Document:

<PAGE>

                                                                 EXHIBIT 10.2.1

                                                  STOCK OPTION NO: (STK OPT NO)

                         EMPLOYEE STOCK OPTION AGREEMENT

                  EMPLOYEE STOCK OPTION AGREEMENT, dated as of (Anniversay Date)
(Grant Year) (this "Agreement"), by and between INHIBITEX, INC., a Delaware
corporation (the "Company"), and (First) (Last), (the "Optionee").

                                R E C I T A L S :

                  WHEREAS, the Company has adopted the 2004 Inhibitex, Inc.
Stock Incentive Plan (the "Plan") to provide long-term performance incentives to
those employees, contractors and consultants of the Company and its Subsidiaries
who are largely responsible for the management, growth and protection of the
business of the Company and its Subsidiaries; and

                  WHEREAS, the Company desires to grant to the Optionee an
option (the "Option") to purchase a number of shares of the common stock, $0.001
par value, of the Company (the "Stock") pursuant to the Plan and on the terms
and conditions set forth herein.

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Company and the
Optionee hereby agree as follows:

                  Section 1. Grant of Option. Subject to final approval by the
Company's Board of Directors, the Company hereby grants to the Optionee,
pursuant to the Plan and on the terms and conditions set forth herein, an Option
to purchase that number of shares of Stock and at the exercise price as set
forth on Schedule A hereto.

                  (a)      The Option hereby granted shall vest in installments
as provided on Schedule A. Notwithstanding the foregoing, in the event of a
Change of Control, if the Optionee has been employed by the Company:

                           (i)      For less than six (6) months on the date of
the Change of Control, the Option shall vest as to that number of whole shares
of Stock (rounding down) as is equal to twenty-five percent (25%) of the number
of outstanding and unvested shares subject to the Option.

                           (ii)     For six (6) months or more but less than
twelve (12) months, the Option shall vest as to that number of whole shares of
Stock (rounding down) as is equal to fifty percent (50%) of the number of
outstanding and unvested shares subject to the Option.

                           (iii)    For twelve (12) months or more but less than
twenty-four (24) months, the Option shall vest as to that number of whole shares
of Stock (rounding down) as is equal to seventy-five percent (75%) of the number
of outstanding and unvested shares subject to the Option.

                           (iv)     For twenty-four (24) months or more, the
Option shall vest as to that number of whole shares of Stock (rounding down) as
is equal to one-hundred percent (100%) of the number of outstanding and unvested
shares subject to the Option.

                  (b)      Any shares of Stock subject to the Option that remain
unvested after a Change of Control shall vest in installments as provided on
Schedule A, except that "the number of shares

                                       1
<PAGE>

subject to the Option" shall be the number of shares of Stock subject to the
Option that remain outstanding and unvested after the Change of Control, if any.

                  (c)      If so designated on Schedule A hereto, this Option is
intended to be an Incentive Stock Option within the meaning of Section 422 of
the Code.

                  Section 2. Term of Option. Unless earlier terminated pursuant
to the other provisions herein, the Option hereby granted shall terminate at the
close of business on the date six (6) years from the date of this Agreement (the
"Expiration Date").

                  (a)      In addition, at the close of business on the date the
Optionee's employment with the Company or any Subsidiary terminates for any
reason whatsoever (including, without limitation, by reason of death, Disability
or Retirement) the Option shall terminate as to that number of shares of Stock
as to which the Option is not vested on that date.

                  (b)      If the Optionee's employment is terminated for Cause,
the unexercised portion of the Option will terminate immediately upon the
Optionee's termination of employment.

                  (c)      If the Optionee's employment with the Company or any
Subsidiary terminates for any reason other than Cause, death, Disability or
Retirement, then the Option may be exercised as to the extent vested on the date
of the Optionee's termination of employment at any time prior to the earlier of
the Expiration Date and three (3) months after the date of the Optionee's
termination of employment, and any part of the Option which is not so exercised
within such period shall thereupon terminate.

                  (d)      If the Optionee's employment with the Company or any
Subsidiary terminates by reason of his or her death or Disability, then the
Option may be exercised as to that number of whole shares of Stock as to which
the Option is vested on the date of the Optionee's death or Disability at any
time prior to the earlier of the Expiration Date and twelve (12) months after
the date of the Optionee's death or Disability, and any part of the Option which
is not so exercised within such period shall thereupon terminate.

                  (e)      If the Optionee's employment with the Company or any
Subsidiary terminates by reason of his or her Retirement, the Option may be
exercised as to that number of whole shares of Stock as to which the Option is
vested on the date of the Optionee's termination of employment at any time prior
to the earlier of the Expiration Date and twenty-four (24) months after the date
of the Optionee's Retirement, and any part of the Option which is not so
exercised within such period shall thereupon terminate.

                  (f)      For all purposes of this Agreement, the Optionee's
employment with the Company or any Subsidiary shall terminate at the time when
the employment relationship between the Optionee and the Company or any
Subsidiary is terminated for any reason, which time shall be conclusively
determined from the records of the Company and its Subsidiaries. No termination
of employment shall be deemed to occur (i) when there is a simultaneous
reemployment of an Optionee by the Company or any Subsidiary, (ii) at the
discretion of the Committee, when the severance of employment is temporary or
pursuant to a leave of absence granted by the Company, and (iii) at the
discretion of the Committee, when the termination is followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the Optionee. The Committee, in its absolute discretion, shall
determine the effect of all matters and questions relating to termination of
employment, including, but not by way of limitation, the question of whether a
termination of employment resulted from a discharge for Cause.

                                       2
<PAGE>

                  (g)      For purposes of this Agreement, "Retirement" shall
mean the cessation of employment with the Company after an Optionee has attained
age fifty-nine and one-half (59 1/2) and completed five (5) or more consecutive
years of service with the Company or any Subsidiary.

                  (h)      For purposes of this Agreement, "Disability" shall
mean "disability" as defined in any employment agreement between the Optionee
and the Company or any Subsidiary, or if not defined therein or if there is no
such agreement, as defined in the Company's long-term disability plan.

                  Section 3. Manner of Exercise.

                  (a)      To exercise the Option, the Optionee shall provide
notice of such exercise as provided in Annex 1 hereto. In order for the option,
or any part thereof, to be exercised, payment must be received by the Company in
cash or Stock or any combination thereof equal to the product of (i) the
exercise price and (ii) the number of shares of Stock to be purchased at that
time, plus the amount of the withholding taxes estimated in accordance with
Section 6 to be due upon the purchase of such number of shares of Stock, unless
the Committee shall have consented to the making of other arrangements with the
Optionee.

                  (b)      Delivery of the notice of exercise shall constitute
an irrevocable election to purchase the Stock specified in the notice, and the
date on which the Company receives the notice accompanied by payment in full of
the exercise price for the Stock covered by the notice and the applicable
withholding taxes shall be the date as of which the Stock so purchased shall be
deemed to have been issued.

                  (c)      An Optionee may use other Stock that the Optionee has
owned for at least six (6) months as payment of all or any part of the exercise
price, which Stock will be valued at its Fair Market Value as of the date of
exercise.

                  (d)      To exercise the Option upon the Optionee's death, the
persons who acquire the right to exercise the Option must prove to the
Committee's satisfaction that they have duly acquired the Option and that they
have paid (or have provided for payment of) any taxes, such as estate, transfer,
inheritance or death taxes, payable with respect to the Option or to the Stock
to which it relates.

                  Section 4. Transferability. If the Option hereby granted is
designated on Schedule A as an "Incentive Stock Option," the Option may only be
transferred by will or the laws of descent and distribution and may be exercised
during the Optionee's lifetime only by the Optionee. If this Option is
designated on Schedule A as a "Non-Qualified Stock Option," the Option may be
transferred, without consideration, to immediate family members (i.e., children,
grandchildren or spouse) of the Optionee, to trusts for the benefit of immediate
family members of the Optionee and to partnerships in which the only partners
are immediate family members of the Optionee (collectively referred to as
"Immediate Family Members"); provided that, prior to any such transfer, the
Immediate Family Members enter into an agreement with the Company (in form and
substance satisfactory to the Company) agreeing to be bound by the provisions of
Section 5 of this Agreement. Except as permitted by the preceding sentence, this
Option may only be transferred by will or the laws of descent and distribution
and may be exercised during the Optionee's lifetime only by the Optionee.

                  Section 5. Right of First Refusal. Before any Stock acquired
pursuant to the exercise of this Option and held by the Optionee or any
transferee (either being sometimes referred to as the "Holder") may be sold or
otherwise transferred (including by gift or by operation of law), the Company
shall have a right of first refusal to purchase the Stock on the terms and
conditions set forth

                                       3
<PAGE>

below (the "Right of First Refusal"). The certificate representing such acquired
Stock shall contain a legend or notation indicating that the Stock is subject to
the Right of First Refusal.

                  (a)      The Holder of the Stock shall deliver to the Company
a written notice (the "Notice") stating: (i) the Holder's bona fide intention to
sell or otherwise transfer such Stock; (ii) the name of each proposed purchaser
or other transferee ("Proposed Transferee"); (iii) the number of shares of Stock
to be transferred to each Proposed Transferee; and (iv) the bona fide cash price
or other consideration for which the Holder proposes to transfer the Stock (the
"Offered Price"), and the Holder shall offer the Stock at the Offered Price to
the Company.

                  (b)      At any time within fifteen (15) days after receipt of
the Notice, the Company may, by giving written notice to the Holder, elect to
purchase all, but not less than all, of the shares of Stock proposed to be
transferred to any one or more of the Proposed Transferees, at the Offered
Price; provided, however, that if the Offered Price includes consideration other
than cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.

                  (c)      The Offered Price shall be payable on the terms
established by the Board of Directors of the Company and, at the option of the
Company, the Offered Price may be payable in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company,
or by any combination thereof within fifteen (15) days after receipt of the
Notice or in the manner and at the times set forth in the Notice.

                  (d)      If all of the shares of Stock proposed in the Notice
to be transferred to a given Proposed Transferee are not purchased by the
Company as provided in this Section 5, then the Holder may sell or otherwise
transfer such shares of Stock to such Proposed Transferee at the Offered Price
or at a higher price, provided that such sale or other transfer is consummated
within one hundred twenty (120) days after the date of the Notice, that any such
sale or other transfer is effected in accordance with any applicable securities
laws and that the Proposed Transferee agrees in writing that the provisions of
this Section shall continue to apply to the shares of Stock in the hands of such
Proposed Transferee. If the shares of Stock described in the Notice are not
transferred to the Proposed Transferee within such period, a new Notice shall be
given to the Company, and the Company shall again be offered the Right of First
Refusal before any shares of Stock held by the Holder may be sold or otherwise
transferred.

                  (e)      The Right of First Refusal shall not be applicable to
a transfer of Stock to an Immediate Family Member(s); provided, that, prior to
any such transfer, the Immediate Family Member(s) enters into an agreement with
the Company (in form and substance satisfactory to the Company) agreeing to be
bound by the provisions of this Section 5. The Right of First Refusal shall
terminate as to any shares of Stock upon the first sale of Stock of the Company
to the general public pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act").

                  Section 6. Withholding Taxes.

                  (a)      At the time of the exercise of all or any part of
this Option, the Optionee shall pay to the Company (or otherwise make
arrangements satisfactory to the Committee for the payment of) the amount of the
Federal, state and local and foreign income and employment taxes required, in
the Company's sole judgment, to be collected or withheld with respect to the
exercise of the Option. Such amount shall be paid to the Company in cash or by
the surrender of that number of whole shares of Stock with a Fair Market Value
(valued on the date of exercise) as shall be equal to, but does not

                                       4
<PAGE>

exceed, the minimum statutory amounts required to be collected or withheld by
the Company with respect to the exercise of the Option.

                  (b)      If the Option herein granted is designated as an
Incentive Stock Option, then the Optionee agrees that at the time of any
"disqualifying disposition" (as defined in Prop. Treas. Reg. Section
1.422A-1(b)(1)) of the Stock acquired upon exercise of this Option on or after
January 1, 2003, the Optionee shall pay to the Company (or otherwise make
arrangements satisfactory to the Committee for the payment of) the amount of the
Federal, state and local and foreign income and employment taxes required, in
the Company's sole judgment, to be collected or withheld with respect to the
disqualifying disposition of the Stock acquired upon exercise of the Option.
Such amount shall be paid to the Company in cash or by the surrender of that
number of whole shares of Stock with a Fair Market Value (valued on the date of
exercise) as shall be equal to, but does not exceed, the minimum statutory
amounts required to be collected or withheld by the Company with respect to the
exercise of the Option.

                  Section 7. Lock-Up Period. The Optionee agrees that if so
requested by the Company or any representative of the underwriters (the
"Managing Underwriter") in connection with any registration of the offering of
any securities of the Company under the Securities Act, the Optionee shall not
sell or otherwise transfer any shares of Stock or other securities of the
Company during a period of up to 180 days (the "Market Standoff Period")
following the effective date of a registration statement of the Company filed
under the Securities Act. Such restriction shall apply only to the first
registration statement of the Company to become effective under the Securities
Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such Market Standoff Period.

                  Section 8. Rights in Stock Before Issuance and Delivery. No
person shall be entitled to become a stockholder of the Company, unless and
until such Stock has been issued (or deemed to have been issued) to such person
as fully paid Stock.

                  Section 9. No Right to Employment. Nothing contained herein
shall be construed to confer on the Optionee any right to continue as an
employee of the Company or to derogate from any right of the Company to retire,
request the resignation of or discharge the Optionee, or to lay off or require a
leave of absence of the Optionee, with or without pay, at any time, with or
without Cause.

                  Section 10. Qualifications to Exercise. Anything in this
Agreement to the contrary notwithstanding, in no event may the Option be
exercisable if the Company shall, at any time and in its sole discretion,
determine that (a) the listing, registration or qualification of any shares of
Stock otherwise deliverable upon such exercise, upon any securities exchange or
under any state or federal law, or (b) the consent or approval of any regulatory
body, is necessary or desirable in connection with such exercise. In such event,
such exercise shall be held in abeyance and shall not be effective unless and
until such listing, registration, qualification or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.

                  Section 11. Conditions to Transfer. Unless the issuance of the
shares of Stock upon the exercise of the Option has been registered under the
Securities Act, the Committee may require as a condition to the right to
exercise the Option hereunder that the Company receive from the person
exercising the Option representations, warranties and agreements, at the time of
any such exercise, to the effect that the shares of Stock are being purchased
for investment only and without any present intention to sell or otherwise
distribute such shares of Stock and that such shares of Stock will not be
disposed of in transactions which, in the opinion of counsel to the Company,
would violate the

                                       5
<PAGE>

registration provisions of the Securities Act and the rules and regulations
thereunder. The certificate issued to evidence such shares of Stock shall bear
appropriate legends summarizing these restrictions on the disposition thereof
and the restriction on transferability contained in Section 5 hereof.

                  Section 12. Entire Agreement. This Agreement and the Plan
contain the entire agreement between the parties hereto with respect to the
matters contemplated herein and supersede all prior agreements or understandings
among the parties related to such matters.

                  Section 13. Binding Effect. Subject to the restrictions on
transfer herein set forth, this Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and upon the Optionee and
his or her assigns, heirs, executors, administrators and legal representatives.

                  Section 14. Amendment or Modification; Waiver. This Agreement
may be amended, modified, superseded, canceled, renewed or extended, and the
terms or covenants hereof may be waived, only by a written instrument executed
on behalf of the Company (as authorized by the Committee) and the Optionee.

                  Section 15. Governing Law. This Agreement shall be construed
and enforced in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts of law thereof.

                  Section 16. Defined Terms. Capitalized terms used in this
Agreement and not otherwise defined herein have the meaning ascribed to them in
the Plan.

                  Section 17. The Plan. The Optionee acknowledges having
received a copy of the Plan. The Option herein granted is subject to all of the
terms and provisions of the Plan, all of which are hereby incorporated herein by
reference. In the event of any inconsistency between the provisions of this
Agreement and the provisions of the Plan, the provisions of the Plan shall
govern.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.

                                       COMPANY:

                                       INHIBITEX, INC.

                                       By:
                                           ------------------------------------
                                       Name:
                                       Title:

                                       OPTIONEE:

                                       By:
                                           ------------------------------------
                                                 (First)(Last)

                                       6
<PAGE>

                                   SCHEDULE A
                                       to
                             STOCK OPTION AGREEMENT
                                     between
                                 Inhibitex, Inc.
                                       and
                                 (First) (Last)

                     Dated: (Anniversary Date) (Grant Year)

                         Stock Option No. (Stk Opt No)

<TABLE>
<S>      <C>                   <C>                                     <C>
1.       Number of Shares Subject to Option: (Shares Granted) shares of stock.

2.       Type of Option:            X    Incentive Stock Option
                               ---------
                                         Non-Qualified Stock Option
                               ---------

3.       Exercise Price:       $         per share.
                                --------

4.       Grant Date:           (Anniversary Date) (Grant Year)

5.       Vesting:              Anniversary of Grant Date               Percent Vested
         -------               -------------------------               --------------
                                (Anniversary Date) 2006                      25%
                                (Anniversary Date) 2007                      25%
                                (Anniversary Date) 2008                      25%
                                (Anniversary Date) 2009                      25%

6.       Expiration Date:       (Anniversary Date) 2011
</TABLE>

                                       COMPANY:

                                       INHIBITEX, INC.

                                       By:
                                           ------------------------------------
                                       Name:
                                       Title:

                                       OPTIONEE:

                                       By:
                                           ------------------------------------
                                                      (First) (Last)

                                       7Stock Purchase Agreement

    

      Exhibit
        10.1

       

      

       

      

       

      

       

      STOCK
        PURCHASE AGREEMENT

       

      BETWEEN

       

      WEEKLY
        READER CORPORATION

       

      and

       

      PEARSON
        EDUCATION, INC.

       

      

       

      Dated
        as
        of June 22, 2005

       

      

       

      

       

      SALE
        OF
        AMERICAN GUIDANCE SERVICE, INC.

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Table
        of Contents

       

      
        	
                ARTICLE
                  I

              
	
                 

              	
                 

              	
                 

              
	
                Purchase
                  and Sale of Shares; Closing

              
	
                 

              	
                 

              	
                 

              
	SECTION
                1.01.	
                Purchase
                  and Sale of the Shares

              	 1
	
                SECTION
                  1.02.

              	
                Closing
                  Date

              	 1
	
                SECTION
                  1.03.

              	
                Transactions
                  To Be Effected at the Closing

              	 1
	
                SECTION
                  1.04.

              	
                Purchase
                  Price Adjustment

              	 2
	 	 	 
	
                ARTICLE
                  II

              
	 	 	 
	
                Representations
                  and Warranties Relating to Seller and the Shares

              
	 	 	
              
	
                SECTION
                  2.01.

              	
                Organization,
                  Standing and Power

              	 7
	
                SECTION
                  2.02.

              	
                Authority;
                  Execution and Delivery; Enforceability

              	 7
	
                SECTION
                  2.03.

              	
                No
                  Conflicts; Consents

              	 7
	
                SECTION
                  2.04.

              	
                The
                  Shares

              	 8
	 	 	 
	
                ARTICLE
                  III

              
	 	 	 
	
                Representations
                  and Warranties Relating to The Company

              
	 	 	 
	
                SECTION
                  3.01.

