment of any court or
      governmental body having competent jurisdiction; or

     

    (e)
        by
      WRC or
      the Exchanger, if the Closing does not occur on or prior to August 15,
      2005.

     

    This
      Agreement shall terminate (i) in the case of termination pursuant to clause
      (a)
      above, upon the execution and delivery of the written agreement referred to
      in
      such clause or (ii) in the case of termination pursuant to clause (b),
      (c),
      (d) or (e) above, upon notice by the party desiring to terminate this Agreement
      to the other parties hereto.

     

    SECTION
      9.02.   Effect
      of Termination.
      If this
      Agreement is terminated as permitted by Section 9.01, such termination shall
      be
      without liability of any party (or any Affiliate, stockholder, general partner,
      limited partner, member, director, officer, employee, agent, consultant or
      representative of such party) to the other parties to this Agreement;
provided,
      that if
      such termination shall result from the willful (i) failure of any party
      to
      fulfill a condition to the performance of the obligations of another party,
      (ii) failure to perform a covenant of this Agreement or (iii) breach
      by any party hereto of any representation or warranty or agreement contained
      herein, such party shall be fully liable for any and all Damages incurred or
      suffered by each other party as a result of such failure or breach. The
      provisions of Sections 11.03, 11.05, 11.06, 11.07 and 11.08 shall survive any
      termination hereof pursuant to Section 8.01.

     

    ARTICLE
      X

     

    Standstill

     

    SECTION
      10.01.   Standstill.
      The
      Exchanger agrees that, unless this Agreement is terminated pursuant to
      Section 9.01, it shall not, directly or indirectly, (1) transfer,
      sell, convey, assign, gift, hypothecate, pledge or otherwise dispose of, whether
      voluntarily or by operation of law, any shares of Junior Preferred Stock or
      enter into any swap or other arrangement that transfers to another, in whole
      or
      in part, any of the economic consequences of ownership of any shares of Junior
      Preferred Stock, whether any such transaction is to be settled by delivery
      of
      shares of Junior Preferred Stock, in cash or otherwise (any such transaction,
      a
“Sale
      Transaction”),
      (2) solicit, initiate or encourage the submission of, any proposal for
      a
      Sale Transaction or (3) offer or agree to enter into any agreement with
      respect to a Sale Transaction. Any transfer, sale, conveyance, assignment,
      gift,
      hypothecation, pledge or other disposition, whether voluntary or by operation
      of
      law, or transfer of economic consequences of ownership, of any share,
      partnership interest, membership interest or any other ownership interest in
      any
      entity that is a direct or indirect beneficial or record owner of any share
      of
      Junior Preferred Stock

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

     (including
      any disposition by means of a merger, consolidation or similar transaction)
      or
      any other transaction that has the economic effect of any of the foregoing
      (including the designation of any beneficiary of any trust that is a direct
      or
      indirect beneficial or record owner of any share of Junior Preferred Stock)
      shall be deemed to be a Sale Transaction subject to this
      Section 9.01.

     

    ARTICLE
      XI

     

    Miscellaneous

     

    SECTION
      11.01.   Notices.
      All
      notices, requests and other communications to any party hereunder shall be
      in
      writing (including facsimile transmission) and shall be given, if to the
      Exchanger to:

     

    SGC
      Partners I LLC

    1221
      Avenue of the Americas

    New
      York,
      New York 10020

    Attention: Sengal
      Selassie

    Facsimile: (646)
      562-1132

    

    with
      a
      copy to:

     

    Covington
      & Burling

    1330
      Avenue of the Americas

    New
      York,
      New York 10019

    Attention:
       J.
      D.
      Weinberg, Esq.

    Facsimile: (212)
      841-1010

     

    if
      to
      WRC, to:

     

    WRC
      Media
      Inc.

    c/o
      Ripplewood Holdings L.L.C.

    One
      Rockefeller Plaza, 32nd Floor

    New
      York,
      New York 10020

    Attention:
       Timothy
      C. Collins 

     
        Charles
      L. Laurey

    Facsimile:  
      (212)
      218-2719

                       
      (212) 581-4110

     

    with
      a
      copy to:

     

    Cravath,
      Swaine & Moore LLP

    Worldwide
      Plaza

    825
      Eighth Avenue

    New
      York,
      New York 10019

    Attention: Peter
      S.
      Wilson, Esq.

    Facsimile: (212)
      474-3700

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    if
      to the
      Initial Stockholder, to:

     

    EAC
      III
      L.L.C

    c/o
      Ripplewood Holdings L.L.C.