              	
                Organization
                  and Standing; Books and Records

              	 8
	
                SECTION
                  3.02.

              	
                Capital
                  Stock of the Company and the Subsidiaries

              	 9
	
                SECTION
                  3.03.

              	
                No
                  Conflicts; Consents

              	 10
	
                SECTION
                  3.04.

              	
                Financial
                  Statements

              	 10
	
                SECTION
                  3.05.

              	
                Assets
                  Other than Real Property Interests, Intellectual Property and
                  Contracts

              	 11
	
                SECTION
                  3.06.

              	
                Real
                  Property

              	 12
	
                SECTION
                  3.07.

              	
                Intellectual
                  Property

              	 12
	
                SECTION
                  3.08.

              	
                Contracts

              	 14
	
                SECTION
                  3.09.

              	
                Insurance

              	 17
	
                SECTION
                  3.10.

              	
                Taxes

              	 17
	
                SECTION
                  3.11.

              	
                Proceedings

              	 20
	
                SECTION
                  3.12.

              	
                Benefit
                  Plans

              	 20
	
                SECTION
                  3.13.

              	
                Absence
                  of Changes or Events

              	 22
	
                SECTION
                  3.14.

              	
                Compliance
                  with Applicable Laws

              	 22
	
                SECTION
                  3.15.

              	
                Transactions
                  with Affiliates

              	 23
	
                SECTION
                  3.16.

              	
                Accounts;
                  Safe Deposit Boxes; Officers and Directors

              	 23
	
                SECTION
                  3.17.

              	
                Interests
                  in Assets

              	 23    

      

      
         

        
          
            	
                    ARTICLE
                      IV

                  
	 	 	 
	
                    Representations
                      and Warranties of Purchaser

                  

          

           

        

      

      

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

      

       

      
        
          	 	 	 
	
                  SECTION
                    4.01.

                	
                  Organization,
                    Standing and Power

                	 24
	
                  SECTION
                    4.02.

                	
                  Authority;
                    Execution and Delivery; and Enforceability

                	 24
	
                  SECTION
                    4.03.

                	
                  No
                    Conflicts; Consents

                	 24
	
                  SECTION
                    4.04.

                	
                  Litigation

                	 25
	
                  SECTION
                    4.05.

                	
                  Securities
                    Act

                	 25
	
                  SECTION
                    4.06.

                	
                  Availability
                    of Funds

                	 25
	 	 	 
	
                  ARTICLE
                    V

                
	 	 	 
	
                  Covenants

                
	 	 	 
	
                  SECTION
                    5.01.

                	
                  Covenants
                    Relating to Conduct of Business

                	 25
	
                  SECTION
                    5.02.

                	
                  Access
                    to Information

                	 28
	
                  SECTION
                    5.03.

                	
                  Confidentiality

                	 28
	
                  SECTION
                    5.04.

                	
                  Commercially
                    Reasonable Efforts

                	 29
	
                  SECTION
                    5.05.

                	
                  Expenses;
                    Transfer Taxes

                	 30
	
                  SECTION
                    5.06.

                	
                  Brokers
                    or Finders

                	 31
	
                  SECTION
                    5.07.

                	
                  Tax
                    Matters

                	 31
	
                  SECTION
                    5.08.

                	
                  Supplemental
                    Disclosure

                	 32
	
                  SECTION
                    5.09.

                	
                  Post-Closing
                    Cooperation

                	 33
	
                  SECTION
                    5.10.

                	
                  Publicity

                	 33
	
                  SECTION
                    5.11.

                	
                  Records

                	 33
	
                  SECTION
                    5.12.

                	
                  Support
                    Services

                	 34
	
                  SECTION
                    5.13.

                	
                  Noncompetition;
                    Nonsolicitation

                	 34
	 	 	 
	
                  ARTICLE
                    VI

                
	 	 	 
	
                  Conditions
                    Precedent

                
	 	 	 
	
                  SECTION
                    6.01.

                	
                  Conditions
                    to Each Party’s Obligation

                	 36
	
                  SECTION
                    6.02.

                	
                  Conditions
                    to Obligation of Purchaser

                	 37
	
                  SECTION
                    6.03.

                	
                  Conditions
                    to Obligation of Seller

                	 37
	
                  SECTION
                    6.04.

                	
                  Frustration
                    of Closing Conditions

                	 38
	 	 	 
	
                  ARTICLE
                    VII

                
	 	 	 
	
                  Employee
                    and Related Matters

                
	 	 	 
	
                  SECTION
                    7.01.

                	
                  Continuation
                    of Employment; General Principles

                	 38
	
                  SECTION
                    7.02.

                	Assumption
                  of Liabilities	 39
	
                  SECTION
                    7.03.

                	Credited
                  Service	 39
	
                  SECTION
                    7.04.

                	Continuation
                  of Compensation and Benefits	 39
	
                  SECTION
                    7.05.

                	U.S.
                  Savings and Investment Plan	 40
	
                  SECTION
                    7.06.

                	Welfare
                  Plans	 41
	
                  SECTION
                    7.07.

                	Severance
                  Policies	 42
	
                  SECTION
                    7.08.

                	Performance
                  Bonuses	 43
	
                  SECTION
                    7.09.

                	Vacation
                  Benefits	 43

        

        
          
             

          

        

      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

         

         

      

      
        
          	
                  SECTION
                    7.10.

                	
                  Employment
                    and Other Agreements

                	 43
	
                  SECTION
                    7.11.

                	
                  Retention
                    Arrangements

                	 43
	
                  SECTION
                    7.12.

                	
                  No
                    Third-Party Beneficiaries

                	 43
	 	 	 
	
                  ARTICLE
                    VIII

                
	 	 	 
	
                  Termination,
                    Amendment and Waiver

                
	 	 	 
	
                  SECTION
                    8.01.

                	
                  Termination

                	 44
	
                  SECTION
                    8.02.

                	
                  Effect
                    of Termination

                	 44
	
                  SECTION
                    8.03.

                	
                  Amendments
                    and Waivers

                	 45
	 	 	 
	
                  ARTICLE
                    IX

                
	 	 	 
	
                  Indemnification

                
	 	 	 
	
                  SECTION
                    9.01.

                	
                  Tax
                    Indemnification

                	 45
	
                  SECTION
                    9.02.

                	
                  Other
                    Indemnification

                	 46
	
                  SECTION
                    9.03.

                	
                  Indemnification
                    Procedures

                	 46
	
                  SECTION
                    9.04.

                	
                  Limitations
                    on Indemnification

                	 49
	
                  SECTION
                    9.05.

                	
                  Calculation
                    of Losses

                	 51
	 	 	 
	
                  ARTICLE
                    X

                
	 	 	 
	
                  General
                    Provisions

                
	 	 	 
	
                  SECTION
                    10.01.

                	
                  No
                    Additional Representations; Survival of Representations

                	 51
	
                  SECTION
                    10.02.

                	
                  Assignment

                	 52
	
                  SECTION
                    10.03.

                	
                  No
                    Third-Party Beneficiaries

                	 52
	
                  SECTION
                    10.04.

                	
                  Notices

                	 52
	
                  SECTION
                    10.05.

                	
                  Interpretation;
                    Exhibits and Schedules; Certain Definitions

                	 53
	
                  SECTION
                    10.06.

                	
                  Counterparts

                	 57
	
                  SECTION
                    10.07.

                	
                  Entire
                    Agreement

                	 57
	
                  SECTION
                    10.08.

                	
                  Severability

                	 58
	
                  SECTION
                    10.09.

                	
                  Consent
                    to Jurisdiction

                	 58
	
                  SECTION
                    10.10.

                	
                  Governing
                    Law

                	 58
	
                  SECTION
                    10.11.

                	
                  Waiver
                    of Jury Trial

                	 58
	
                  SECTION
                    10.12.

                	
                  Specific
                    Performance

                	 58
	 	 	 
	Exhibits
                   

                  Exhibit
                    A Form
                    of Transitional Services Agreement

                  Exhibit
                    B Form
                    of Legal Opinion of Faegre & Benson LLP

                  Exhibit
                    C Form
                    of Legal Opinion of Cravath, Swaine & Moore LLP

                  Exhibit
                    D Form
                    of Legal Opinion of Morgan, Lewis & Bockius
                    LLP

                

        

      

       

      
        
        

      

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

       

      STOCK
        PURCHASE AGREEMENT

       

      STOCK
        PURCHASE AGREEMENT dated as of June 22, 2005 (this “Agreement”),
        among
        WEEKLY READER CORPORATION, a Delaware corporation (“Seller”),
        and
        Pearson Education, Inc., a Delaware corporation (“Purchaser”).

       

      Purchaser
        desires to purchase from Seller, and Seller desires to sell to Purchaser,
        all
        the issued and outstanding shares of Class A Common Stock, par value
        $0.01
        per share (the “Shares”),
        of
        American Guidance Service, Inc., a Minnesota corporation (the “Company”).

       

      Certain
        terms used in this Agreement are defined in Section 10.05(b).
        Section 10.05(c) identifies other Sections of this Agreement in which
        capitalized terms used in this Agreement are defined. Accordingly, the parties
        hereby agree as follows:

       

      ARTICLE
        I  

       

      Purchase
        and Sale of Shares; Closing

       

      SECTION
        1.01.   Purchase
        and Sale of the Shares.
        On the
        terms and subject to the conditions of this Agreement, at the Closing, Seller
        shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase
        from
        Seller, the Shares for an aggregate purchase price of $270,000,000 (the
“Purchase
        Price”),
        payable as set forth below in Section 1.02 and subject to adjustment
        as
        provided in Section 1.04. The purchase and sale of the Shares is referred
        to in this Agreement as the “Acquisition”.

       

      SECTION
        1.02.   Closing
        Date.
        The
        closing of the Acquisition (the “Closing”)
        shall
        take place at the offices of Cravath, Swaine & Moore LLP, 825 Eighth
        Avenue, New York, New York 10019, at 10:00 a.m. on the
        second
        business day following the satisfaction (or, to the extent permitted, the
        waiver) of the conditions set forth in Section 6.01, or, if on such
        day any
        condition set forth in Section 6.02 or 6.03 has not been satisfied
        (or, to
        the extent permitted, waived by the party entitled to the benefit thereof),
        as
        soon as practicable after all the conditions set forth in Article VI
        have
        been satisfied (or, to the extent permitted, waived by the parties entitled
        to
        the benefits thereof), or at such other place, time and date as shall be
        agreed
        between Seller and Purchaser. The date on which the Closing occurs is referred
        to in this Agreement as the “Closing
        Date”.

       

      SECTION
        1.03.   Transactions
        To Be Effected at the Closing.
        At the
        Closing:

       

      (a)
          Seller
        shall deliver to Purchaser certificates representing the Shares, duly endorsed
        in blank or accompanied by stock powers duly endorsed in blank in proper
        form
        for transfer; and

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b)
          Purchaser
        shall deliver to Seller payment, by wire transfer to a bank account designated
        in writing by Seller (such designation to be made at least two business days
        prior to the Closing Date), immediately available funds in an amount equal
        to
        the Purchase Price, plus or minus an estimate, prepared by Seller, in
        consultation with Purchaser, and delivered to Purchaser at least five business
        days prior to the Closing Date, of any adjustment to the Purchase Price under
        clauses (i) or (ii) of Section 1.04(c) (the Purchase Price plus or
        minus
        such estimate of any adjustment under Section 1.04 being hereinafter
        called
        the “Closing
        Date Amount”).
        Prior
        to delivery of such estimate, Purchaser shall be permitted to review the
        working
        papers relating to such estimate and Seller shall provide Purchaser reasonable
        access to the personnel, properties, books and records of Seller relevant
        for
        such purpose.

       

      SECTION
        1.04.   Purchase
        Price Adjustment. (a)
         (i)
        Within
        30 days after the Closing Date, Seller shall prepare and deliver to
        Purchaser an unaudited consolidated balance sheet of the Company as of the
        close
        of business on the day immediately preceding the Closing Date and a statement
        (the “Seller
        Statement”)
        setting forth Tangible Net Worth as of the close of business on the day
        immediately preceding the Closing Date (“Closing
        Tangible Net Worth”)
        and
        Accounts Receivable as of the close of business on the day immediately preceding
        the Closing Date (“Closing
        Accounts Receivable”),
        together with a certificate of Seller that the Seller Statement has been
        prepared in compliance with the requirements of this Section 1.04.
        Purchaser shall assist, and shall cause the Company and the Subsidiaries
        to
        assist, Seller in the preparation of the Seller Statement and shall provide
        Seller reasonable access to the personnel, properties, books and records
        of the
        Company and the Subsidiaries relevant for such purpose. Purchaser and
        Purchaser’s independent auditors may participate in the preparation of the
        Seller Statement; provided,
        however,
        that
        Purchaser acknowledges that Seller shall have the primary responsibility
        and
        authority for preparing the Seller Statement.

       

      (ii)  
        If the
        Closing occurs prior to 11:59 p.m. on July 22, 2005, on or
        prior to
        August 15, 2005, Purchaser shall prepare and deliver to Seller a statement
        (the “Purchaser
        Statement”
        and,
        together with the Seller Statement, collectively the “Statements”
        and
        individually a “Statement”),
        setting forth Accounts Receivable as of the close of business on July 29,
        2005 (the “July
        29 A/R Amount”),
        together with a certificate of Purchaser that the Purchaser Statement has
        been
        prepared in compliance with the requirements of this Section 1.04. The parties
        acknowledge that the July 29 A/R Amount set forth in the Purchaser Statement
        may
        be based on Purchaser’s assumption that the amount of the Closing Accounts
        Receivable as reflected in the Company’s books and records on the Closing Date
        or in the Seller Statement, as applicable, is correct and that in any Notice
        of
        Disagreement which may be delivered by the Purchaser pursuant to
        paragraph (b) below, Purchaser may revise its calculation of the
        July 29 A/R Amount to reflect the effect thereon of any disagreement
        raised
        by Purchaser with respect to the Closing Accounts Receivable as set forth
        in the
        Seller Statement. Seller and Seller’s independent auditors may participate in
        the preparation of the Purchaser Statement; provided,
        however,
        that
        Seller acknowledges that Purchaser shall have the primary responsibility
        and
        authority for preparing the Purchaser Statement.

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      (b)
          During
        the 30-day period following the later of the date of Purchaser’s receipt of the
        Seller Statement and the date of Seller’s receipt of the Purchaser Statement
        (such later date, the “Trigger
        Date”),
        each
        party and its independent auditors shall be permitted to review the working
        papers relating to the Statement prepared by the other party and each party
        shall provide to the other party and its independent auditors reasonable
        access
        to its personnel, properties, books and records relevant for such purpose.
        Each
        Statement shall become final and binding upon the parties on the 30th day
        following the Trigger Date, unless the party that received such Statement
        gives
        written notice of its disagreement with such Statement (a “Notice
        of Disagreement”)
        to the
        party that prepared such Statement prior to such 30th day following the Trigger
        Date. Any Notice of Disagreement shall (i) specify in reasonable detail
        the
        nature of any disagreement so asserted, (ii) only include disagreements
        based on mathematical errors or (A) in the case of a disagreement
        by
        Purchaser with the Seller Statement, based on Closing Tangible Net Worth
        or
        Closing Accounts Receivable not being calculated in accordance with this
        Section 1.04 (and Purchaser may revise its calculation of the July 29
        A/R Amount set forth originally in the Purchaser Statement to reflect the
        effect
        thereon of any such disagreement with respect to the calculation of Closing
        Accounts Receivable set forth in the Seller Statement), or (B) in
        the case
        of a disagreement by Seller with the Purchaser Statement, based on the July
        29
        A/R Amount not being calculated in accordance with this Section 1.04,
        and
        (iii) be accompanied by a certificate of such party that it has complied
        with Section 1.04(e). If a Notice of Disagreement with respect to
        either
        Statement is received by the party that prepared such Statement in a timely
        manner, then such Statement (as revised in accordance with this sentence)
        shall
        become final and binding upon Seller and Purchaser on the earlier of
        (A) the date Seller and Purchaser resolve in writing any differences
        they
        have with respect to the matters specified in the Notice of Disagreement
        and
        (B) the date any disputed matters are finally resolved in writing
        by the
        Accounting Firm. During the 30-day period following the delivery of a Notice
        of
        Disagreement, Seller and Purchaser shall seek in good faith to resolve in
        writing any differences that they may have with respect to the matters specified
        in the Notice of Disagreement. During such period the party that prepared
        the
        relevant Statement and its auditors shall have access to the personnel,
        properties, books and records of the party that delivered the Notice of
        Disagreement and the working papers of such party (and, if they have
        participated in such party’s preparation of the Notice of Disagreement, the
        working papers of such party’s auditors prepared in connection with their review
        of the Notice of Disagreement). At the end of such 30-day period, Seller
        and
        Purchaser shall submit to an independent accounting firm (the “Accounting
        Firm”)
        for
        arbitration any and all matters that remain in dispute and were properly
        included in the Notice of Disagreement. The Accounting Firm shall be
        Ernst & Young LLP or, if such firm is unable or unwilling to act or has
        at that time or at any time within the preceding twelve months had any not
        insignificant retention by either Purchaser or Seller or their affiliates,
        such
        other nationally recognized independent public accounting firm as shall be
        agreed upon by the parties hereto in writing (if the parties are unable to
        agree, Seller and Purchaser shall each select a nationally recognized
        independent public accounting firm and those two firms shall select a third
        such
        firm, in which event the “Accounting Firm” shall mean the third such firm).
        Seller and Purchaser shall instruct the Accounting Firm to render its decision
        by selecting either the position of Seller or Purchaser as to each 

       

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

       

      
        matter
          submitted to the Accounting Firm, and the Accounting Firm shall not be
          permitted
          to reach a decision as to any matter other than the position of Seller
          or
          Purchaser. Seller and Purchaser agree to use reasonable efforts to cause
          the
          Accounting Firm to render a decision resolving the matters submitted to
          the
          Accounting Firm within 30 days following submission. Judgment may be entered
          upon the determination of the Accounting Firm in any court having jurisdiction
          over the party against which such determination is to be enforced. Except
          as
          provided in the next sentence, the cost of any arbitration (including the
          fees
          and expenses of the Accounting Firm and reasonable attorney fees and expenses
          of
          the parties) pursuant to this Section 1.04 shall be borne by Purchaser
          and
          Seller in inverse proportion as they may prevail on the value of the matters
          determined by the Accounting Firm, which proportionate allocations shall
          also be
          determined by the Accounting Firm at the time the determination of the
          Accounting Firm is rendered on the merits of the matters submitted to it.
          The
          fees and disbursements of Seller’s independent auditors incurred in connection
          with their review of the Statements and preparation, review or resolution
          of any
          Notice of Disagreement shall be borne by Seller, and the fees and disbursements
          of Purchaser’s independent auditors incurred in connection with their review of
          the Statements and the preparation, review or resolution of any Notice
          of
          Disagreement shall be borne by Purchaser.