    One
      Rockefeller Plaza, 32nd Floor

    New
      York,
      New York 10020

    Attention:
       Christopher
      Minnetian

    Facsimile: (212)
      218-4699

     

    or
      to
      such other address or telecopy number and with such other copies as such party
      may hereafter specify for the purpose of notice.

     

    All
      such
      notices, requests and other communications shall be deemed received on the
      date
      of receipt by the recipient thereof if received prior to 5 p.m. in the
      place of receipt and such day is a business day in the place of receipt.
      Otherwise, any such notice, request or communication shall be deemed not to
      have
      been received until the next succeeding business day in the place of
      receipt.

     

    SECTION
      11.02.   Amendments
      and Waivers. (a)
      Except
      as
      expressly provided in Section 8.01, any provision of this Agreement may be
      amended or waived if, but only if, such amendment or waiver is in writing and
      is
      signed, in the case of an amendment, by each party to this Agreement, or in
      the
      case of a waiver, by the party against whom the waiver is to be
      effective.

     

    (b)
        No
      failure or delay by any party in exercising any right, power or privilege
      hereunder shall operate as a waiver thereof nor shall any single or partial
      exercise thereof preclude any other or further exercise thereof or the exercise
      of any other right, power or privilege. The rights and remedies herein provided
      shall be cumulative and not exclusive of any rights or remedies provided by
      law.

     

    SECTION
      11.03.   Expenses;
      Other Payments.
      All
      costs and expenses incurred in connection with this Agreement shall be paid
      by
      the party incurring such cost or expense; provided
      that WRC
      shall pay, on a timely basis as billed, the fees and expenses of the Exchanger’s
      counsel in connection with the Transactions, whether or not
      consummated.

     

    SECTION
      11.04.   Consent
      and Waiver.
      Subject
      to the satisfaction of the conditions set forth in Section 7.01 and the
      occurrence of the Closing, the Exchanger (A) waives (i) any applicability to
      the
      Transactions of Sections 2.05, 3.04 or 5.02 of the Existing Stockholders
      Agreement or any other provision of the Existing Stockholders Agreement
      (including any approval, notification or other rights) applicable to the
      Transactions to the extent inconsistent with the terms of this Agreement, and
      (ii) any right to subscribe for and purchase any shares of common stock of
      WRC
      pursuant to Article V of the Existing Stockholders Agreement in connection
      with
      the Transactions and (B) if required, agrees to vote in favor of the adoption
      of
      an amendment in the form of Exhibit F attached hereto to the Certificate of
      Incorporation of WRC.

     

    SECTION
      11.05.   Successors
      and Assigns.
      The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns; provided,
      that no
      party may assign, delegate or otherwise transfer any of its rights
      or

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    obligations
      under this Agreement without the consent of each other party hereto, except
      that
      the Exchanger may assign any of its rights and obligations hereunder to any
      transferee of any of its shares in WRC that also complies with the transferee
      requirements of Section 6.01(a) of the Existing Stockholders
      Agreement.

     

    SECTION
      11.06.   Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the law of
      the
      State of New York, without regard to the conflict of law rules of such
      state.

     

    SECTION
      11.07.   Jurisdiction.
      The
      parties hereto agree that any suit, action or proceeding seeking to enforce
      any
      provision of, or based on any matter arising out of or in connection with,
      this
      Agreement or the transactions contemplated hereby may only be brought in the
      United States District Court for the Southern District of New York or any New
      York State court sitting in New York City, and each of the parties hereby
      consents to the jurisdiction of such courts (and of the appropriate appellate
      courts therefrom) in any such suit, action or proceeding and irrevocably waives,
      to the fullest extent permitted by law, any objection which it may now or
      hereafter have to the laying of the venue of any such suit, action or proceeding
      in any such court or that any such suit, action or proceeding which is brought
      in any such court has been brought in an inconvenient forum. Process in any
      such
      suit, action or proceeding may be served on any party anywhere in the world,
      whether within or without the jurisdiction of any such court. Without limiting
      the foregoing, each party agrees that service of process on such party as
      provided in Section 10.01 shall be deemed effective service of process on such
      party.

     

    SECTION
      11.08.   WAIVER
      OF JURY TRIAL.
      EACH OF
      THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
      JURY
      IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
      TRANSACTIONS CONTEMPLATED HEREBY.

     

    SECTION
      11.09.   Counterparts;
      Third Party Beneficiaries.
      This
      Agreement may be signed in any number of counterparts, each of which shall
      be an
      original, with the same effect as if the signatures thereto and hereto were
      upon
      the same instrument. This Agreement shall become effective when each party
      hereto shall have received a counterpart hereof signed by the other party
      hereto. No provision of this Agreement shall confer upon any Person other than
      the parties hereto any rights or remedies hereunder.

     

    SECTION
      11.10.   Entire
      Agreement.
      This
      Agreement (including the documents, schedules and exhibits referred to herein
      and therein) constitute the entire agreement between the parties with respect
      to
      the subject matter of this Agreement and supersede all prior agreements and
      understandings, both oral and written, between the parties with respect to
      the
      subject matter of this Agreement.

     

    SECTION
      11.11.   Captions.
      The
      captions herein are included for convenience of reference only and shall be
      ignored in the construction or interpretation hereof.

     

    SECTION
      11.12.   Severability.
      If one
      or more provisions of this Agreement are held to be unenforceable under
      applicable law, such provision shall be excluded from this Agreement and the
      balance of this Agreement shall be interpreted as if such provision were
      so

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    excluded
      and shall be enforced in accordance with its terms to the maximum extent
      permitted by law.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
 

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective authorized officers, partners or representatives
      as
      of the day and year first above written.

     

    

    
      	
              WRC
                MEDIA INC.

               

            
	
              By:  /s/                                                                                                                                                      
                

            
	
              Name:
                 Ricbhard Nota

            
	
              Title:   
                EVP, Operations

            

    

    

    

    

    
      	
              SGC
                PARTNERS I LLC 

               

            
	    

	
              By: 
                /s/                                                                                                  

            
	
              Name: 
                Christoper A. White

            
	
              Title:   
                Director

            
	
               

               

               

               

              EAC
                III L.L.C.

               

            
	
              By
                EAC IV L.L.C.

                
                its Managing Member

               

              By
                Ripplewood Partners, L.P.

                
                its Sole Member

               

              By
                Ripplewood Investments L.L.C.

                
                its General Partner

               

            
	
              By: 
                /s/                                                                                                   
                

            
	
              Name:
                

            
	
              Title:
                

            

    

    

    
      
        
          

        

        
        

      

      
        22

        
          

        

      

      
        
        

        
        

      

    

    
       

    

     

    Exhibit
      B

    Form
      of
      Amendment to Existing Stockholders Agreement

     

     

    

      

       

      FIRST
        AMENDMENT dated
        as of June [__], 2005 (this “Amendment”), to the AMENDED AND RESTATED
STOCKHOLDERS
        AGREEMENT
        dated
        as of November 17, 1999 (the “Agreement”), among WRC MEDIA INC. (the “Parent”),
        SGC PARTNERS I LLC (the “Purchaser”) and EAC III L.L.C. (the “Initial
        Stockholder”).

       

      

       

      The
        Parent, the Purchaser and the Initial Stockholder desire to amend certain
        provisions of the Agreement as set forth in this Amendment. This Amendment
        is
        being entered into pursuant to the Redemption and Repurchase Agreement, dated
        as
        of June 22, 2005, among the parties hereto (as it may be amended and
        supplemented from time to time, the “Redemption and Repurchase Agreement”). This
        Amendment shall become effective upon the Closing (such time, being referred
        to
        herein as the “Effective Time”) as defined in the Redemption and Repurchase
        Agreement. Unless otherwise specified, all capitalized terms used but not
        defined in this Amendment have the meanings ascribed to such terms in the
        Agreement. Except as specifically amended by this Amendment, the Agreement
        remains in full force and effect.

       

      In
        consideration of the premises and mutual agreements set forth below, the
        parties
        agree as follows:

       

      1.  Amendments.  (A)
        Section 1.01 of the Agreement is hereby amended by replacing the words “Common
        Stock” therein with the words “Issuable Shares.”

      

      (B)  Section
        2.05 of the Agreement is hereby amended by deleting the last paragraph of
        such
        section in its entirety.

      

      (C)  Sections
        3.03(a), (b), (c), (d) and (f), shall, from the Effective Time, have no further
        force and effect.