      

       

      (c)    The
        Purchase
        Price shall be (i) increased by the amount by which Closing Tangible
        Net
        Worth exceeds $27,661,000 (the “TNW Amount”), provided that the
        Purchase Price shall not be increased by more than $3,750,000 pursuant to
        this
        clause (i), (ii) decreased by the amount by which Closing Tangible
        Net
        Worth is less than the TNW Amount, and (iii) if the Closing occurs
        prior to
        11:59 p.m. on July 22, 2005, increased by the Applicable Percentage
        of
        the amount by which the July 29 A/R Amount exceeds Closing Accounts Receivable,
        provided that the Purchase Price shall not be increased by more than
        $2,500,000 pursuant to this clause (iii) (the Purchase Price as so increased
        or
        decreased pursuant to clauses (i), (ii) and (iii) shall hereinafter
        be
        referred to as the “Adjusted Purchase Price”).  If the Closing Date
        Amount is less than the Adjusted Purchase Price, Purchaser shall, and if
        the
        Closing Date Amount is more than the Adjusted Purchase Price, Seller shall,
        within 10 business days after the first date on which both Statements
        have
        become final and binding on the parties, make payment by wire transfer in
        immediately available funds of the amount of such difference, together with
        interest thereon at a rate equal to the rate of interest from time to time
        announced publicly by Citibank, N.A. as its prime rate, calculated on the
        basis
        of the actual number of days elapsed divided by 365, from (x) the Closing
        Date
        to the date of payment, in the case of any such difference attributable to
        the
        difference between Seller’s estimate delivered prior to the Closing pursuant to
        Section 1.03(b) of the adjustments set forth in clauses (i) and (ii)
        of the
        foregoing sentence and the final determination thereof, and (y) from
        July 29, 2005 to the date of payment, in the case of any such
        difference attributable to the adjustment set forth in clause (iii) of the
        foregoing sentence.

       

      (d)    The
        term
“Tangible Net Worth” means Total Tangible Assets minus Total Liabilities.
        The term “Total Tangible Assets” means the consolidated total assets of
        the Company and its consolidated subsidiaries after deducting consolidated
        goodwill and other intangible assets, net, of the Company and its consolidated
        subsidiaries, the term “Total Liabilities” means the consolidated total
        liabilities of the Company and its 

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

       

      
        consolidated
          subsidiaries, and the term “Accounts
          Receivable”
          means
          the consolidated accounts receivable (net of allowance for doubtful accounts
          and
          sales returns) of the Company and its subsidiaries, in each case calculated
          in
          the same way, using the same methodologies, practices, accounting applications,
          assumptions and method of applying estimates, as such line items on the
          Audited
          Balance Sheet (whether or not doing so is in accordance with United States
          generally accepted accounting principles (“GAAP”)),
          except that (i) amounts attributable to Income Taxes for the Pre-Closing
          Tax
          Period, cash and cash equivalents, indebtedness and other accounts payable
          owing
          to Seller or any of its affiliates, accounts receivable owing from Seller
          or any
          of its affiliates and amounts attributable to the Retention Program shall
          be
          excluded in determining Total Tangible Assets and Total Liabilities and
          (ii) the
          reserve for Pre-Closing Health Care Claims will equal $1,100,000 in determining
          Total Liabilities. The accrued pension liability included in the Total
          Liabilities set forth in the Statement shall be no less than the unfunded
          Accumulated Benefit Obligation, within the meaning of Statement of Financial
          Accounting Standards 87, as reflected in the Audited Balance Sheet plus
          any
          accruals for the net periodic benefits less any contributions made during
          the
          period from January 1, 2005 to the Closing Date, and such liability shall
          not be
          reduced by any unamortized or accumulated amounts. Solely for purposes
          of
          determining the July 29 A/R Amount, the allowance for doubtful accounts
          and
          sales returns used to calculate Closing Accounts Receivable shall be carried
          forward without change to calculate the July 29 A/R Amount. The foregoing
          principles are referred to in this Agreement as the “Balance
          Sheet Principles”.
          The
          parties agree that the adjustments contemplated by this Section 1.04 are
          intended to be based on Tangible Net Worth as of the close of business
          on the
          day immediately preceding the Closing Date and Accounts Receivable as of
          the
          close of business on each of the day immediately preceding the Closing
          Date and
          July 29, 2005, measured, in the case of Tangible Net Worth, using component
          items calculated in the same way as such component items were calculated
          on the
          Audited Balance Sheet and, in the case of Accounts Receivables, calculated
          in
          the same way as Accounts Receivable are calculated on the Audited Balance
          Sheet
          (except that in the case of the July 29 A/R Amount, the allowance for doubtful
          accounts and sales returns used to calculate Closing Accounts Receivable
          shall
          be carried forward without change to calculate the July 29 A/R Amount),
          and,
          accordingly, any items on or omissions from the Audited Balance Sheet that
          are
          based upon errors of fact or mathematical errors or that are not in accordance
          with GAAP shall be carried forward for purposes of calculating Closing
          Tangible
          Net Worth, Closing Accounts Receivable and the July 29 A/R Amount. The
          scope of
          the disputes to be resolved by the Accounting Firm shall be limited to
          whether
          such calculation was done in accordance with the Balance Sheet Principles,
          and
          whether there were mathematical errors in the applicable Statement, and
          the
          Accounting Firm is not to make any other determination, including any
          determination as to whether GAAP was followed for the Audited Balance Sheet
          or
          the applicable Statement or as to whether the TNW Amount is correct. Schedule
          1.04(d) sets forth an illustrative calculation of Tangible Net Worth as
          of
          December 31, 2004.

      

       

      The
        term
“Applicable
        Percentage”
        means
        the percentage set forth in the table below under the column heading “Applicable
        Percentage” opposite the period or the date set forth in the table below during
        or on which the Closing occurs:

       

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

       

      
        	
                Period
                  or Date

              	
                Applicable
                  Percentage

              
	
                On
                  or prior to July 12, 2005

              	
                80%

              
	
                July
                  13, 2005

              	
                75%

              
	
                July
                  14, 2005

              	
                70%

              
	
                July
                  15, 2005

              	
                65%

              
	
                July
                  16, 2005

              	
                65%

              
	
                July
                  17, 2005

              	
                65%

              
	
                July
                  18, 2005

              	
                60%

              
	
                July
                  19, 2005

              	
                55%

              
	
                July
                  20, 2005

              	
                50%

              
	
                July
                  21, 2005

              	
                45%

              
	
                July
                  22, 2005

              	
                40%

              
	
                July
                  23, 2005 and thereafter

              	
                0%

              

      

      

      (e)
          During
        the period from and after Closing through the resolution of any adjustment
        to
        the Purchase Price contemplated by this Section 1.04, Purchaser shall
        not,
        and from the date hereof until Closing, Seller shall not (except (i) in
        each case as required by GAAP and (ii) in the case of Purchaser, as required
        by
        Purchaser accounting policies and practices at the time, provided in the
        case of
        this clause (ii) that such actions do not make impossible or impracticable
        the
        calculation of any adjustment to the Purchase Price as contemplated by this
        Section 1.04), take any action with respect to the accounting books and records
        of the Company on which either Statement is to be based that are not consistent
        with the Company’s past practices. Without limiting the generality of the
        foregoing, during such periods no changes shall be made in any reserve or
        other
        account existing as of the date of the Audited Balance Sheet except as a
        result
        of events occurring after the date of the Audited Balance Sheet and, in such
        event, only in a manner consistent with past practices and as required by
        GAAP.
        Purchaser shall cause the Company and the Subsidiaries to cooperate in the
        preparation of the Seller Statement, including providing customary
        certifications, including management representation letters, to Seller’s
        independent auditors. If the Closing occurs prior to 11:59 p.m. on July 22,
        2005, from the Closing to the close of business on July 29, 2005, Purchaser
        shall cause Accounts Receivable management and collection to be conducted
        in the
        usual, regular and ordinary course in substantially the same manner as
        previously conducted.

       

      (f)
          During
        the period of time from and after the Closing Date through the resolution
        of any
        adjustment to the Purchase Price contemplated by this Section 1.04,
        Purchaser shall afford, and shall cause the Company to afford, to Seller
        and any
        accountants, counsel or financial advisers retained by Seller in connection
        with
        any adjustment to the Purchase Price contemplated by this Section 1.04,
        reasonable access during normal business hours to all the properties, books,
        contracts, personnel and records of the Company and the Subsidiaries relevant
        to
        the adjustment contemplated by this Section 1.04.

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

       

      ARTICLE
        II  

       

      Representations
        and Warranties

      Relating
        to Seller and the Shares

       

      Except
        as
        set forth on the Disclosure Schedule attached hereto (the “Disclosure
        Schedule”)
        in
        accordance with Section 10.05(a), Seller hereby represents and warrants
        to
        Purchaser as follows:

       

      SECTION
        2.01.   Organization,
        Standing and Power.
        Seller
        is duly organized, validly existing and in good standing under the laws of
        the
        State of Delaware and has full corporate power and authority and possesses
        all
        governmental franchises, licenses, permits, authorizations and approvals
        necessary to enable it to own, lease or otherwise hold its properties and
        assets, including the Shares, and to conduct its businesses as presently
        conducted, other than such franchises, licenses, permits, authorizations
        and
        approvals the lack of which have not had and would not be reasonably likely
        to
        have a material adverse effect on the ability of Seller to consummate the
        Acquisition (a “Seller
        Material Adverse Effect”).

       

      SECTION
        2.02.   Authority;
        Execution and Delivery; Enforceability.
        Seller
        has full corporate power and authority to execute this Agreement and the
        other
        agreements and instruments to be executed and delivered in connection with
        this
        Agreement (the “Ancillary
        Agreements”)
        to
        which it is, or is specified to be, a party and to consummate the Acquisition
        and the other transactions contemplated hereby and thereby. The execution
        and
        delivery by Seller of this Agreement and the Ancillary Agreements to which
        it
        is, or is specified to be, a party and the consummation by Seller of the
        Acquisition and the other transactions contemplated hereby and thereby have
        been
        duly authorized by all necessary corporate action. Seller has duly executed
        and
        delivered this Agreement and at or prior to the Closing will have duly executed
        and delivered each Ancillary Agreement to which it is, or is specified to
        be, a
        party, and this Agreement constitutes, and each Ancillary Agreement to which
        it
        is, or is specified to be, a party will after the Closing constitute, its
        legal,
        valid and binding obligation, enforceable against it in accordance with its
        terms.

       

      SECTION
        2.03.   No
        Conflicts; Consents.
        Except
        as set forth in Schedule 2.03, the execution and delivery by Seller
        of this
        Agreement do not, the execution and delivery by Seller of each Ancillary
        Agreement to which it is, or is specified to be, a party will not, and the
        consummation of the Acquisition and the other transactions contemplated hereby
        and thereby and compliance by Seller with the terms hereof and thereof will
        not
        conflict with, or result in any violation of or default (with or without
        notice
        or lapse of time, or both) under, or give rise to a right of termination,
        cancelation or acceleration of any obligation or to loss of a material benefit
        under, or result in the creation of any Lien upon any of the properties or
        assets of Seller under, any provision of (i) the certificate of
        incorporation or by-laws of Seller, (ii) any contract, lease, license,
        indenture or other agreement (a “Contract”)
        to
        which Seller is a party or by which any of its properties or assets is bound
        or
        (iii) any judgment, order or decree (“Judgment”)
        or
        statute, law, ordinance, rule or regulation or other pronouncement of a

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        Governmental
          Entity having the effect of law (“Applicable
          Law”)
          applicable to Seller or its properties or assets, other than, in the case
          of
          clauses (ii) and (iii) above, any such items that have not had and would
          not be
          reasonably likely to have, individually or in the aggregate, a Seller Material
          Adverse Effect. No material consent, approval, license, permit, order or
          authorization (“Consent”)
          of, or
          registration, declaration or filing with, any Federal, state, local or
          foreign
          government or any court of competent jurisdiction, administrative agency
          or
          commission or other governmental authority or instrumentality, domestic
          or
          foreign (a “Governmental
          Entity”),
          is
          required to be obtained or made by or with respect to Seller in connection
          with
          the execution, delivery and performance of this Agreement or any Ancillary
          Agreement or the consummation of the Acquisition or the other transactions
          contemplated hereby and thereby, other than (A) compliance with and filings
          under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
“HSR
          Act”),
          (B)
          compliance with and filings under Section 13(a) of the Securities Exchange
          Act
          of 1934 (the “Exchange
          Act”),
          (C)
          filings of termination statements and mortgage releases in connection with
          the
          release by the lenders under the Credit Facilities of all Liens securing
          the
          Credit Facilities upon the Shares and the assets of the Company and the
          Subsidiaries, and (D) those that may be required solely by reason of Purchaser’s
          (as opposed to any other third party’s) participation in the Acquisition and the
          other transactions contemplated hereby and by the Ancillary
          Agreements.

      

       

      SECTION
        2.04.   The
        Shares.
        Seller
        has good and valid title to the Shares, free and clear of all Liens except
        as
        set forth in Schedule 2.04. Assuming Purchaser has the requisite power
        and
        authority to be the lawful owner of the Shares, upon delivery to Purchaser
        at
        the Closing of certificates representing the Shares, duly endorsed by Seller
        for
        transfer to Purchaser, and upon Seller’s receipt of the Closing Date Amount,
        good and valid title to the Shares will pass to Purchaser, free and clear
        of any
        Liens, other than those arising from acts of Purchaser or its affiliates.
        Other
        than this Agreement, except as set forth in Schedule 2.04, the Shares
        are
        not subject to any voting trust agreement or other Contract restricting or
        otherwise relating to the voting, dividend rights or disposition of such
        Shares.

       

      ARTICLE
        III  

       

      Representations
        and Warranties

      Relating
        to The Company

       

      Except
        as
        set forth on the Disclosure Schedule in accordance with Section 10.05(a),
        Seller hereby represents and warrants to Purchaser as follows:

       

      SECTION
        3.01.   Organization
        and Standing; Books and Records. 
        (a)
        Schedule
        3.01(a) sets forth a list of each subsidiary of the Company (each, a
“Subsidiary”).
        Each
        of the Company and the Subsidiaries is a corporation duly organized, validly
        existing and in good standing under the laws of its jurisdiction of
        incorporation, which jurisdiction is set forth in Schedule 3.01(a).
        Each of
        the Company and the Subsidiaries has full corporate power and authority and
        possesses all governmental franchises, licenses, permits, authorizations
        and
        approvals necessary to enable it to own, lease or otherwise hold its properties
        and assets and to carry on its 

       

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       

      business
        as presently conducted, other than such franchises, licenses, permits,
        authorizations and approvals the lack of which has not had and would not
        be
        reasonably likely to have, individually or in the aggregate, a Company Material
        Adverse Effect. Each of the Company and the Subsidiaries is duly qualified
        and
        in good standing to do business as a foreign corporation in each jurisdiction
        in
        which the conduct or nature of its business or the ownership, leasing or
        holding
        of its properties makes such qualification necessary, except such jurisdictions
        where the failure to be so qualified or in good standing would not be reasonably
        likely to have, individually or in the aggregate, a Company Material Adverse
        Effect. A list of the jurisdictions in which the Company and the Subsidiaries
        are so qualified is set forth in Schedule 3.01(a).

       

      (b)
          The
        Company has delivered to Purchaser true and complete copies of (i) the
        certificate of incorporation and by-laws, each as amended to date, of the
        Company and (ii) the comparable governing instruments, each as amended
        to
        date, of each Subsidiary.

       

      SECTION
        3.02.   Capital
        Stock of the Company and the Subsidiaries.  (a)
        The
        authorized capital stock of the Company consists of (i) 10,000,000
        shares
        of Class A Common Stock, par value $.01 per share, of which 2,137,591
        shares, constituting the Shares, are issued and outstanding, (ii) 1,000,000
        shares of Class B Common Stock, par value $.01 per share, which are
        unissued and (iii) 5,000,000 shares of Class C Common Stock,
        par value
        $.01 per share, which are unissued. Except for the Shares, there are no shares
        of capital stock or other equity securities of the Company issued, reserved
        for
        issuance or outstanding. Schedule 3.02(i)
        sets
        forth for each Subsidiary the amount of its authorized capital stock or other
        equity interests, the amount of its outstanding capital stock or other equity
        interests and the record and beneficial owners of its outstanding capital
        stock
        or other equity interests. Except as set forth in Schedule 3.02(a),
        there
        are no shares of capital stock or other equity interests of any Subsidiary
        issued, reserved for issuance or outstanding. The Shares are duly authorized,
        validly issued, fully paid and nonassessable and not subject to or issued
        in
        violation of any purchase option, call option, right of first refusal,
        preemptive right, subscription right or any similar right under any provision
        of
        the Minnesota Business Corporation Act, the certificate of incorporation
        or
        by-laws of the Company or any Contract to which the Company is a party or
        otherwise bound. All the outstanding shares of capital stock or other equity
        interests of each Subsidiary have been duly authorized and validly issued,
        are
        fully paid and nonassessable and are not subject to or issued in violation
        of
        any purchase option, call option, right of first refusal, preemptive right,
        subscription right or any similar right under any provision of the Minnesota
        Business Corporation Act, the Delaware General Corporation Law or any other
        Applicable Law, the certificate of incorporation or by-laws (or comparable
        governing instruments) of such Subsidiary or any Contract to which such
        Subsidiary is a party or otherwise bound. The Company has good and valid
        title
        to all such shares and interests, free and clear, except as set forth in
        Schedule 3.02(a), of all Liens. There are no outstanding bonds, debentures,
        notes or other indebtedness of the Company or any Subsidiary having the right
        to
        vote (or convertible into, or exchangeable for, securities having the right
        to
        vote) on any matters on which holders of Shares or shares of capital stock
        of or
        other equity interests of any Subsidiary may vote (“Voting
        Company Debt”).
        There
        are no outstanding options, 

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       

      
        warrants,
          rights, convertible or exchangeable securities, “phantom” stock rights, stock
          appreciation rights, stock-based performance units or Contracts to which
          the
          Company or any Subsidiary is a party or by which any of them is bound (i)
          obligating the Company or any Subsidiary to issue, deliver or sell, or
          cause to
          be issued, delivered or sold, additional shares of capital stock or other
          equity
          interests in, or any security convertible or exercisable for or exchangeable
          into any capital stock of or other equity interest in, the Company or of
          any
          Subsidiary or any Voting Company Debt, (ii) obligating the Company or any
          Subsidiary to issue, grant, extend or enter into any such option, warrant,
          call,
          right, security or Contract or (iii) that give any person the right to
          receive
          any economic benefit or right similar to or derived from the economic benefits
          and rights occurring to holders of Shares or any such capital stock or
          other
          equity interests.

      

       

      (b)
          Except
        for its interests in the Subsidiaries, the Company does not own, directly
        or
        indirectly, any capital stock, membership interest, partnership interest
        or
        other equity interest in any person.