      

      (D)
        The
        following new Section 3.03(g) is hereby added to the Agreement:

      

      (g)
        Purchaser shall be entitled to designate from time to time an individual
        to
        serve as an observer for Purchaser at all meetings of the Board of Directors
        or
        any committee thereof (the “Board Observer”), and the Board Observer shall be
        entitled to attend all such meetings (including telephonic meetings). The
        Board
        Observer shall be entitled to receive notice of all meetings of the Board
        of
        Directors at the same time notice is given to the directors (or committee
        members) and to receive copies of all materials and all other information
        provided to directors (or committee members). The initial Board Observer
        shall
        be Sengal Selassie.

      

      (E)  Section
        3.04 of the Agreement shall, from the Effective Time, have no further force
        or
        effect.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (F)
        The
        following new Section 3.06 is hereby added to the Agreement:

      

      Right
        to Proportionate Treatment.
        The
        Purchaser shall be entitled to share ratably in any payments of cash, securities
        or other assets from the Parent or any of its Subsidiaries to Ripplewood
        or any
        of its Affiliates (other than the Parent or any of its Subsidiaries), including
        any payments made with respect to management fees, transaction fees or advisory
        fees (including any paid in connection with any of the Transactions (as defined
        in the Redemption and Repurchase Agreement) and any paid pursuant to the
        Management Agreements in effect as referred to previously in Section 3.04
        of the Agreement), but excluding pro rata dividends payable with respect
        to
        Capital Stock, reimbursement of out-of-pocket expenses and arm’s length
        transactions for (x) the receipt of goods or services by Parent or any of
        its
        Subsidiaries from operating portfolio companies in which Ripplewood has invested
        or of which it is an Affiliate and which goods and services are not in the
        nature of the fees customarily charged by private equity sponsors to their
        portfolio companies and (y) the sale of goods or services by Parent or any
        of
        its Subsidiaries to any such portfolio company. The ratable share allocable
        to
        the Purchaser with respect to any such payment shall be a percentage of the
        total payment amount based on the proportionate stockholdings beneficially
        owned, directly or indirectly, by the Purchaser in the Parent and its
        Subsidiaries relative to the stockholdings beneficially owned, directly or
        indirectly, in the Parent and its Subsidiaries by the Persons to whom such
        payment is made, at the time such payment is made by the Parent or one of
        its
        Subsidiaries, and the amount of the payment owed to the Purchaser shall be
        paid
        by Parent to the Purchaser on a “gross up” basis, if necessary, if the
        underlying payment to Ripplewood (or its Affiliate) is not agreed to be shared
        by it in accordance with this Section.

      

      (G)
        The
        following new Section 3.07 is hereby added to the Agreement:

      

      Amendments
        to DLJ Stockholders Agreement.
        The
        Initial Stockholder and WRC shall not, directly or indirectly, cause or permit
        any amendment to the DLJ Stockholders Agreement after the Closing (as defined
        in
        the Redemption and Repurchase Agreement) or enter into any other agreement
        or
        arrangement that entitles the Exchangers (as defined in the DLJ Stockholders
        Agreement) to any rights that are more favorable than the rights granted
        to the
        Purchaser hereunder.

      

      (H)  Section 6.01(a)
        of the Agreement is hereby amended by deleting the first sentence
        thereof.

      

      (I)
        Section 6.01(b) of the Agreement shall, from Effective Time, have no further
        force or effect.

      

      (J)
        Section 7.01 of the Agreement shall be amended as follows: 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (i)
        to
        amend the definition of “Additional Issuable Shares Number” by inserting at the
        end thereof the following: “Additional Issuable Shares Number” shall be
        determined, with respect to any security of a class (or, if applicable, series
        of a class) of which the Purchaser already owns securities therein, by reference
        only to the securities of that class (or series) outstanding and, with respect
        to any security of a class (or series) of which the Purchaser does not already
        owns securities therein, by reference to the class (or series) of securities
        outstanding that would give rise to the highest Additional Issuable Shares
        Number for the Purchaser”;

       

      (ii)
        to
        amend the definition of “Corporation Sale” by deleting the word “90%” therein
        and replacing it with the word “75%”.

       

      (iii)
        to
        add the new definition “DLJ Stockholders Agreement” immediately after the
        definition of “Corporation Sale” as follows: “DLJ Stockholders Agreement” shall
        mean the Stockholders Agreement, dated as of June 22, 2005, among the Parent,
        the Initial Stockholder and the Exchangers (as defined therein), entered
        into in
        connection with the Redemption and Repurchase Agreement.