       

      SECTION
        3.03.   No
        Conflicts; Consents.
        The
        execution and delivery by Seller of this Agreement do not, the execution
        and
        delivery by Seller of each Ancillary Agreement to which it is, or is specified
        to be, a party will not, and the consummation of the Acquisition and the
        other
        transactions contemplated hereby and thereby and compliance by Seller with
        the
        terms hereof and thereof will not conflict with, or result in any violation
        of
        or default (with or without notice or lapse of time, or both) under, or give
        rise to a right of termination, cancelation or acceleration of any obligation
        or
        to loss of a material benefit under, or result in the creation of any Lien
        upon
        any of the properties or assets of the Company or any Subsidiary under, any
        provision of (i) the certificate of incorporation or by-laws (or the comparable
        governing instruments) of the Company or any Subsidiary, (ii) any Contract
        to
        which the Company or any Subsidiary is a party or by which any of their
        respective properties or assets is bound or (iii) any Judgment or Applicable
        Law
        applicable to the Company or any Subsidiary or their respective properties
        or
        assets, other than, in the case of clauses (ii) and (iii) above, any
        such
        items that have not had and would not reasonably be likely to have, individually
        or in the aggregate, a Company Material Adverse Effect. No material Consent
        of,
        or registration, declaration or filing with, any Governmental Entity is required
        to be obtained or made by or with respect to the Company or any Subsidiary
        in
        connection with the execution, delivery and performance of this Agreement
        or any
        Ancillary Agreement or the consummation of the Acquisition or the other
        transactions contemplated hereby and thereby, other than (A) compliance
        with and filings under the HSR Act, (B) compliance with and filings
        under
        Section 13(a) of the Exchange Act, (C) filings of termination
        statements and mortgage releases in connection with the release by the lenders
        under the Credit Facilities of all Liens securing the Credit Facilities upon
        the
        Shares and the assets of the Company and the Subsidiaries, and (D) those
        that may be required solely by reason of Purchaser’s (as opposed to any other
        third party’s) participation in the Acquisition and the other transactions
        contemplated hereby and by the Ancillary Agreements.

       

      SECTION
        3.04.   Financial
        Statements. (a)
         Schedule
        3.04(a) sets forth the audited consolidated balance sheet of the Company
        as of
        December 31, 2004 (the “Audited
        Balance Sheet”)
        and
        the audited consolidated statements of income and cash 

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
         

        flows
          of
          the Company for the year ended December 31, 2004 together with the report
          thereon from Deloitte & Touche LLP (such financial statements, the
“Audited
          Financial Statements”).
          The
          Audited Financial Statements have been prepared in conformity with GAAP
          consistently applied (except in each case as described in the notes thereto)
          and
          on that basis fairly present the consolidated financial condition, results
          of
          operations and cash flows of the Company as of and for the year ended December
          31, 2004. 

      

       

      (b)
          Schedule
        3.04(b) sets forth the unaudited consolidated balance sheet of the Company
        as of
        March 31, 2005 (the “Unaudited
        Balance Sheet”)
        and
        the unaudited consolidated statements of income and cash flows of the Company
        for the three months ended March 31, 2005 (such financial statements,
        the
“Unaudited
        Financial Statements”).
        The
        Unaudited Financial Statements have been prepared in conformity with GAAP
        consistently applied (except as described in the notes thereto) and on that
        basis fairly presents (subject to normal, recurring year-end audit adjustments)
        the consolidated financial condition and results of operations of the Company
        as
        of and for the three months ended March 31, 2005.

       

      (c)
          The
        Company and the Subsidiaries do not have any liabilities or obligations of
        a
        nature required by GAAP to be reflected on a consolidated balance sheet of
        the
        Company or in the notes thereto that have had or would reasonably be likely
        to
        have, individually or in the aggregate, a Company Material Adverse Effect,
        except (i) as disclosed, reflected or reserved against in the Audited
        Balance Sheet and the notes thereto or in the Unaudited Balance Sheet,
        (ii) for items set forth in Schedule 3.04(c) and (iii) for
        liabilities
        and obligations incurred in the ordinary course of business consistent with
        past
        practice since the date of the Unaudited Balance Sheet and not in violation
        of
        this Agreement.

       

      (d)
          The
        Company and the Subsidiaries maintain accurate books and records reflecting
        their respective material assets and liabilities and maintain proper and
        adequate internal accounting controls which are intended to provide assurance
        that: (i) material transactions are executed with management’s authorization;
        (ii) material transactions are recorded as necessary to permit preparation
        of
        the consolidated financial statements of WRC Media Inc. (“Seller
        Parent”)
        and to
        maintain accountability for Seller Parent’s consolidated assets; (iii) access to
        Seller Parent’s material assets is permitted only in accordance with
        management’s authorization; and (iv) the reporting of Seller Parent’s material
        assets is compared with existing assets at regular intervals.

       

      SECTION
        3.05.   Assets
        Other than Real Property Interests, Intellectual Property and
        Contracts. (a)
        The
        Company or a Subsidiary has good and valid title to all the assets reflected
        on
        the Unaudited Balance Sheet or thereafter acquired, other than those disposed
        of
        since the date of the Unaudited Balance Sheet in the ordinary course of business
        consistent with past practice, in each case free and clear of all mortgages,
        liens, security interests, easements, leases, subleases, rights of way, options
        or encumbrances of any kind (collectively, “Liens”),
        except (i) such Liens as are set forth in Schedule 3.05(a),
        (ii) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens
        arising or incurred in the ordinary course of business, Liens arising under
        original purchase price conditional sales contracts and equipment leases
        with
        third parties and Liens for Taxes that are not 

       

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

       

      
        due
          and
          payable or that may thereafter be paid without penalty and (iii) Liens
          the
          existence of which is referred to in the notes to the Audited Balance Sheet
          (the
          Liens described in clauses (ii) and (iii) above, together with the Liens
          referred to in clause (ii) of Section 3.06, are referred to collectively
          as
“Permitted
          Liens”).

      

       

      (b)
          This
        Section 3.05 does not relate to real property or interests in real
        property, such items being the subject of Section 3.06, to Intellectual
        Property, such items being the subject of Section 3.07, or to Contracts,
        such items being the subject of Section 3.08.

       

      SECTION
        3.06.   Real
        Property.
        Neither
        the Company nor any of the Subsidiaries owns any real property or interests
        in
        real property in fee. Schedule 3.06 sets forth a complete list of all real
        property and interests in real property leased by the Company or any Subsidiary
        (individually, a “Leased
        Property”,
        and
        the lease, sublease or other agreement pursuant to which it is occupied by
        the
        Company or the applicable Subsidiary, and all amendments thereto, individually,
        a “Lease”).
        The
        Company or the applicable Subsidiary has good and valid title to the leasehold
        estates in the Leased Property created by the Leases, subject to
        (i) Permitted Liens, (ii) other imperfections of title or
        encumbrances, if any, that do not materially impair, and could not reasonably
        be
        expected materially to impair, the continued use and operation of the assets
        to
        which they relate in the conduct of the business of the Company and the
        Subsidiaries as presently conducted, (iii) subleases and similar agreements
        also listed in Schedule 3.06 and (iv) Liens that have been placed
        by any
        developer, landlord or other third party on any Leased Property and
        subordination or similar agreements relating thereto. Neither
        the Company nor any Subsidiary has granted a Lien on its leasehold estate
        in any
        Leased Property, other than any Lien granted in such Lease to the landlord
        thereunder for any rent which may become delinquent. True
        and
        complete copies of the Leases have been made available to Purchaser for review.
        Except as set forth in Schedule 3.06, all of the Leases are valid, binding
        and
        in full force and effect in all material respects and are enforceable by
        the
        Company or the applicable Subsidiary in accordance with their terms subject,
        as
        to enforcement, to applicable bankruptcy, insolvency, moratorium, reorganization
        or similar laws affecting creditors’ rights generally and to general equitable
        principles. Except as set forth in Schedule 3.06 Seller, as of the date of
        this
        Agreement the Company and the Subsidiaries have performed all material
        obligations required to be performed by them under the Leases and are not
        in
        material default under any Lease, and to the knowledge of Seller, no other
        party
        to any Lease is in material default thereunder. Each Leased Property is in
        materially good condition and repair, ordinary wear and tear
        excepted.

       

      SECTION
        3.07.   Intellectual
        Property. (a)
        Schedule
        3.07 sets forth a true and complete list of all material Intellectual Property,
        used by the Company or any Subsidiary (the “Company
        Intellectual Property”).
        With
        respect to any Company Intellectual Property that is registered by the Company
        or any Subsidiary or subject to an application for registration filed by
        the
        Company or any Subsidiary (“Company-Owned
        Intellectual Property”),
        Schedule 3.07 sets forth a list of the owner, the title or mark, registration
        or
        application number, and the jurisdiction where registered or sought to be
        registered. The Company or a Subsidiary is the owner or licensee of, and/or
        has
        the right 

       

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

       

      
        to
          use in
          the ordinary course of its business, without payment to any other person
          in the
          case of Company-Owned Intellectual Property (except as set forth in Schedule
          3.07), all the Company Intellectual Property and the consummation of the
          Acquisition and the other transactions contemplated hereby does not and
          will not
          conflict with, alter or impair any such rights.

      

       

      (b)
          Except
        as
        set forth on Schedule 3.07:

       

      (i)
          The
        Company and the Subsidiaries are the sole owners of, and have all right,
        title
        and interest in and to, all of the Company-Owned Intellectual Property and
        all
        material unregistered Intellectual Property of the Company and the Subsidiaries,
        free and clear of all Liens (other than Permitted Liens.

       

      (ii)
          All
        material unexpired registrations and applications for the Company-Owned
        Intellectual Property listed on Schedule 3.07 are valid and in full force
        and
        effect, as applicable; all necessary registration, maintenance and/or renewal
        fees in connection therewith have been paid; all necessary documents and
        certificates in connection therewith have been filed with the relevant agencies;
        and all known material defects or errors in record title have been
        corrected.

       

      (iii)
          There
        are
        no settlements, forbearances to sue, consent judgments or orders, co-existence
        agreements or similar obligations, other than license agreements entered
        into in
        the ordinary course of business, that restrict any rights of the Company
        or the
        Subsidiaries to use the Company Intellectual Property or restrict the business
        of the Company and the Subsidiaries which were entered into or undertaken
        to
        accommodate the Intellectual Property rights of any other person.

       

      (c)
          The
        Company and the Subsidiaries have taken reasonable security measures to protect
        and preserve the confidentiality and value of their Confidential
        Information.

       

      (d)
          The
        Software used by the Company and the Subsidiaries for their internal operations
        does not use any material amount of open source Software.

       

      (e)
          Except
        (i) as set forth in Schedules 3.07 and 3.08, (ii) for nonexclusive licenses
        to
        end-users and permissions to quote issued in the ordinary course of business
        and
        (iii) for licenses between the Company and one or more Subsidiaries: (x)
        neither
        the Company nor any of the Subsidiaries has granted any material license
        of any
        kind relating to Company Intellectual Property or the marketing or distribution
        thereof; (y) neither the Company nor any of the Subsidiaries is bound by
        or a
        party to any material Contract relating to the Intellectual Property of any
        other person for the use of such Intellectual Property in the conduct of
        the
        business of the Company and the Subsidiaries, except for license agreements
        relating to Software licensed to the Company or a Subsidiary in the ordinary
        course of business, and works published under license as 

       

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      
        opposed
          to pursuant to a grant or assignment of rights; (z) to the knowledge of
          Seller,
          the conduct of the business of the Company and the Subsidiaries as presently
          conducted does not violate, conflict with or infringe in any material respect
          the Intellectual Property of any other person, and no person is engaging
          in any
          activity that infringes in any material respect any Company Intellectual
          Property; (xx) no claims are pending against the Company or any Subsidiary
          by
          any person with respect to the ownership, validity, enforceability,
          effectiveness or use in the business of the Company and the Subsidiaries
          of any
          Company Intellectual Property and (yy) during the past twelve months none
          of
          Seller, the Company or the Subsidiaries has received any written communication
          alleging that the Company or any Subsidiary infringed any rights relating
          to
          Intellectual Property of any person.

      

       

      (f)
          To
        the
        knowledge of Seller, no product, service, publication or advertising, marketing
        or promotional material of the Company or the Subsidiaries includes any
        defamatory statement or material that violates any rights of publicity or
        privacy of any person.

       

      (g)
          Definitions.

       

      (i)
          In
        this
        Agreement “Intellectual
        Property”
        means
        any patent (including all reissues, divisions, continuations and extensions
        thereof), patent application, patent right, trademark, trademark registration,
        trademark application, service mark, service mark application, service mark
        registration, trade dress, logo, trade name, business name, brand name,
        copyright, copyright registration or domain name, including any goodwill
        associated with any of the foregoing, Confidential Information, Software,
        web
        site content, database or any right to any of the foregoing.

       

      (ii)
          In
        this
        Agreement “Software”
        means
        all computer software of any nature whatsoever (including system software,
        application software, utility software, web sites, security software,
        programming software, middleware and firmware, modules and data files), in
        object and/or source code form as applicable. 

       

      (iii)
          In
        this
        Agreement “Confidential
        Information”
        means
        confidential and proprietary information, trade secrets, know-how, discoveries
        and inventions (whether patentable or unpatentable and whether or not reduced
        to
        practice), models, algorithms, processes and techniques, research and
        development information, customer lists, supplier lists, ideas, technical
        data,
        designs, drawings and specifications, to the extent any or all of the foregoing
        are not generally known in the industry.

       

      SECTION
        3.08.   Contracts. (a)
        Except
        as
        set forth in Schedule 3.08(a), neither the Company nor any Subsidiary
        is a
        party to or bound by any:

       

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

       

      (i)
          employment
        agreement or consulting agreement with a natural person that in either case
        has
        an aggregate future liability in excess of $75,000 and is not terminable
        by the
        Company or a Subsidiary by notice of not more than 60 days for a cost
        of
        less than $75,000;

       

      (ii)
          collective
        bargaining agreement or other contract with any labor organization, union
        or
        association;

       

      (iii)
          Contract
        containing a covenant not to compete, or other covenant restricting the
        development, manufacture, marketing or distribution of products and services
        of
        the Company or any Subsidiary, that limits the conduct of the business of
        the
        Company and its Subsidiaries as presently conducted (other than limitations
        or
        restrictions applicable to goods, services or rights to any Intellectual
        Property procured pursuant to such Contract);

       

      (iv)
          Contract
        with (A) Seller or any affiliate of Seller (other than the Company
        or a
        Subsidiary), (B) any person who since January 1, 2000 has been
        an
        officer, director or employee of the Company, a Subsidiary, Seller or any
        affiliate of Seller (other than employment agreements or consulting agreements
        with natural persons covered by clause (i) above) or (C) PRIMEDIA
        Inc.;

       

      (v)
          lease,
        sublease or similar Contract with any person (other than the Company or a
        Subsidiary) under which the Company or a Subsidiary is a lessor or sublessor
        of,
        or makes available for use to any person (other than the Company or a
        Subsidiary), (A) any Leased Property or (B) any portion of
        any
        premises otherwise occupied by the Company or a Subsidiary;

       

      (vi)
          lease,
        sublease or similar Contract with any person (other than the Company or a
        Subsidiary) under which (A) the Company or a Subsidiary is lessee
        of, or
        holds or uses, any machinery, equipment, vehicle or other tangible personal
        property owned by any person or (B) the Company or a Subsidiary is
        a lessor
        or sublessor of, or makes available for use by any person, any tangible personal
        property owned or leased by the Company or a Subsidiary, in any such case
        which
        has an aggregate future liability or receivable, as the case may be, in excess
        of $250,000 (exclusive of any indemnity obligation) and is not terminable
        by the
        Company or a Subsidiary by notice of not more than 60 days for a cost
        of
        less than $100,000;

       

      (vii)
          (A)
        continuing Contract for the future purchase of materials, supplies or equipment
        (other than purchase contracts and orders for inventory in the ordinary course
        of business consistent with past practice), (B) management, service,
        consulting or other similar Contract or (C) advertising Contract,
        in any
        such case which has a minimum or 

       

       

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

                

      
      

      
        fixed
          aggregate liability to any person (other than the Company or a Subsidiary)
          over
          the life of the Contract in excess of $100,000 and is not terminable by
          the
          Company or a Subsidiary by notice of not more than 60 days for a cost of
          less
          than $100,000;

      

       

      (viii)
          license,
        sublicense, option or other agreement relating in whole or in part to the
        Company Intellectual Property (including any license or other agreement under
        which the Company or a Subsidiary is licensee or licensor of any Intellectual
        Property) other than licenses, sublicenses, options and other agreements
        entered
        into in the ordinary course of business consistent with past
        practice;

       

      (ix)
          Contract
        under which the Company or a Subsidiary has borrowed any money from, or issued
        any note, bond, debenture or other evidence of indebtedness for borrowed
        money
        to, any person (other than the Company or a Subsidiary) or any other note,
        bond,
        debenture or other evidence of indebtedness for borrowed money of the Company
        or
        a Subsidiary (other than in favor of the Company or a Subsidiary);

       

      (x)
          Contract
        (including any so-called take-or-pay or keepwell agreements) under which
        (A) any person other than the Company or a Subsidiary, has guaranteed
        indebtedness, liabilities or obligations of the Company or a Subsidiary or
        (B) the Company or a Subsidiary has guaranteed indebtedness, liabilities
        or
        obligations of any person, other than the Company or another Subsidiary (in
        each
        case other than endorsements for the purpose of collection in the ordinary
        course of business);

       

      (xi)
          Contract
        under which the Company or a Subsidiary has, directly or indirectly, made
        any
        advance, loan, extension of credit or capital contribution to, or other
        investment in, any person (other than the Company or a Subsidiary and other
        than
        extensions of trade credit in the ordinary course of business), in any such
        case
        which, individually, is in excess of $100,000;

       

      (xii)
          material
        Contract granting a Lien upon any Leased Property or any other asset, which
        Lien
        is not set forth in Schedule 3.05(a) or Schedule 3.06;

       

      (xiii)
          Contract
        providing for indemnification of any person with respect to liabilities relating
        to any former business of the Company, a Subsidiary or any predecessor person
        (other than any Contract to purchase insurance for the benefit of any
        person);

       

      (xiv)
          Contract
        for the sale of any asset of the Company or a Subsidiary (other than inventory
        sales in the ordinary course of business) or the grant of any preferential
        rights to purchase any such asset or 

       

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

       

      
        requiring
          the consent of any party to the transfer thereof, other than any such Contract
          entered into in the ordinary course of business after the date of this
          Agreement
          and not in violation of this Agreement;

      

       

      
      

      (xv)
          Contract
        providing for the services of any dealer, distributor, sales representative,
        franchisee or similar representative involving the payment or receipt over
        the
        life of such Contract in excess of $100,000 by the Company or a Subsidiary;
        or

       

      (xvi)
          joint
        venture or partnership Contract (regardless of legal form).

       

      (b)
          All
        Contracts listed in Schedule 3.08(a) (the “Company
        Contracts”)
        are
        valid, binding and in full force and effect and are enforceable by the Company
        or the applicable Subsidiary in accordance with their terms (subject to
        applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
        moratorium and other laws affecting creditors’ rights generally, general
        principles of equity and the discretion of courts in granting equitable
        remedies), except to the extent any such Contract has expired pursuant to
        its
        terms and except for such failures to be valid, binding, in full force and
        effect or enforceable that have not had and would not reasonably be likely
        to
        have, individually or in the aggregate, a Company Material Adverse Effect.
        The
        Company or the applicable Subsidiary has performed all obligations required
        to
        be performed by it to date under the Company Contracts, and it is not (with
        or
        without the lapse of time or the giving of notice, or both) in breach or
        default
        in any respect thereunder and, to the knowledge of Seller, no other party
        to any
        Company Contract is (with or without the lapse of time or the giving of notice,
        or both) in breach or default in any respect thereunder, except for such
        noncompliance, breaches and defaults that have not had and would not reasonably
        be likely to have, individually or in the aggregate, a Company Material Adverse
        Effect. Complete and correct copies of all material Company Contracts, together
        with all modifications and amendments thereto, have been made available to
        Purchaser.