       

      (iv)
        to
        replace the definition of “Issuable Share” in its entirety with the
        following:

       

      “Issuable
        Share” means and includes at any time, 

      

      (a)
        a
        share of issued and outstanding Common Stock or other Capital Stock of Parent;
        

      

      (b)
        a
        Right and (without duplication) all shares of Common Stock or other Capital
        Stock issuable upon exercise of such Right, in each case at such time;
        and

      

      (c)
        for
        purposes of Article V, any indebtedness issued by the Parent to the
        Initial
        Stockholder or any of its Affiliates.

      

      For
        purposes of this definition of “Issuable Share”, a Right to acquire one share of
        Common Stock (or other Capital Stock, as applicable) shall constitute one
        Issuable Share, and a Person shall be deemed to own an Issuable Share if
        such
        Person has a Right to acquire such share whether or not such Right is
        exercisable at such time.

       

      (v)
        to
        amend the definition of “Proportionate Amount” by inserting at the end thereof
        the following: “Proportionate Amount”, where applicable, shall be determined,
        for any security, with respect to only other securities of the same class
        or, if
        applicable, series of a class.”;

       

      (vi)
        to
        add the new definition “Redemption and Repurchase Agreement” immediately after
        the definition of “Purchaser Shares” as follows: “Redemption and Repurchase
        Agreement” shall mean the Redemption and Repurchase Agreement, dated as of June
        22, 2005, among the Parent, the Initial Stockholder and the
        Purchaser.

       

      (vii)
        to
        replace the definition of “Right” in its entirety with the following:

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

           “Right”
        means and
        includes:

      

      (a)
        any
        warrants, rights or other options exercisable into Common Stock or other
        Capital
        Stock of Parent; and

      

      (b)
        any
        conversion or exchange privilege or right pursuant to any indebtedness or
        Security (including, without limitation, any share of Capital Stock) which
        is
        convertible or exchangeable into Common Stock or other Capital Stock of
        Parent.

       

      (viii)
        to
        replace the definition of “Subsidiary Issuable Shares” in its entirety with the
        following:

       

      “Subsidiary
        Issuable Shares” means and includes at any time:

       

      (a)
        a
        share of issued and outstanding common stock or other Capital Stock of a
        Subsidiary

      

      (b)
        a
        Subsidiary Right and (without duplication) all shares of a Subsidiary’s common
        stock or other Capital Stock issuable upon exercise of such Subsidiary Right,
        in
        each case at such time; and

      

      (c)
        for
        purposes of Article V, any indebtedness issued by a Subsidiary to
        the
        Initial Stockholder or any of its Affiliates.

       

      (ix)
        to
        replace the definition of “Subsidiary Right” in its entirety with the following:

       

       “Subsidiary
        Right” means and includes:

      

      (a)
        any
        warrants, rights or other options exercisable into common stock or other
        Capital
        Stock; and

      

      (b)
        any
        conversion or exchange privilege or right pursuant to which any indebtedness
        or
        Security (including, without limitation, any share of capital stock) is
        convertible or exchangeable into common stock or other Capital
        Stock.

      

      (K)
        Section 8.07(a) of the Agreement is hereby amended by inserting the words
“their
        rights under Article V, which, for the avoidance of doubt, shall not include
        the
        price paid for any subscription under such Article, and” immediately after the
        words “in connection with”.

       

      2.  Miscellaneous.  (A)  This
        Amendment constitutes the entire agreement and understanding of the parties
        with
        respect to the subject matter hereof and supersedes any and all prior or
        contemporaneous agreements, resolutions and understandings, oral or written,
        relating to the subject matter hereof.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (B)  This
        Amendment shall be governed by and construed in accordance with the laws
        of the
        State of New York applicable to agreements made and to be performed entirely
        within such State, without regard to the conflicts of law principles of such
        State.

       

      (C)  Each
        reference to a party hereto shall be deemed to include its permitted successors
        and assigns, all of whom shall be bound by this Amendment and to whose benefit
        the provisions of this Amendment shall inure.

       

      (D)  This
        Amendment may be executed in one or more counterparts, all of which shall
        be
        considered one and the same agreement, and shall become effective when one
        or
        more such counterparts have been signed by each of the parties and delivered
        to
        the other parties.

       

      (E)  Except
        as expressly set forth herein, this Amendment shall not by implication or
        otherwise limit, impair, constitute a waiver or amendment of, or otherwise
        affect the rights and remedies of the parties under the Agreement.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

          
          

        

      

      IN
        WITNESS WHEREOF, each of the parties has caused this Amendment to be duly
        executed and delivered as of the date first above written.