       

      SECTION
        3.09.   Insurance.
        The
        insurance policies maintained with respect to the Company and the Subsidiaries
        and their respective assets and properties are set forth on Schedule 3.09.
        All such policies are in full force and effect (other than those expiring
        pursuant to their terms which have been replaced prior to expiration), all
        premiums due and payable thereon have been paid (other than retroactive or
        retrospective premium adjustments that are not yet, but may be, required
        to be
        paid with respect to any period ending prior to the Closing Date), and no
        notice
        of cancellation or termination has been received with respect to any such
        policy
        which has not been replaced prior to the date of such cancellation. Purchaser
        acknowledges that all such insurance policies will terminate effective as
        of the
        close of business on the Closing Date and that such termination shall not
        constitute a breach of this Section 3.09 or Section 5.01.

       

      SECTION
        3.10.   Taxes. (a)
         For
        purposes of this Agreement:

       

      “Code”
        shall
        mean the Internal Revenue Code of 1986, as amended.

       

       

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

       

      “Income
        Tax”
        or
“Income
        Taxes”
        shall
        mean all Taxes based upon, measured by, or calculated with respect to, (i)
        gross
        or net income or gross or net receipts or profits (including any capital
        gains,
        minimum taxes and any Taxes on items of tax preference, but not including
        sales,
        use, goods and services, real or personal property transfer or other similar
        Taxes), (ii) multiple bases (including, but not limited to, corporate franchise,
        doing business or occupation Taxes) if one or more of the bases upon which
        such
        Tax may be based upon, measured by, or calculated with respect to, is described
        in clause (i) above or (iii) withholding taxes measured by, or calculated
        with
        respect to, any payments or distributions (other than wages).

       

      “Post-Closing
        Tax Period”
        shall
        mean any taxable period (or portion thereof) that begins on or after and
        ends
        after the Closing Date.

       

      “Pre-Closing
        Tax Period”
        shall
        mean all taxable periods (or portions thereof) beginning before and ending
        on or
        before the Closing Date.

       

      “Tax”
        or
“Taxes”
        shall
        mean all Federal, foreign, state, county, local, municipal and other taxes,
        assessments, duties or similar charges of any kind whatsoever, including
        all
        corporate franchise, income, sales, use, ad valorem, receipts, value added,
        profits, license, withholding, payroll, employment, excise, premium, property,
        customs, net worth, capital gains, transfer, stamp, documentary, social
        security, environmental, alternative minimum, occupation, recapture and other
        taxes, and including all interest, penalties and additions imposed with respect
        to such amounts, and all amounts payable pursuant to any Contract with respect
        to Taxes.

       

      “Tax
        Return”
        or
“Tax
        Returns”
        shall
        mean all returns, declarations of estimated tax payments, reports, estimates,
        information returns and statements, including any related or supporting
        information with respect to any of the foregoing, filed or to be filed with
        any
        Taxing Authority in connection with the determination, assessment, collection
        or
        administration of any Taxes.

       

      “Taxing
        Authority”
        shall
        mean any domestic, foreign, federal, national, state, county or municipal
        or
        other local government, any subdivision, agency, commission or authority
        thereof, or any quasi-governmental body exercising tax regulatory
        authority.

       

      (b)
          (i)
        The
        Company and each Subsidiary, and any affiliated group, within the meaning
        of
        Section 1504 of the Code, and any affiliated, consolidated, combined, unitary
        or
        similar group for Tax purposes other than federal Income Tax purposes of
        which
        the Company or any Subsidiary is a member (any such group, for federal Income
        Tax or other Tax purposes, an “Affiliated Group”), has filed or caused to be
        filed in a timely manner (within any applicable extension periods) all material
        Tax Returns required to be filed by the Code or by other applicable Tax laws,
        (ii) all such Tax Returns are correct and complete in all material respects
        to
        the extent they relate to the Company and the Subsidiaries, (iii) all material
        Taxes relating to the Company and the Subsidiaries with respect to taxable
        periods covered by such material Tax Returns, and all other material Taxes
        for
        which the Company or any Subsidiary is liable, whether or not 

       

       

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      reflected
        on a Tax Return, have been timely paid in full or will be timely paid in
        full by
        the due date thereof and the provision for Taxes due (as opposed to any reserve
        for deferred Taxes established to reflect temporary differences between book
        and
        Tax income) on the most recent audited financial statements for the Company
        reflect an adequate reserve for all Taxes payable by the Company and the
        Subsidiaries for all taxable periods and portions thereof through the date
        of
        such financial statements, (iv) there are no material Liens for Taxes with
        respect to any of the assets or properties of the Company or any Subsidiary
        and
        (v) the Company and the Subsidiaries have withheld and paid all material
        Taxes
        required to have been withheld and paid in connection with amounts paid or
        owing
        to any employee, former employee, creditor, independent contractor, shareholder,
        affiliate, customer, supplier or other third party. 

       

      (c)
          As
        of the
        date hereof, no material Tax Return of the Company, any Subsidiary or any
        Affiliated Group of which the Company or any Subsidiary is a member is under
        audit or examination by any Taxing Authority, and no written or unwritten
        notice
        of such an audit or examination has been received by the Company or any
        Subsidiary. No issues relating to Taxes were asserted in writing by any Taxing
        Authority in any completed or current audit or examination that would reasonably
        be expected to recur in a later taxable period. Neither the Company nor any
        Subsidiary (or any Affiliated Group of which the Company or any Subsidiary
        is a
        member) has participated in a “reportable transaction” within the meaning of
        Treasury Regulations Section 1.6011-4(b) or a “potentially abusive tax shelter”
        within the meaning of Section 6112(b) of the Code.

       

      (d)
          Each
        material deficiency resulting from any audit or examination relating to Taxes
        of
        the Company or any Subsidiary (including Taxes attributable to an Affiliated
        Group) by any Taxing Authority has been timely paid. The relevant statute
        of
        limitations is closed with respect to the Federal Tax Returns of the
        consolidated group of which the Company is a member for all years through
        1999.

       

      (e)
          There
        are
        no outstanding agreements or waivers extending, or having the effect of
        extending, the statutory period of limitation applicable to any material
        Tax
        Returns required to be filed with respect to any Affiliated Group of which
        the
        Company or any Subsidiary is a member.

       

      (f)
          Seller
        is
        not a “foreign person” within the meaning of Section 1445 of the Code. Neither
        the Company nor any Subsidiary: (i) has made any payments, is obligated to
        make
        any payments, or is a party to any agreement that under certain circumstances
        could require it to make any payments, that are not deductible under Section
        280G of the Code; (ii) is a “United States real property holding corporation”
        within the meaning of Section 897(c)(2) of the Code; (iii) has participated
        in
        or cooperated with an international boycott within the meaning of Section
        999 of
        the Code; (iv) is a party to any joint venture, partnership or other arrangement
        that is treated as a partnership for federal Income Tax purposes; (v) has
        received or is subject to any written ruling of a Taxing Authority related
        to
        Taxes or has entered into any written and legally binding agreement with
        a
        Taxing Authority relating to Taxes; or (vi) has waived any statute
        of
        limitations in respect of Taxes or agreed to any extension of time with respect
        

       

       

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

       

      to
        a Tax
        assessment or deficiency. There are no accounting method changes, or proposed
        or
        threatened accounting method changes, of the Company or any Subsidiary that
        could give rise to an adjustment under Section 481 of the Code for periods
        after
        the Closing Date. Neither the Company nor any Subsidiary has any liability
        for
        Taxes of any person or entity other than the Company or such Subsidiary
        (w) as a result of the Company or any Subsidiary being a member of
        an
        Affiliated Group other than an Affiliated Group that includes the Seller
        or
        (x) as a transferee or successor.

       

      SECTION
        3.11.   Proceedings.
        Schedule
        3.11 sets forth a list of each suit, action or proceeding (“Proceeding”)
        that
        is pending as of the date of this Agreement or, to the knowledge of Seller,
        threatened in a writing received within two years prior to (and which threat
        remains unresolved as of) the date of this Agreement and that (a) involves
        a claim for more than $100,000, (b) seeks any material injunctive
        relief
        with respect to the business of the Company and the Subsidiaries or
        (c) seeks any legal restraint on or prohibition against the transactions
        contemplated by this Agreement. Neither the Company nor any Subsidiary is
        a
        party or subject to or in default under any material Judgment. Except as
        set
        forth in Schedule 3.11, as of the date hereof, there is no Proceeding
        by
        the Company or any Subsidiary pending against any other person.

       

      SECTION
        3.12.   Benefit
        Plans. (a)
        Schedule 3.12(a)
        contains a list of each bonus, pension, profit sharing, deferred compensation,
        incentive compensation, stock ownership, stock purchase, stock appreciation,
        restricted stock, stock option, phantom stock, performance, retirement, thrift,
        savings, stock bonus, cafeteria, paid time off, vacation, severance,
        termination, retention, change of control, disability, death benefit,
        hospitalization, medical or other welfare benefit or other plan or program,
        whether written or oral, for the benefit of a single employee or more than
        one
        employee (a “Plan”),
        including each “employee pension benefit plan” (as defined in Section 3(2) of
        ERISA, whether or not subject to ERISA) (a “Pension
        Plan”)
        and
“employee welfare benefit plan” (as defined in Section 3(1) of ERISA, whether or
        not subject to ERISA) (a “Welfare
        Plan”),
        in
        each case maintained or contributed to, or required to be maintained or
        contributed to, by the Company or any other person or entity that, together
        with
        the Company, is or was treated as a single employer under Section 414(b),
        (c),
        (m) or (o) of the Code (each, together with the Company, a “Commonly
        Controlled Entity”),
        for
        the benefit of any present or former director, officer or employee of the
        Company or any Subsidiary (all the foregoing being herein called “Benefit
        Plans”).
        Each
        Benefit Plan maintained and sponsored solely by the Company and/or any
        Subsidiary or expressly assumed by Purchaser pursuant to Applicable Law or
        this
        Agreement is referred to herein as a “Company
        Benefit Plan”.
        Each
        Benefit Plan other than a Company Benefit Plan is referred to herein as a
        “Seller
        Benefit Plan”.
        Seller
        has made available to Purchaser complete and correct copies of (i) each Benefit
        Plan (or, in the case of any unwritten Benefit Plans, descriptions thereof),
        (ii) the most recent annual report on Form 5500 (including all schedules
        and
        attachments thereto) filed with the Internal Revenue Service with respect
        to
        each Benefit Plan (if any such report was required by Applicable Law), (iii)
        the
        most recent summary plan description (or similar document) for each Benefit
        Plan
        for which such a summary plan description is required by Applicable Law or
        was
        otherwise provided to plan participants or beneficiaries, (iv) each trust
        agreement and insurance or annuity contract or other funding or financing
        arrangement relating to any 

       

       

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

       

      Benefit
        Plan and (v) the most recent actuarial valuation report for each Company
        Benefit
        Plan that is a defined benefit pension plan. 

       

      (b)
          Each
        of
        the WRC Media Inc. 401(k) plan (“Seller’s
        401(k) Plan”)
        and
        each Company Benefit Plan has been administered in all material respects
        in
        accordance with its terms and is in compliance in all material respects with
        the
        applicable provisions of ERISA, the Code, all other Applicable Laws and the
        terms of all applicable collective bargaining agreements. Except as has not
        had
        or could not reasonably be expected to have, individually or in the aggregate,
        a
        Company Material Adverse Effect, there are no investigations by any Governmental
        Entity, termination proceedings or other claims (except routine claims for
        benefits payable under the Company Benefit Plans or Seller’s 401(k) Plan) or
        Proceedings against or involving any Company Benefit Plan or Seller’s 401(k)
        Plan that could give rise to any liability.

       

      (c)
          There
        has
        been no application for waiver or waiver of the minimum funding standards
        imposed by Section 412 of the Code with respect to any Company Benefit Plan
        that
        is a Pension Plan (a “Company
        Pension Plan”).
        No
        Company Pension Plan has or had at any time during the current year an
“accumulated funding deficiency” within the meaning of Section 412(a) of the
        Code.

       

      (d)
          Each
        of
        Seller’s 401(k) Plan and each Company Pension Plan intended to be qualified
        under Section 401(a) of the Code, and the trust (if any) forming a part thereof,
        (i) has received a determination letter from the Internal Revenue
        Service
        as to its qualification under Section 401(a) of the Code and to the effect
        that
        each such trust is exempt from taxation under Section 501(a) of the Code;
        no
        such determination letter has been revoked, and, to the knowledge of Seller
        and
        the Company, revocation has not been threatened; and (ii) has at all
        times
        during the past two years been so qualified. Seller has made available to
        Purchaser a copy of the most recent determination letter received with respect
        to Seller’s 401(k) Plan and each Company Pension Plan for which such a letter
        has been issued.

       

      (e)
          Except
        as
        has not have and could not reasonably be expected to have, individually or
        in
        the aggregate, a Company Material Adverse Effect, no Commonly Controlled
        Entity
        has incurred or would be reasonably expected to incur any actual or contingent
        liability to the Pension Benefit Guaranty Corporation (other than for the
        payment of premiums not yet due) that has not been fully paid as of the date
        hereof.

       

      (f)
          No
        Commonly Controlled Entity is required to contribute to any “multiemployer plan”
        (as defined in Section 4001(a)(3) of ERISA), no Benefit Plan is a multiemployer
        plan, and no employee benefit plan (that would be treated as a Benefit Plan
        if
        it were still in existence) has been terminated within the six years prior
        to
        the date hereof, the liabilities of which have not been satisfied in
        full.

       

      (g)
          No
        Company Benefit Plan that is a Welfare Plan provides benefits after termination
        of employment, except where the cost thereof is borne entirely by the former
        employee (or his eligible dependents or beneficiaries) or as required by
        Section
        4980B(f) of the Code or any similar Applicable Law.

       

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

       

       

      (h)
          No
        employee of the Company or any Subsidiary will be entitled to any additional
        compensation, severance or other benefits or any acceleration of the time
        of
        payment or vesting of any compensation, severance or other benefits as a
        result
        of the transactions contemplated by this Agreement (alone or in combination
        with
        any other event). Neither the execution and delivery of this Agreement, nor
        the
        consummation of any transaction contemplated by this Agreement will trigger
        any
        funding (through a grantor trust or otherwise) of any compensation, severance
        or
        other benefits under any Company Benefit Plan.

       

      (i)
          Except
        as
        disclosed on Schedule 3.12(i), no Company Benefit Plan is described
        in
        Section 401(a)(1) of ERISA. The obligations under each such Company
        Benefit
        Plan described in Section 401(a)(1) of ERISA are fully funded by assets
        that are held in the “rabbi” trusts that are identified on
        Schedule 3.12(i).

       

      SECTION
        3.13.   Absence
        of Changes or Events.
        Since
        the date of the Unaudited Balance Sheet, there has not been any Company Material
        Adverse Effect, nor has there been any event that would be reasonably likely
        to
        have, individually or in the aggregate, a Company Material Adverse Effect.
        Purchaser acknowledges that there may have been or may be disruption to the
        Company’s and the Subsidiaries’ business as a result of the announcement by
        Seller of its intention to sell the Company or the execution of this Agreement
        and the consummation of the transactions contemplated hereby, and Purchaser
        acknowledges that such disruptions do not and shall not constitute a breach
        of
        this Section 3.13 or Section 5.01. Since the date of the Unaudited
        Balance Sheet, the business of the Company and the Subsidiaries has been
        conducted in the ordinary course and in substantially the same manner as
        previously conducted. Since the date of the Unaudited Balance Sheet to the
        date
        of this Agreement, neither the Company nor any Subsidiary has taken any action
        that, if taken after the date of this Agreement, would constitute a breach
        of
        Section 5.01.

       

      SECTION
        3.14.   Compliance
        with Applicable Laws. (a)
         The
        Company and the Subsidiaries are in compliance with all Applicable Laws,
        except
        for instances of noncompliance that have not had and would not reasonably
        be
        likely to have, individually or in the aggregate, a Company Material Adverse
        Effect. None of Seller, the Company and the Subsidiaries has received any
        written communication during the past twelve months from a Governmental Entity
        that alleges that the Company or a Subsidiary is not in compliance in any
        respect with any Applicable Law, which allegation if proven would reasonably
        be
        likely to have, individually or in the aggregate, a Company Material Adverse
        Effect. The Company and the Subsidiaries are in material compliance with
        all
        governmental qualifications, registrations, licenses, permits, approvals,
        consents or other authorizations from a Governmental Entity (“Permits”)
        required for the operation of the businesses of the Company and the Subsidiaries
        as currently conducted, except for any failures to be in compliance that
        have
        not had and would not be reasonably likely to have, individually or in the
        aggregate, a Company Material Adverse Effect. This Section 3.14(a)
        does not
        relate to matters with respect to Taxes, which are the subject of
        Section 3.10, or to environmental matters, which are the subject of
        Section 3.14(b). 

       

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

       

      (b)
          Except
        for matters that would not reasonably be likely to have a Company Material
        Adverse Effect, (i) the Company and the Subsidiaries are in compliance
        with
        Environmental Laws, (ii) the Company and the Subsidiaries hold, and
        are in
        compliance with, all material Permits required under Environmental Laws for
        the
        Company and the Subsidiaries to conduct their respective business operations,
        (iii) the Company and the Subsidiaries have not entered into or agreed
        to
        any court decree or order, are not subject to any Judgment, and have not
        received any written notices or complaints relating to compliance with, or
        liability under, any Environmental Law, (iv) no releases of Hazardous
        Materials have occurred at, from, in, to, on or under any property currently
        or,
        to Seller’s knowledge, formerly owned, operated or leased by the Company or any
        Subsidiary or any current or, to Seller’s knowledge, former subsidiary thereof
        which releases would be reasonably likely to result in liability to the Company
        or any Subsidiary, and (v) neither the Company or any Subsidiary,
        any
        current or, to Seller’s knowledge, former subsidiary thereof, nor, to Seller’s
        knowledge, any predecessor of any of the foregoing has transported or arranged
        for the treatment, storage, disposal or transportation of any Hazardous
        Materials to any off-site location which would be reasonably likely to result
        in
        liability to the Company or any Subsidiary. The term “Environmental
        Laws”
        means
        all Applicable Laws or Judgments relating to the environment, preservation
        or
        reclamation of natural resources, the protection of human health or worker
        health and safety, or the management, use, handling, generation, treatment,
        storage, transportation, disposal, labeling, release, threatened release
        of or
        exposure of any Person to Hazardous Materials. The term “Hazardous
        Materials”
        means
        (1) any radioactive materials or wastes, petroleum (including crude
        oil or
        any fraction thereof) or asbestos containing materials and (2) any
        other
        wastes, materials, chemicals or substances regulated pursuant to any
        Environmental Law.

       

      SECTION
        3.15.   Transactions
        with Affiliates.
        None of
        the Contracts set forth in Schedule 3.08(a) between the Company or
        any
        Subsidiary, on the one hand, and Seller or any of its affiliates (other than
        the
        Company and the Subsidiaries), on the other hand, will continue in effect
        subsequent to the Closing. After the Closing none of Seller, any affiliates
        of
        Seller (other than the Company and the Subsidiaries) or PRIMEDIA Inc. will
        have
        any material interest in any property (real or personal, tangible or intangible)
        or Contract of the Company or any Subsidiary or used in or pertaining to
        their
        business.

       

      SECTION
        3.16.   Accounts;
        Safe Deposit Boxes; Officers and Directors.
        Schedule 3.16 sets forth (i) a true and correct list of all
        bank and
        savings accounts, certificates of deposit and safe deposit boxes of the Company
        and the Subsidiaries and those persons authorized to sign thereon, and
        (ii) a true and correct list of all officers and directors of the
        Company
        and the Subsidiaries.

       

      SECTION
        3.17.   Interests
        in Assets.
        Seller
        and its affiliates, other than the Company and the Subsidiaries, do not own
        any
        asset used in the conduct of the businesses of the Company and the Subsidiaries,
        except for assets used to provide corporate level services to the
        Company.

       

       

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

       

      ARTICLE
        IV 

       

      Representations
        and Warranties of Purchaser

       

      Purchaser
        hereby represents and warrants to Seller as follows:

       

      SECTION
        4.01.   Organization,
        Standing and Power.
        Purchaser is duly organized, validly existing and in good standing under
        the
        laws of the jurisdiction in which it is organized and has full corporate
        power
        and authority and possesses all governmental franchises, licenses, permits,
        authorizations and approvals necessary to enable it to own, lease or otherwise
        hold its properties and assets and to carry on its business as presently
        conducted, other than such franchises, licenses, permits, authorizations
        and
        approvals the lack of which have not had and would not reasonably be likely
        to
        have a material adverse effect on the ability of Purchaser to consummate
        the
        Acquisition (a “Purchaser
        Material Adverse Effect”).

       

      SECTION
        4.02.   Authority;
        Execution and Delivery; and Enforceability.
        Purchaser has full corporate power and authority to execute this Agreement
        and
        the Ancillary Agreements to which it is, or is specified to be, a party and
        to
        consummate the Acquisition and the other transactions contemplated hereby
        and
        thereby. The execution and delivery by Purchaser of this Agreement and the
        Ancillary Agreements to which it is, or is specified to be, a party and the
        consummation by Purchaser of the Acquisition and the other transactions
        contemplated hereby and thereby have been duly authorized by all necessary
        corporate action. Purchaser has duly executed and delivered this Agreement
        and
        at or prior to the Closing will have duly executed and delivered each Ancillary
        Agreement to which it is, or is specified to be, a party, and this Agreement
        constitutes, and each Ancillary Agreement to which it is, or is specified
        to be,
        a party will after the Closing constitute, its legal, valid and binding
        obligation, enforceable against it in accordance with its terms.

       

      SECTION
        4.03.   No
        Conflicts; Consents.
        The
        execution and delivery by Purchaser of this Agreement do not, the execution
        and
        delivery by Purchaser of each Ancillary Agreement to which it is, or is
        specified to be, a party will not, and the consummation of the Acquisition
        and
        the other transactions contemplated hereby and thereby and compliance by
        Purchaser with the terms hereof and thereof will not conflict with, or result
        in
        any violation of or default (with or without notice or lapse of time, or
        both)
        under, or give rise to a right of termination, cancellation or acceleration
        of
        any obligation or to loss of a material benefit under, or result in the creation
        of any Lien upon any of the properties or assets of Purchaser or any of its
        subsidiaries under, any provision of (i) the certificate of incorporation
        or by-laws of Purchaser or any of its subsidiaries, (ii) any Contract
        to
        which Purchaser or any of its subsidiaries is a party or by which any of
        their
        respective properties or assets is bound or (iii) any Judgment or
        Applicable Law applicable to Purchaser or any of its subsidiaries or their
        respective properties or assets, other than, in the case of clauses (ii)
        and
        (iii) above, any such items that have not had and would not reasonably be
        likely
        to have a Purchaser Material Adverse Effect. No Consent of or registration,
        declaration or filing with any Governmental Entity is required to be obtained
        or
        made by or with respect to Purchaser or any of its subsidiaries in connection
        

       

       

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      with
        the
        execution, delivery and performance of this Agreement or any Ancillary Agreement
        or the consummation of the Acquisition or the other transactions contemplated
        hereby and thereby, other than (A) compliance with and filings under
        the
        HSR Act, (B) compliance with and filings under Section 13(a)
        of the
        Exchange Act and (C) those that may be required solely by reason of
        the
        participation of Seller (as opposed to any other third party) in the Acquisition
        and other transactions contemplated hereby and by the Ancillary
        Agreements).

       

      SECTION
        4.04.   Litigation.
        There
        are not any (a) outstanding Judgments against Purchaser or any of
        its
        subsidiaries, (b) Proceedings pending or, to the knowledge of Purchaser,
        threatened against Purchaser or any of its subsidiaries or
        (c) investigations by any Governmental Entity that are, to the knowledge
        of
        Purchaser, pending or threatened against Purchaser or any of its subsidiaries
        that, in any case have had or would reasonably be likely to have a Purchaser
        Material Adverse Effect.

       

      SECTION
        4.05.   Securities
        Act.
        The
        Shares purchased by Purchaser pursuant to this Agreement are being acquired
        for
        investment only and not with a view to any public distribution thereof, and
        Purchaser shall not offer to sell or otherwise dispose of the Shares so acquired
        by it in violation of any of the registration requirements of the Securities
        Act.

       

      SECTION
        4.06.   Availability
        of Funds.
        Purchaser has cash available or has existing borrowing facilities that are
        sufficient to enable it to consummate the Acquisition. Any financing required
        to
        consummate the Acquisition is referred to in this Agreement as the “Financing”.
        Purchaser does not have any reason to believe that any of the conditions
        to the
        Financing will not be satisfied or that the Financing will not be available
        to
        Purchaser on a timely basis to consummate the Acquisition.

       

      ARTICLE
        V

       

      Covenants

       

      SECTION
        5.01.   Covenants
        Relating to Conduct of Business. (a)
         Except
        for matters set forth in Schedule 5.01 or otherwise contemplated by
        the
        terms of this Agreement, including any actions taken in furtherance of the
        separation of the Company and the Subsidiaries from Seller and its other
        affiliates, from the date of this Agreement to the Closing, Seller shall
        cause
        the businesses of the Company and the Subsidiaries to be conducted in the
        usual,
        regular and ordinary course in substantially the same manner as previously
        conducted and, to the extent consistent therewith, use commercially reasonable
        efforts to keep intact their respective businesses, keep available the services
        of their current employees and preserve their relationships with customers,
        suppliers, licensors, licensees, distributors and others with whom they deal
        to
        the end that their respective businesses shall not be materially impaired
        at the
        Closing; provided,
        however,
        that
        Seller shall not be obligated to, directly or indirectly, provide any funds
        to
        the Company or any Subsidiary. In addition (and without limiting the generality
        of the foregoing), except as set forth in Schedule 5.01 or otherwise
        contemplated by the terms 

       

       

       

       

      
        
          
          

        

        
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      of
        this
        Agreement, Seller shall not permit the Company or any Subsidiary to do any
        of
        the following without the prior written consent of Purchaser:

       

      (i)
          amend
        its
        certificate of incorporation, by-laws or comparable governing
        instruments;

       

      (ii)
          declare
        or pay any dividend or make any other distribution to its stockholders;
provided,
        however,
        that
        (A) Purchaser acknowledges that the Company and the Subsidiaries do
        not
        maintain cash balances and, at or prior to the close of business on the day
        immediately preceding the Closing Date, Seller will withdraw any cash balances
        of the Company and the Subsidiaries and (B) dividends and distributions
        may
        continue to be made by the Subsidiaries to the Company;

       

      (iii)
          redeem
        or
        otherwise acquire any shares of its capital stock or issue any capital stock
        or
        any option, warrant or right relating thereto or any securities convertible
        into
        or exchangeable for any shares of capital stock; provided,
        however,
        that
        any Subsidiary may redeem or otherwise acquire shares of its capital
        stock;

       

      (iv)
          (A)
        adopt
        or amend in any material respect any Company Benefit Plan (or any plan that
        would be a Company Benefit Plan if adopted) or (B) enter into, adopt, extend
        (beyond the Closing Date), renew or amend any collective bargaining agreement
        or
        other Contract with any labor organization, union or association, except
        in each
        case as required by Applicable Law; provided
        that
        Seller may adopt or amend any Benefit Plan if the cost to Seller or its
        subsidiaries (including the Company) and affiliates of providing the benefits
        thereunder is not materially increased;

       

      (v)
          grant
        to
        any employee of the Company or any Subsidiary whose annual base salary exceeds
        $100,000 annually as of the date hereof any increase in compensation or
        benefits, except in the ordinary course of business and consistent with past
        practice or as may be required under existing agreements or Applicable Law
        and
        except for any bonuses or other compensation in connection with the sale
        of the
        Company for which Seller shall be solely obligated;

       

      (vi)
          incur
        or
        assume any indebtedness for borrowed money or guarantee any such indebtedness,
        other than under the revolving facility under the Credit Facilities, or incur
        any other liabilities or obligations other than in the ordinary course of
        business consistent with past practice;

       

      (vii)
          grant
        any
        Lien on any of its assets that would have been required to be set forth in
        Schedule 3.05(a) or 3.06 if existing on the date of this
        Agreement;

       

       

       

      
        
          
          

        

        
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      (viii)
          pay,
        loan
        or advance any amount to, or sell, transfer or lease any of its assets to,
        or
        enter into any agreement or arrangement with, Seller or any of its affiliates,
        except for (A) transactions among the Company and the Subsidiaries,
        (B) dividends and distributions permitted under clause (ii)
        above and
        (C) intercompany transactions in the ordinary course of business consistent
        with past practice;

       

      (ix)
          make
        any
        material change in any method of accounting or accounting practice or policy
        other than those required by GAAP;

       

      (x)
          acquire
        by merging or consolidating with, or by purchasing a substantial portion
        of the
        assets or capital stock of or other equity interests in, or by any other
        manner,
        any business or any corporation, partnership, association or other business
        organization or division thereof or otherwise acquire any assets (other than
        inventory or Intellectual Property) that are material;

       

      (xi)
          make
        or
        incur any capital expenditure that is not currently approved in writing or
        budgeted and that, individually, is in excess of $250,000 or make or incur
        any
        such expenditures which, in the aggregate, are in excess of
        $500,000;

       

      (xii)
          sell,
        lease, license or otherwise dispose assets, except in the ordinary course
        of
        business and consistent with past practice;

       

      (xiii)
          enter
        into any lease of real property or exercise any material option under any
        lease,
        except any renewals or extensions of existing leases in the ordinary course
        of
        business and consistent with past practice (after consulting with Purchaser),
        or
        demolish or materially alter any Leased Property, except as required by the
        applicable Lease or Applicable Law;

       

      (xiv)
          modify,
        amend, terminate or permit the lapse of any lease of, or reciprocal easement
        agreement, operating agreement or other material agreement relating to, real
        property (except modifications or amendments associated with renewals of
        existing leases in the ordinary course of business and consistent with past
        practice (after consultation with Purchaser) and except for the lapse of
        any
        lease set forth in Schedule 3.06 in accordance with its
        terms);

       

      (xv)
          make,
        revoke or change any Tax election, adopt or change any Tax accounting method
        or
        period, file any amended Tax Return or settle any Tax claim or assessment,
        if
        any such action could reasonably be expected to have the effect of materially
        increasing the Tax liability of Purchaser, the Company or any Subsidiary
        during
        any Post-Closing Period; or

       

       

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      (xvi)
          authorize
        any of, or commit or agree to take, whether in writing or otherwise, to do
        any
        of, the foregoing actions.

       

      (b)
          Insurance.
        Seller
        shall keep, or cause to be kept, all insurance policies set forth in
        Schedule 3.09 or suitable replacements therefor, in full force and
        effect
        through the close of business on the Closing Date. Any and all insurance
        policies maintained with respect to the Company and the Subsidiaries and
        their
        respective assets and properties are owned and maintained by Seller and its
        affiliates (other than the Company and the Subsidiaries), and none of Purchaser,
        the Company or any Subsidiary will have any rights under any such insurance
        policies from and after the Closing Date; provided,
        however,
        that
        with respect to workers compensation, general liability and umbrella (to
        the
        extent relating to workers compensation and general liability coverage)
        insurance coverage written on an “occurrence basis”, to the extent the Company
        or a Subsidiary was an insured under such policies and the events giving
        rise to
        a claim under such policies occurred prior to 11:59 p.m. on the day immediately
        preceding the Closing Date, Seller agrees to cooperate with Purchaser, the
        Company and any Subsidiary in making claims under Seller’s insurance policies
        with respect to such insurable events that occurred prior to 11:59 p.m. on
        the
        day immediately preceding the Closing Date, and shall remit any recoveries
        relating thereto promptly to Purchaser. After the Closing, Seller agrees
        to
        cooperate with Purchaser, the Company and any Subsidiary in the submission
        of
        any claim by the Company or any Subsidiary under Seller Parent’s errors and
        omissions, directors and officers and umbrella (to the extent relating to
        errors
        and omissions) insurance policies, to the extent that the events giving rise
        to
        such claim under such policies occurred prior to 11:59 p.m. on the
        day
        immediately preceding the Closing Date (it being understood that neither
        Seller
        Parent nor any of its affiliates shall be obligated to continue in effect
        or
        maintain policies providing such insurance) and Seller agrees to remit any
        recoveries relating thereto promptly to Purchaser.

       

      SECTION
        5.02.   Access
        to Information.
        Seller
        shall, and shall cause the Company and the Subsidiaries to, afford to Purchaser
        and its accountants, counsel and other representatives reasonable access,
        upon
        reasonable notice, during normal business hours during the period prior to
        the
        Closing, to the management, employees, properties, books, Contracts, Tax
        Returns
        and records of the Company and the Subsidiaries, and, during such period
        shall
        furnish promptly to Purchaser any information concerning the Company or a
        Subsidiary as Purchaser may reasonably request; provided,
        however,
        that
        such access does not unreasonably disrupt the normal operations of the Company
        and the Subsidiaries. During the period commencing on the date of this Agreement
        and ending at the time of the Closing, Seller shall inform, without
        representation or warranty, Purchaser of the commencement of any Proceeding
        or
        receipt of written notice of any threat of a Proceeding which, had such
        Proceeding been commenced or written notice been received prior to the date
        of
        this Agreement, would have been required to be disclosed on Schedule
        3.11.

       

      SECTION
        5.03.   Confidentiality. (a)
         Purchaser
        acknowledges that the information being provided to it in connection with
        the
        Acquisition and the consummation of the other transactions contemplated hereby
        is subject to the terms of a confidentiality agreement between Purchaser
        and WRC
        Media Inc. dated January 21, 

       

       

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      

        2005
          (the
          “Confidentiality
          Agreement”),
          the
          terms of which are incorporated herein by reference. Effective upon, and
          only
          upon, the Closing, the Confidentiality Agreement shall terminate with respect
          to
          information relating solely to the Company and the Subsidiaries; provided,
          however,
          that
          Purchaser acknowledges that any and all other information provided to it
          by
          Seller, its affiliates or their representatives concerning Seller and its
          affiliates (other than the Company and the Subsidiaries) shall remain subject
          to
          the terms and conditions of the Confidentiality Agreement after the Closing
          Date.

         

                  (b) 
          From
          and
          after the Closing Date until the date that is the second anniversary of
          the
          Closing Date, Seller shall, and shall cause its affiliates to, keep confidential
          any information relating to the Company or any Subsidiary except for any
          such
          information that (i) is available to the public on the Closing Date, (ii)
          thereafter becomes available to the public other than as a result of a
          disclosure by Seller or any of its affiliates, or (iii) is or becomes available
          to Seller or any of its affiliates on a non-confidential basis from a source
          other than the Company or any of its affiliates, provided that such source
          is
          not known by Seller to bound by a confidentiality agreement with or other
          obligation of secrecy to the Company or any of its affiliates. 
          Should
          Seller or any affiliate thereof be required to disclose any such information
          in
          response to legal or administrative process, it shall inform Purchaser
          in
          writing of such request or obligation as soon as possible and, if possible,
          before any information is disclosed, so that a protective order or other
          appropriate remedy may be obtained by Purchaser.  If Seller or any
          affiliate thereof is obligated to make such disclosure, it may make such
          disclosure only to the extent to which it is so obligated, but not further
          or
          otherwise.

         

      

      (c)
          At
        the
        Closing, Seller shall assign, or cause to be assigned, to Purchaser all
        confidentiality, nondisclosure or similar agreements executed by or on behalf
        of
        Seller or any affiliate thereof in connection with the possible sale of the
        Company, to the extent that (A) the Company is not a party to such
        agreements and (B) such agreements are assignable to Purchaser.

       

      SECTION
        5.04.   Commercially
        Reasonable Efforts. (a)
        On
        the
        terms and subject to the conditions of this Agreement, each party shall use
        its
        commercially reasonable efforts to cause the Closing to occur, including
        (i) taking all reasonable actions necessary to comply promptly with
        all
        legal requirements that may be imposed on it or any of its affiliates with
        respect to the Closing and (ii) in the case of Seller, using commercially
        reasonable efforts to cause the conditions set forth in Sections 6.01(c)
        and 6.03(d) to be satisfied.

       

      (b)
          Each
        of
        Seller and Purchaser shall as promptly as practicable, but in no event later
        than ten business days following the execution and delivery of this Agreement,
        file with the United States Federal Trade Commission (the “FTC”)
        and
        the United States Department of Justice (the “DOJ”)
        the
        notification and report form, if any, required for the transactions contemplated
        hereby and any supplemental information requested in connection therewith
        pursuant to the HSR Act. Any such notification and report form and supplemental
        information shall be in substantial compliance with the requirements of the
        HSR
        Act. Each of Seller and Purchaser shall furnish to the other 

       

       

       

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

       

      
        such
          necessary information and reasonable assistance as the other may request
          in
          connection with its preparation of any filing or submission that is necessary
          under the HSR Act. Seller and Purchaser shall keep each other apprised
          of the
          status of any communications with, and any inquiries or requests for additional
          information from, the FTC and the DOJ and shall comply promptly with any
          such
          inquiry or request and shall promptly provide any supplemental information
          requested in connection with the filings made hereunder pursuant to the
          HSR Act.
          Any such supplemental information shall be in substantial compliance with
          the
          requirements of the HSR Act. Each party shall use its commercially reasonable
          efforts to obtain any clearance required under the HSR Act for the consummation
          of the transactions contemplated by this Agreement. For purposes of this
          Section
          5.04, the “commercially reasonable efforts” of Purchaser shall include (i)
          opposing any motion or action for a temporary, preliminary or permanent
          injunction against the Acquisition and (ii) entering into a consent decree
          containing Purchaser’s agreement to hold separate and divest (pursuant to terms
          required by any Governmental Entity) the products and assets of the Company
          and
          the Subsidiaries or Purchaser and its affiliates, as the case may be, as
          required by any Governmental Entity; provided, however, that
          Purchaser’s obligations in such regard shall not preclude Purchaser from seeking
          in good faith to negotiate the terms of any such consent decree so as to
          minimize any adverse impact to the business of the Company or Purchaser
          or
          both.