       

       

      
        	 	 	 
	 	WRC
                MEDIA, INC.,
	 
 	 
 	 
 
	 	By:  	 
	 	Name: 
	 	Title: 
                

      

       

      
        
          	 	 	 
	 	SGC
                  PARTNERS I LLC,
	 
 	 
 	 
 
	 	By:  	 
	 	Name:
                  
	 	Title: 
                  

        

         

      

      
        
          	 	 	 
	 	EAC
                  III L.L.C.,
	 
 	 
 	 
 
	 	By:  	EAC
                  IV L.L.C., its Managing Member
	 	 	 
	 	By: 	Ripplewood
                  Partners, L.P., its Sole Member 
	 	 	 
	 	By: 	Ripplewood
                  Investments L.L.C., its General Partner 
	 	 	 
	 	By: 	 
	 	Name:
                  
	 	Title:Unassociated Document

    Exhibit
      10.5

     

    
 

    EAC
      III
      L.L.C.

    
    

    c/o
      Ripplewood Holdings L.L.C.

    One
      Rockefeller Plaza, 32nd Floor

    New
      York,
      NY 10020

     

    June
      22,
      2005

     

    WRC
      Media
      Inc.

    c/o
      Ripplewood Holdings L.L.C.

    One
      Rockefeller Plaza, 32nd Floor

    New
      York,
      NY 10020

     

    Dear
      Sirs:

     

    Reference
      is made to the Redemption and Repurchase Agreement dated as of the date hereof
      (the “Redemption and Repurchase Agreement”), among WRC Media Inc., a
      Delaware corporation (the “Company”), and the Exchangers identified
      therein. Terms used but not defined herein shall have the meaning assigned
      to
      such terms in the Redemption and Repurchase Agreement.

     

    EAC
      III
      L.L.C. (“EAC III”) hereby confirms that, upon satisfaction of all the
      conditions set forth in Article VI of the Redemption and Repurchase Agreement,
      without waiver of any such conditions except (a) waivers in which EAC III
      concurs and (b) waivers by the Company, EAC III will purchase from the Company
      shares of common stock, par value $0.01 per share, of the Company (“Common
      Stock”) for cash consideration in an amount, when added to the amount of any
      cash consideration paid to the Company by any other shareholder of the Company
      for any shares of Common Stock that any such shareholder may concurrently
      purchase from the Company, equal to $26 million (the “New Equity
      Investment”) at the Closing.

     

    This
      letter agreement shall terminate and be of no further force or effect upon
      the
      earlier of (a) both the consummation of the Redemption and Repurchase and the
      receipt by the Company of the New Equity Investment and (b) the termination
      of the Redemption and Repurchase Agreement in accordance with its
      terms.

     

    This
      letter agreement shall become effective upon the execution and delivery of
      the
      Redemption and Repurchase Agreement. This letter agreement (a) may be executed
      in any number of counterparts, each of which shall be deemed to be an original
      but all of which together shall be deemed to be one and the same agreement,
      (b)
      shall be governed by and construed in accordance with the laws of the State
      of
      New York without giving effect to its conflicts of laws principles, (c)
      constitutes the entire agreement of the parties with respect to the subject
      matter hereof and supersedes all other prior agreements and understandings,
      both
      written and oral, of the parties with respect to the subject matter of this
      letter agreement and (d) may be amended only by a writing signed by each of
      the
      parties hereto. No provision of this letter agreement is intended to confer
      any
      rights, benefits, remedies, obligations or liabilities hereunder upon any person
      other than the parties hereto and their respective successors and permitted
      assigns. This letter agreement is not assignable by any of the parties hereto
      without the prior written consent of the other party.

     

     

    
      
        
           

        

        
           

          
            

          

        

        
          2

        

         

      

    

    Thank
      you
      for your consideration of this letter.

     

    
      	 	
               Very
                truly yours,EAC
                III LLC,

               

            
	 	
               

                 by EAC
                IV L.L.C., its Managing Member,

            
	 	
               

                 by
                Ripplewood Partners, L.P., its Sole Member,

            
	 	
               

                 by
                Ripplewood Investments L.L.C., its General Partner,

            
	 	 	
               

              by:
                

            	/s/
	 	 	
               Name: Chris
                Minnetian

            
	 	 	
               Title: Secretary

            

    

    

      

    
      	
               Acknowledged:

               

            
	
               WRC
                Media Inc.

               

            
	 by:	/s/ 
	 	Name: 
              Richard Nota 
	 	Title:    
              Executive Vice President,
              Operations

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