      

       

      (c)
          Purchaser
        acknowledges that consents and waivers with respect to the transactions
        contemplated by this Agreement and the Ancillary Agreements may be required
        from
        parties to Contracts to which the Company or any of the Subsidiaries is a
        party,
        including certain of the Contracts listed on the Disclosure Schedule or with
        respect to other assets and that such consents and waivers have not been
        obtained. Purchaser agrees that Seller shall not have any liability whatsoever
        to Purchaser arising out of or relating to the failure to obtain any consents
        or
        waivers that may be required in connection with the transactions contemplated
        by
        this Agreement or the Ancillary Agreements or because of the termination
        of any
        Contract as a result thereof. Purchaser further agrees that no representation,
        warranty or covenant of Seller contained herein shall be breached or deemed
        breached, and no condition shall be deemed not satisfied, as a result of
        (a) the failure to obtain any such consent or waiver, (b) any
        such
        termination or (c) any lawsuit, action, proceeding or investigation
        commenced or threatened by or on behalf of any person arising out of or relating
        to the failure to obtain any such consent or any such termination.
        Notwithstanding that any such consent is not obtained prior to the Closing,
        the
        Closing shall take place on the terms set forth herein. The provisions of
        this
        Section 5.04 do not modify the representations and warranties contained
        in
        Sections 2.03 or 3.03, nor do they limit the applicability of the condition
        set
        forth in Section 6.02(a).

       

      SECTION
        5.05.    Expenses;
        Transfer Taxes. (a)
         Whether
        or not the Closing takes place, and except as set forth in
        Sections 5.09(b), all costs and expenses incurred in connection with
        this
        Agreement and the Ancillary Agreements and the transactions contemplated
        hereby
        and thereby shall be paid by the party incurring such expense, including
        all
        costs and expenses incurred pursuant to Sections 1.04 (except as provided
        in Section 1.04(b)), and, in the event the Closing takes place, all such
        out-of-pocket costs and expenses incurred by the Company shall be paid or
        reimbursed by Seller.

       

       

      
        
          
          

        

        
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      (b)
          All
        Transfer Taxes applicable to the transfer of the Shares shall be shared equally
        by Seller and Purchaser. Each party shall use reasonable efforts to avail
        itself
        of any available exemptions from any such Taxes, and to cooperate with the
        other
        parties in providing any information and documentation that may be necessary
        to
        obtain such exemptions.

       

      SECTION
        5.06.   Brokers
        or Finders.
        Each of
        Purchaser and Seller represents, as to itself and its affiliates, that no
        agent,
        broker, investment banker or other firm or person is or will be entitled
        to any
        broker’s or finder’s fee or any other commission or similar fee in connection
        with any of the transactions contemplated by this Agreement, except, as to
        Seller, Goldman, Sachs & Co., whose fees and expenses will be paid by
        Seller.

       

      SECTION
        5.07.   Tax
        Matters. (a)
         Return
        Filings.
        For any
        taxable period of the Company or any Subsidiary that ends on or before the
        Closing Date, Seller shall be responsible for timely preparing and filing
        with
        the appropriate authorities all Federal Income Tax Returns (including amended
        Returns required to be filed as a result of examination adjustments) and
        all
        other Tax Returns with respect to Income Taxes for which the Company or any
        Subsidiary is a member of an Affiliated Group, each of which shall be prepared
        in a manner consistent with past practice except to the extent required by
        law,
        and shall pay all Taxes due with respect to such Tax Returns (including as
        a
        result of an audit or examination of any such Tax Return). Purchaser shall
        be
        responsible for preparing and filing with the appropriate authorities all
        other
        Tax Returns of the Company or any Subsidiary and shall pay all Taxes due
        with
        respect to all other such Tax Returns.

       

      (b)
          Straddle
        Period.
        For any
        taxable period of the Company or any Subsidiary that includes, but does not
        end
        on, the Closing Date (the “Straddle
        Period”),
        Purchaser shall timely file and prepare with the appropriate authorities
        all Tax
        Returns required to be filed, with the consultation of the Seller, and shall
        pay
        all Taxes due with respect to such Tax Returns; provided, however, that Seller
        shall reimburse Purchaser for any amount owed by Seller with respect to a
        Pre-Closing Tax Period covered by such Tax Returns (as determined in accordance
        with Section 9.01(d)), such reimbursement to be made by Seller to Purchaser
        not
        later than five business days before the due date (including any extension
        thereof) for payment of Taxes with respect to such Tax Return (or, if later,
        five business days after receipt of a copy of such Tax Return, in final draft
        form, from Purchaser).

       

      (c)
          Cooperation.
        Seller
        and Purchaser shall reasonably cooperate, and shall cause their respective
        affiliates, officers, employees, agents, auditors and representatives reasonably
        to cooperate, in preparing and filing all Tax Returns, including maintaining
        and
        making available to each other all records necessary in connection with Taxes
        and in resolving all disputes and audits with respect to all taxable periods
        relating to Taxes. Seller and its affiliates, on the one hand, and Purchaser
        and
        its affiliates (including the Company and the Subsidiaries), on the other
        hand,
        will need access, from time to time, after the Closing Date, to certain
        accounting and Tax records and information held by the Company and the
        Subsidiaries, on the one hand, or the Seller or 

       

       

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

       

       

      its
        affiliates, on the other hand, to the extent such records and information
        pertain to the Company and the Subsidiaries and relate to events occurring
        prior
        to the Closing Date. Therefore, each of the Seller and Purchaser shall (or
        the
        Purchaser shall cause the Company and Subsidiaries to) (i) use its reasonable
        best efforts to properly retain and maintain such records until such time
        as
        each party agrees that such retention and maintenance is no longer necessary
        and
        (ii) allow each party and its agents and representatives (and agents or
        representatives of any of its affiliates), at times and dates mutually
        acceptable to the parties, to inspect, review and make copies of such records
        as
        each party may deem necessary or appropriate from time to time, such activities
        to be conducted during normal business hours and at the other party’s expense.
        Each such party shall make its employees available on a mutually convenient
        basis to provide explanations of any documents or information provided
        hereunder.

       

      (d)
          Refunds
        and Credits.
        Any
        refund or credit of Federal Income Taxes of the Company or any Subsidiary,
        or of
        any other Tax, for any taxable period ending on or before the Closing Date
        shall
        be for the account of the Seller. Any other refund or credit of any other
        Tax is
        for the account of the Purchaser. Following the Closing, the Company and
        the
        Subsidiaries shall make an election under Section 172(b)(3) of the Code (or
        any
        comparable provision under state or local laws) to forego the carryback of
        net
        operating losses of the Company or the Subsidiaries to any Pre-Closing Tax
        Period.

       

      (e)
          Tax
        Sharing Agreements.
        Seller
        shall cause the provisions of any Tax sharing agreement between (i) Seller
        or
        any of its affiliates (other than the Company and the Subsidiaries) and (ii)
        the
        Company or any Subsidiary to be terminated on or before the Closing Date.
        After
        the Closing Date, no party shall have any rights or obligations under any
        such
        Tax sharing agreement.

       

      (f)
          338
        Elections.
        Purchaser and Seller shall not make an election under Section 338(h)(10)
        of the
        Code (or any comparable election under state or local Tax laws). Purchaser
        shall
        not make an election under Section 338(g) of the Code (or any comparable
        election under state or local Tax laws).

       

      (g)
          Closing
        Date.
        On the
        Closing Date, and subject to the transactions contemplated by this Agreement,
        Purchaser shall cause the Company and each Subsidiary to conduct its business
        in
        the ordinary course in substantially the same manner as presently conducted
        and
        on the Closing Date shall not permit the Company or any Subsidiary to effect
        any
        extraordinary transactions (other than any such transactions expressly required
        by Applicable Law or expressly contemplated by this Agreement) that could
        result
        in Tax liability to the Company or any Subsidiary in excess of Tax liability
        associated with the conduct of its business in the ordinary course.

       

      SECTION
        5.08.   Supplemental
        Disclosure.
        Seller
        shall have the continuing obligation until the Closing promptly to supplement
        or
        amend the Schedules with respect to any matter hereafter arising or discovered
        that, if existing or known at the date of this Agreement, would have been
        required to be set forth or described in the Schedules; provided,
        however,
        that
        for the purpose of the rights and obligations of the parties under this
        Agreement (including satisfaction of the condition set forth in Section

       

       

       

       

      
        
          
          

        

        
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      6.02(a)),
        any such supplemental or amended Schedule shall not be deemed to have been
        disclosed as of the date of this Agreement or as of the Closing Date unless
        so
        agreed in writing by Purchaser.

       

      SECTION
        5.09.   Post-Closing
        Cooperation. (a)
         After
        the Closing, upon reasonable written notice, Seller and Purchaser shall
        (i) furnish or cause to be furnished to each other and their affiliates
        and
        their respective employees, counsel, auditors and representatives access,
        during
        normal business hours, to such information and assistance relating to the
        Company and the Subsidiaries (to the extent within the control of such party)
        as
        is reasonably necessary for financial reporting and accounting matters, (ii)
        cooperate in good faith and use commercially reasonable efforts to effect
        the
        transition of customers, suppliers and owners of Intellectual Property used
        by
        or licensed to the Company or any Subsidiary (it being understood that Seller
        maintains little, if any, relationship with such customers, suppliers and
        owners
        of Intellectual Property), (iii) cooperate in good faith and use commercially
        reasonable efforts to provide to Purchaser and the Company the benefits of
        the
        indemnity respecting environmental matters set forth in that certain Redemption,
        Stock Purchase and Recapitalization Agreement dated as of August 13, 1999
        between PRIMEDIA Inc. and WRC Media Inc. (then known as EAC II Inc.), and
        (iv) execute and deliver to such other party such other instruments
        of
        sale, transfer, conveyance, assignment and confirmation, and take such other
        actions, as may be reasonably requested by the other party in furtherance
        of the
        transactions contemplated hereby.

       

      (b)
          Each
        party shall reimburse the other for reasonable out-of-pocket costs and expenses
        incurred in assisting the other pursuant to this Section 5.09. Neither
        party shall be required by this Section 5.09 to take any action that
        would
        unreasonably interfere with the conduct of its business or unreasonably disrupt
        its normal operations (or, in the case of Purchaser, those of the Company
        and
        the Subsidiaries).

       

      SECTION
        5.10.   Publicity.
        From the
        date hereof through the Closing Date, no public release or announcement
        concerning the transactions contemplated hereby shall be issued by any party
        without the prior consent of the other party (which consent shall not be
        unreasonably withheld), except as such release or announcement may be required
        by law or the rules or regulations of any securities exchange, in which case
        the
        party required to make the release or announcement shall allow the other
        party
        reasonable time to comment on such release or announcement in advance of
        such
        issuance; provided,
        however,
        that
        each of Seller and Purchaser may make internal announcements to their
        respective, and their respective affiliates’, employees that are consistent with
        the parties’ prior public disclosures regarding the transactions contemplated
        hereby.

       

      SECTION
        5.11.   Records.
        On the
        Closing Date, Seller shall deliver or cause to be delivered to Purchaser
        all
        material agreements, documents, books, records and files, including records
        and
        files stored on computer disks or tapes or any other storage medium
        (collectively, “Records”),
        if
        any, in the possession of Seller relating to the business and operations
        of the
        Company and the Subsidiaries to the extent not then in the possession of
        the
        Company and the Subsidiaries, subject to the following exceptions:

       

       

       

       

      
        
          
          

        

        
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      (i)
          Purchaser
        recognizes that certain Records may contain information relating to the Company
        and the Subsidiaries and may relate to subsidiaries, divisions, businesses
        or
        affiliates of Seller other than the Company and the Subsidiaries, and that
        Seller may retain such Records and shall provide copies of the relevant portions
        thereof to Purchaser;

       

      (ii)
          Seller
        may retain all Records prepared in connection with the sale of the Shares,
        including bids received from other parties and analyses relating to the Company
        and the Subsidiaries; and

       

      (iii)
          Seller
        may retain any Tax Returns, and Purchaser shall be provided with copies of
        such
        Tax Returns that relate to the Company’s and the Subsidiaries’ separate Tax
        Returns or separate Tax liability.

       

      SECTION
        5.12.   Support
        Services.
        Seller
        and certain of its affiliates (other than the Company and the Subsidiaries)
        provide the Company and the Subsidiaries with certain support services,
        including cash management, credit and accounts receivable, payroll and human
        resources, legal, tax and benefit plan administration. Purchaser acknowledges
        that all such support services will be terminated as of the Closing Date.
        The
        Company provides Seller and its affiliates (other than the Company and its
        Subsidiaries) with certain support services that will continue to be provided
        following the Closing Date pursuant to the Transitional Services Agreement
        between Seller and the Company to be dated as of the Closing Date in the
        form
        attached hereto as Exhibit A (the “Transitional
        Services Agreement”).

       

      SECTION
        5.13.   Noncompetition;
        Nonsolicitation. (a)
        Seller
        covenants and agrees that, commencing on the Closing Date and ending on the
        fifth anniversary thereof, it shall not, directly or indirectly through Seller
        Parent or any subsidiary of Seller Parent, engage in the Restricted Business
        in
        the United States. Notwithstanding the foregoing, (x) this Section
        5.13(a)
        shall not restrict Seller Parent or any of its subsidiaries from (i) acquiring
        any business or person that is engaged, directly or indirectly, in the
        Restricted Business in the United States, provided
        that (A)
        at the time of such acquisition, the Restricted Business in the United States
        of
        such business or person accounts for less than 10% of such business’s or
        person’s consolidated annual revenues and (B) such acquisition is not undertaken
        for the primary purpose of evading Seller’s obligations under this Section
        5.13(a), or (ii) owning less than 5% of any class of stock of a person
        engaged, directly or indirectly, in the Restricted Business in the United
        States
        and (y) upon and after the consummation of any disposition of all
        or
        substantially all the assets or capital stock of Seller Parent, any of its
        subsidiaries or any of their businesses to an unaffiliated third party, this
        Section 5.13(a) shall not apply to, restrict or have any remaining
        effect
        with respect to Seller Parent (if disposed of pursuant to such disposition),
        such subsidiary or such business, provided
        that
        following such disposition none of Paul Liska, Ralph D. Caulo or Charles
        L.
        Laurey are employed by the acquirer of, or by, Seller Parent (if disposed
        of
        pursuant to such disposition), such subsidiary or such business.

       

       

      
        
          
          

        

        
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      (b)
          For
        purposes of this Agreement:

       

      “Permitted
        Business”
        means
        any of the following activities that WRC Media Inc. and its subsidiaries
        may
        engage in:

       

      (i)
          selling
        Restricted Texts published by third parties; 

       

      (ii)
          selling
        Restricted Tests published by third parties;

       

      (iii)
          publishing
        assessment tests and related test administration manuals of any kind other
        than
        Restricted Tests;

       

      (iv)
          publishing
        textbooks and supplemental materials of any kind other than Restricted
        Texts;

       

      (v)
          publishing
        electronic textbooks and supplemental materials of any kind;

       

      (vi)
          publishing
        at-grade-level textbooks, assessment tests, related test administration manuals
        and supplemental materials and other at-grade-level materials of any
        kind;

       

      (vii)
          publishing
        electronic individualized one-on-one special education assessment tests and
        other electronic assessment tests of any kind and related test administration
        manuals;

       

      (viii)
          publishing
        English language learning textbooks, assessment tests, related test
        administration manuals and supplemental materials and other English language
        learning materials of any kind; and

       

      (ix)
          publishing
        formative or group assessment tests of any kind and related test administration
        manuals.

       

      “Restricted
        Business”
        means
        publishing Restricted Tests or Restricted Texts, but does not include any
        Permitted Business.

       

      “Restricted
        Tests”
        means
        paper-based individualized one-on-one special education assessment tests
        and
        related test administration manuals that are of the same type as any of the
        following tests published by the Company as of the date of this Agreement:
        KeyMath, CASL, WRMT, Vineland, DIAL, GFTA, PPVT, BASC or Kaufman products
        (K-Products).

       

      “Restricted
        Texts”
        means
        paper-based low readability level textbooks for the secondary school market
        in
        the following subject areas: mathematics, reading/language arts, social studies,
        science and health and science.

       

      (c)
          Seller
        covenants and agrees that, during the period commencing on the Closing Date
        and
        ending on the date that is 18 months following the Closing Date, it shall
        

       

       

       

      
        
          
          

        

        
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      not,
        directly or indirectly through Seller Parent or any subsidiary of Seller
        Parent,
        employ, engage as a consultant or seek to employ or engage as a consultant
        any
        individual who as of the time of the Closing was an employee of the Company
        earning a salary plus commissions in excess of $50,000 per annum; provided,
        however,
        that
        the foregoing shall not prohibit (i) Seller, Seller Parent or any
        subsidiary of Seller Parent from employing, engaging as a consultant or seeking
        to employ or engage as a consultant any such individual at any time that
        such
        individual is not employed by the Company, Purchaser or any of their respective
        subsidiaries and (ii) any general solicitation of employment not targeted
        at the Company or any such individual.

       

      (d)
          The
        parties hereto recognize that Applicable Laws and public policies of various
        jurisdictions may differ as to the validity and enforceability of covenants
        similar to those set forth in this Section 5.13. It is the intention of the
        parties hereto that the provisions of this Section 5.13 be enforced to the
        fullest extent permissible under Applicable Laws and policies of each
        jurisdiction in which enforcement may be sought, and that the unenforceability
        (or the modification to conform to such laws or policies) of any provisions
        of
        this Section 5.13 shall not render unenforceable, or impair, the remainder
        of
        the provisions of this Section 5.13. Accordingly, if at the time of enforcement
        of any provision of this Section 5.13 a court of competent jurisdiction holds
        that the restrictions stated herein are unreasonable under circumstances
        then
        existing, the parties hereto agree that the maximum period, scope or geographic
        area reasonable under such circumstances will be substituted for the stated
        period, scope or geographical area and that such court shall be allowed to
        revise the restrictions contained herein to cover the maximum period, scope
        and
        geographical area permitted by Applicable Law and public policy.

       

      ARTICLE
        VI

       

      Conditions
        Precedent

       

      SECTION
        6.01.   Conditions
        to Each Party’s Obligation.
        The
        obligation of Purchaser to purchase and pay for the Shares and the obligation
        of
        Seller to sell the Shares to Purchaser is subject to the satisfaction or
        waiver
        on or prior to the Closing of the following conditions:

       

      (a)
          HSR
        Act.
        The
        waiting period under the HSR Act shall have expired or been
        terminated.

       

      (b)
          No
        Injunctions or Restraints.
        No
        Applicable Law or Injunction enacted, entered, promulgated, enforced or issued
        by any Governmental Entity or other legal restraint or prohibition preventing
        the consummation of the Acquisition shall be in effect.

       

      (c)
          Termination
        of Guarantees.
        The
        guarantees by the Company and the Subsidiaries of the Credit Facilities and
        the
        12.75% Senior Subordinated Notes due 2009 of Seller Parent and certain of
        its
        affiliates shall have been terminated and all Liens 

       

       

       

      
        
          
          

        

        
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      securing
        the Credit Facilities upon the Shares and the assets of the Company and the
        Subsidiaries shall have been terminated.

       

      SECTION
        6.02.   Conditions
        to Obligation of Purchaser.
        The
        obligation of Purchaser to purchase and pay for the Shares is subject to
        the
        satisfaction (or waiver by Purchaser) on or prior to the Closing Date of
        the
        following conditions:

       

      (a)
          Representations
        and Warranties.
        The
        representations and warranties of Seller in this Agreement that are qualified
        as
        to materiality, Seller Material Adverse Effect or Company Material Adverse
        Effect shall be true and correct, and those not so qualified shall be true
        and
        correct in all material respects, as of the date hereof and as of the Closing
        Date as though made on the Closing Date, except to the extent such
        representations and warranties expressly relate to an earlier date (in which
        case such representations and warranties qualified as to materiality, Seller
        Material Adverse Effect or Company Material Adverse Effect shall be true
        and
        correct, and those not so qualified shall be true and correct in all material
        respects, on and as of such earlier date). Purchaser shall have received
        a
        certificate signed by an authorized officer of Seller to such
        effect.

       

      (b)
          Performance
        of Obligations of Seller.
        Seller
        shall have performed or complied in all material respects with all obligations
        and covenants required by this Agreement to be performed or complied with
        by
        Seller by the time of the Closing, and Purchaser shall have received a
        certificate signed by an authorized officer of Seller to such
        effect.

       

      (c)
          FIRPTA
        Certificate.
        Seller
        shall have delivered to Purchaser at the Closing a certificate, in form and
        substance reasonably satisfactory to Purchaser, certifying that the Acquisition
        is exempt from withholding pursuant to the Foreign Investment in Real Property
        Tax Act.

       

      (d)
          Resignations.
        Seller
        shall have delivered to Purchaser written resignations (including customary
        releases) of the directors of the Company and the Subsidiaries.

       

      (e)
          Legal
        Opinions.
        Purchaser shall have received an opinion of Faegre & Benson LLP with
        respect to the matters set forth on Exhibit B and an opinion of Cravath,
        Swaine & Moore LLP with respect to the matters set forth on
        Exhibit C.

       

      SECTION
        6.03.   Conditions
        to Obligation of Seller.
        The
        obligation of Seller to sell the Shares is subject to the satisfaction (or
        waiver by Seller) on or prior to the Closing Date of the following
        conditions:

       

      (a)
          Representations
        and Warranties.
        The
        representations and warranties of Purchaser made in this Agreement that are
        qualified as to materiality or Purchaser Material Effect shall be true and
        correct, and those not so qualified shall be true and correct in all material
        respects, as of the date hereof and as of the Closing Date as though made
        on the
        Closing Date, except to the extent such representations and warranties expressly
        relate to an earlier date (in which case such representations and warranties
        

       

       

       

      
        
          
          

        

        
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      qualified
        as to materiality or Purchaser Material Effect shall be true and correct,
        and
        those not so qualified shall be true and correct in all material respects,
        on
        and as of such earlier date). Seller shall have received a certificate signed
        by
        an authorized officer of Purchaser to such effect.

       

      (b)
          Performance
        of Obligations of Purchaser.
        Purchaser shall have performed or complied in all material respects with
        all
        obligations and covenants required by this Agreement to be performed or complied
        with by Purchaser by the time of the Closing, and Seller shall have received
        a
        certificate signed by an authorized officer of Purchaser to such
        effect.

       

      (c)
          Legal
        Opinion.
        Seller
        shall have received an opinion of Morgan, Lewis & Bockius LLP with
        respect to the matters set forth on Exhibit D.

       

      (d)
          Refinancing.
        The
        requisite holders of Seller Parent’s 15% Senior Preferred Stock Due 2011 and the
        12.75% Senior Subordinated Notes Due 2009 of Seller Parent and certain of
        its
        affiliates, and the requisite lenders under the Credit Facilities, shall
        have
        consented to the Acquisition and related transactions or, in lieu thereof,
        the
        applicable instruments or indebtedness shall have been redeemed, repurchased,
        refinanced, defeased, retired or canceled so that any restriction on
        consummating the Acquisition and related transactions pursuant to the terms
        thereof no longer apply.

       

      (e)
          Transitional
        Services Agreement.
        Each of
        the Company and Seller shall have executed and delivered the Transitional
        Services Agreement.

       

      SECTION
        6.04.   Frustration
        of Closing Conditions.
        Neither
        Purchaser nor Seller may rely on the failure of any condition set forth in
        this
        Article VI to be satisfied if such failure was caused by such party’s
        failure to act in good faith or to use its commercially reasonable efforts
        to
        cause the Closing to occur, as required by Section 5.04.

       

      ARTICLE
        VII

       

      Employee
        and Related Matters

       

      SECTION
        7.01.   Continuation
        of Employment; General Principles.
        There
        shall be continuity of employment for all employees of the Company or any
        Subsidiary as of the Closing (each, a “Transferred
        Employee”),
        including, for greater certainty, any employees then on short-term disability
        or
        otherwise on a leave of absence but excluding any such employee who is receiving
        long-term disability benefits immediately prior to the Closing (“LTD
        Employee”);
        provided, however, that Purchaser shall cause the Company or its Subsidiaries
        to
        offer to re-employ any LTD Employee effective as of the date he or she presents
        himself or herself to Purchaser or its subsidiaries for active employment
        following the Closing Date to the same extent the Company and its Subsidiaries
        would be required in accordance with Applicable Law to re-employ such LTD
        Employee prior to the Closing. Upon an LTD Employee’s commencing employment with
        the Company or its Subsidiaries following the Closing, such LTD 

       

       

       

      
        
          
          

        

        
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      Employee
        shall be deemed a Transferred Employee. Except as otherwise provided in this
        Article VII, all Transferred Employees shall cease to accrue benefits
        under
        and participate as active participants in all Seller Benefit Plans as of
        11:59
        PM on the day immediately preceding the Closing Date and the Company and
        each
        Subsidiary shall withdraw as participating employers from each Seller Benefit
        Plan as of 11:59 PM on the day immediately preceding the Closing Date. Nothing
        herein shall be construed as a representation or guarantee by Seller that
        any
        individual employee of the Company or any Subsidiary will continue in employment
        with the Company, any Subsidiary or Purchaser following the Closing. Nothing
        in
        this Article VII shall be construed as requiring Purchaser to continue
        the
        employment of any specific person.

       

      SECTION
        7.02.   Assumption
        of Liabilities.
        Except
        as specifically provided in this Agreement, effective as of the Closing,
        Purchaser shall cause the Company and its Subsidiaries to remain solely
        responsible for all employment and employee benefit-related liabilities,
        obligations and commitments that are payable from or after the Closing,
        regardless or whether such liabilities, obligations and commitments arise
        before, on or after the Closing Date, and that relate to any current or former
        employee of the Company or any Subsidiary (or any dependent or beneficiary
        thereof) (the “Covered
        Employee Liabilities”),
        provided that Seller shall retain, and the Covered Employee Liabilities shall
        not include, employee benefit-related liabilities and obligations arising
        under
        any Plan that is not a Company Benefit Plan, except (a) as provided
        in
        Sections 7.05, 7.06(b), 7.06(d), 7.06(f), 7.08 or 7.09 or (b) as
        otherwise expressly provided in this Article VII (such liabilities
        and
        obligations retained by Seller, the “Seller
        Plan Liabilities”).

       

      SECTION
        7.03.   Credited
        Service.
        Purchaser shall credit or cause to be credited, as service with Purchaser
        or its
        affiliates, service accrued by Transferred Employees with, or otherwise
        recognized for benefit plan purposes by, Seller, the Company and their
        subsidiaries and affiliates as of the Closing (the “Pre-Closing
        Service”)
        for
        all purposes (other than for benefit accrual purposes under any defined benefit
        pension plan of Purchaser or its subsidiaries and affiliates) under the benefit
        plans, programs, policies and arrangements (including under any applicable
        pension, 401(k), savings, medical, dental, life insurance, vacation and
        insurance, severance or separation pay plans) of Purchaser and its subsidiaries
        and affiliates, provided that Purchaser shall also give or cause to be given
        credit for Pre-Closing Service for benefit accrual purposes under any defined
        benefit pension plan that is a Company Benefit Plan or any plan to which
        accrued
        benefits under any such Company Benefit Plan are transferred (it being
        understood that nothing in this Section 7.03 shall require Purchaser
        or its
        affiliates to continue to maintain any such defined benefit pension plan
        or to
        offer any post-employment health and insurance plan to Transferred
        Employees).

       

      SECTION
        7.04.   Continuation
        of Compensation and Benefits.
        Without
        limiting the generality of Section 7.01, for not less than the period commencing
        on the Closing Date and ending December 31, 2006 (the “Continuation
        Period”),
        Purchaser shall maintain and provide, and, where applicable, shall cause
        the
        Company and the Subsidiaries to maintain and provide: (i) a base salary
        to
        each Transferred Employee at a rate not less than the rate in effect for
        such
        Transferred Employee immediately prior to 

       

       

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

       

      the
        Closing; (ii) subject to Section 7.08, bonus and other incentive
        compensation opportunities to each Transferred Employee that are no less
        favorable in the aggregate than those provided to similarly situated employees
        of Purchaser and its subsidiaries; (iii) employee benefits to each
        Transferred Employee that are no less favorable in the aggregate than those
        provided to such Transferred Employee immediately prior to the Closing, without
        regard to any defined benefit pension benefits provided prior to the Closing,
        and (iv) equity or equity-based rights to each Transferred Employee
        that
        are no less favorable in the aggregate than those provided to similarly situated
        employees of Purchaser and its subsidiaries. The preceding sentence shall
        apply
        to each Transferred Employee only for so long as he or she remains employed
        with
        Purchaser or its affiliates.

       

      SECTION
        7.05.   U.S.
        Savings and Investment Plan. (a)
         Without
        limiting the generality of Section 7.04, effective as of the Closing, Purchaser
        or an affiliate thereof shall have in effect a profit-sharing plan that includes
        a qualified cash or deferred arrangement within the meaning of Section 401(k)
        of
        the Code (the “Purchaser’s
        401(k) Plan”)
        intended to be qualified pursuant to Section 401(a) of the Code, which will
        provide during the Continuation Period a matching contribution rate to
        Transferred Employees who immediately prior to the Closing are participants
        or
        who would be permitted during the Continuation Period to become participants
        in
        Seller’s 401(k) Plan that, subject to Applicable Law, is at least as favorable
        as the matching contribution rate provided by Seller’s 401(k) Plan immediately
        prior to the Closing. Each Transferred Employee participating in Seller’s 401(k)
        Plan immediately prior to the Closing shall become a participant in the
        Purchaser’s 401(k) Plan as of the Closing and each Transferred Employee who
        would have become eligible during the Continuation Period to participate
        in
        Seller’s 401(k) Plan shall become a participant in Purchaser’s 401(k) Plan at
        such time as he or she would have become eligible to participate in Seller’s
        401(k) Plan.

       

      (b)
          Upon
        presentation to Seller of (i) an Internal Revenue Service letter of
        determination that Purchaser’s 401(k) Plan meets the requirements for
        qualification under Section 401(a) of the Code and (ii) a certificate,
        in
        form and substance reasonably satisfactory to Seller, certifying that
        (A) the aforementioned letter of determination has not been revoked
        and
        (B) to the knowledge of Purchaser, no event has occurred or is reasonably
        expected to occur that would cause Purchaser’s 401(k) Plan to cease to satisfy
        the requirements of Section 401(a) of the Code or cause the trust
        forming a
        part thereof to cease to satisfy the requirements of Section 501(a) of the
        Code,
        as soon as practicable after the Closing, Seller shall cause to be transferred
        to Purchaser’s 401(k) Plan an amount equal to the account balances of the
        Transferred Employees, whether or not vested. Such transfer shall be made
        in
        cash, based on the value of such account balance as of the close of business
        on
        the day prior to such transfer, except that promissory notes evidencing
        outstanding loan balances under Seller’s 401(k) Plan shall be transferred in
        kind. Seller shall debit the account of each Transferred Employee under Seller’s
        401(k) Plan by the amount transferred to Purchaser’s 401(k) Plan, and Purchaser
        shall allocate the amounts transferred to Purchaser’s 401(k) Plan to the
        accounts of the Transferred Employees by crediting such accounts in relative
        proportion to the amount debited from the Transferred Employee’s accounts under
        Seller’s 401(k) Plan.

       

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

       

       

      (c)
          Following
        such transfer, Purchaser and/or Purchaser’s 401(k) Plan shall assume all
        liabilities and obligations of Seller and its subsidiaries and affiliates
        under
        Seller’s 401(k) Plan with respect to Transferred Employees and their
        beneficiaries, to the extent assets equal to such liabilities are so
        transferred.

       

      SECTION
        7.06.   Welfare
        Plans. (a)
         Without
        limiting the generality of Section 7.04, effective as of the Closing, Purchaser
        shall enroll each of the Transferred Employees and their eligible dependents
        who
        are enrolled immediately prior to the Closing in the plans and programs
        maintained or contributed to by Seller and its affiliates that provide medical,
        dental, vision, disability, life insurance and other welfare benefits with
        respect to Transferred Employees (collectively, the “Seller’s
        Welfare Plans”)
        in
        plans and programs that provide such benefits that are maintained or contributed
        to by Purchaser (collectively, the “Purchaser’s
        Welfare Plans”).
        Any
        and all waiting periods and pre-existing conditions, exclusions and
        actively-at-work requirements shall be waived under Purchaser’s Welfare Plans
        with respect to the Transferred Employees and their eligible dependents (to
        the
        extent such conditions, exclusions and requirements were waived or satisfied
        as
        of immediately prior to the Closing under the corresponding Seller’s Welfare
        Plan). In addition, Purchaser shall cause Purchaser’s Welfare Plans to recognize
        any out-of-pocket medical and dental expenses incurred by each of the
        Transferred Employees and their eligible dependents prior to the Closing
        and
        during the calendar year in which the Closing Date occurs for purposes of
        satisfying any applicable deductibles and out-of-pockets maximums under
        Purchaser’s Welfare Plans. During the Continuation Period, the participation
        cost to a Transferred Employee under Purchaser’s Welfare Plans shall be not more
        than the participation cost to similarly situated employees of Purchaser
        and its
        subsidiaries and affiliates.

       

      (b)
          Without
        limiting the generality of Section 7.04, effective as of the Closing, Purchaser
        shall have in effect a health care and dependent care flexible spending
        reimbursement account plan (the “Purchaser’s
        Reimbursement Plan”),
        which
        gives full effect to, and continues in effect, salary reduction elections
        made
        by Transferred Employees under Seller’s health and dependent care reimbursement
        account plans (“Seller’s
        Reimbursement Plan”).
        As
        soon as practicable after the Closing, (i) Seller shall pay to Purchaser
        in
        cash the amount, if any, by which aggregate contributions made by Transferred
        Employees to Seller’s Reimbursement Plan for the year in which the Closing
        occurs exceeded the aggregate benefits provided to Transferred Employees
        as of
        the Closing; or (ii) Purchaser shall pay to Seller in cash the amount,
        if
        any, by which aggregate benefits provided to Transferred Employees under
        Seller’s Reimbursement Plan for the year in which the Closing occurs exceeded
        the aggregate contributions made by Transferred Employees as of the Closing.
        From and after the Closing, Purchaser shall assume and be solely responsible
        for
        all claims made by Transferred Employees under Seller’s Reimbursement Plan,
        whether incurred prior to, on or after the Closing Date, that have not been
        paid
        in full prior to the Closing Date.

       

      (c)
          Effective
        as of the Closing, Seller or an affiliate thereof shall retain all
        responsibilities and obligations with respect to (i) each “qualified
        beneficiary” (as defined in Section 607 of ERISA) in respect of a
        Transferred Employee who has elected or is eligible to elect continuation
        coverage as such term is defined under Section 602 of 

       

       

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

       

      ERISA
        in
        respect of “qualifying events” (as defined in Section 603 of ERISA)
        occurring prior to the Closing and (ii) each former employee of the
        Company
        and the Subsidiaries (other than Transferred Employees) and his or her qualified
        beneficiaries.

       

      (d)
          For
        the
        avoidance of doubt, Purchaser and its affiliates shall remain solely liable
        for
        all liabilities, obligations and commitments with respect to the provision
        of
        short-term disability benefits in respect of Transferred Employees attributable
        to an injury or similar event that occurred prior to Closing; provided,
        however,
        that,
        in the event any such Transferred Employee does not return to active employment
        with Purchaser and its affiliates and would otherwise be eligible to receive
        long-term disability benefits under the terms of a Seller Benefit Plan had
        he or
        she remained employed by Seller or its affiliates attributable to any such
        injury or similar event that occurred prior to Closing, Seller shall retain
        the
        liability to provide such long-term disability benefits to such Transferred
        Employee from and after such time, if any, as such Transferred Employee in
        fact
        becomes eligible to commence receiving such long-term disability
        benefits.

       

      (e)
          Seller
        shall remain solely liable for all liabilities, obligations and commitments
        with
        respect to all workers compensation claims of Transferred Employees solely
        to
        the extent that any such claims are attributable to an injury or condition
        that
        was incurred prior to Closing, and Purchaser shall assume and be solely liable
        for all liabilities, obligations and commitments with respect to all workers
        compensation claims of Transferred Employees to the extent that any such
        claims
        are attributable to an injury or condition that was incurred from and after
        Closing.

       

      (f)
          Seller
        shall be solely responsible for claims under Seller Benefit Plans for health
        care (including dental and vision care) that are incurred prior to the Closing
        Date by Transferred Employees and/or their dependents (“Pre-Closing
        Health Care Claims”),
        and
        Purchaser shall be solely responsible for claims for health care (including
        dental and vision care) that are incurred on or after the Closing Date by
        Transferred Employees and/or their dependents; provided,
        however,
        that
        Purchaser shall, within 15 Business Days of demand therefor by Seller
        accompanied by a statement specifying in reasonable detail the claims for
        which
        reimbursement is sought, reimburse and pay to Seller the amount of Pre-Closing
        Health Care Claims paid by Seller following the Closing; provided
        further,
        however,
        that
        Purchaser shall not be obligated to reimburse Seller for Pre-Closing Health
        Care
        Claims in excess of $1,100,000 in the aggregate. For purposes of the foregoing,
        a medical/dental/vision claim shall be considered incurred when the
        medical/dental/vision services are rendered or medical/dental/vision supplies
        or
        drugs are provided, and not when the condition arose; provided
        that
        claims relating to a hospital confinement that commences prior to the Closing
        Date and continues thereafter shall be treated as incurred prior to the Closing
        Date. From the date hereof until Closing, Seller shall cause Pre-Closing
        Health
        Care Claims to be processed and paid in the usual, regular and ordinary course
        in substantially the same manner as previously conducted.

       

      SECTION
        7.07.   Severance
        Policies.
        Without
        limiting the generality of Section 7.04, Purchaser shall cause the Company
        and
        its Subsidiaries to retain and maintain without amendment for the benefit
        of
        Transferred Employees who are 

       

       

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

       

      terminated
        from employment during the Continuation Period the Company’s Change of Control
        Severance Plan (a correct and complete copy of which has been provided to
        Purchaser) as in effect immediately prior to the Closing. 

       

      SECTION
        7.08.   Performance
        Bonuses.
        Purchaser shall assume responsibility with respect to, and shall make any
        and
        all payments required to be made to Transferred Employees pursuant to, the
        WRC
        Media Inc. Executive Incentive Compensation Plan (the “Seller’s
        Incentive Plan”)
        (a
        correct and complete copy of which has been provided to Purchaser) that relate
        to performance periods in which the Closing Date occurs and that end on or
        before December 31, 2005. Purchaser agrees to calculate and make such
        payments pursuant to the terms and conditions of Seller’s Incentive Plan and on
        or before March 31, 2006. With respect to the Seller’s Incentive Plan for
        the 2005 calendar year, (i) following the Closing, any requirement that a
        Transferred Employee remain employed with Seller and its affiliates as of
        December 31, 2005 in order to receive any applicable bonus or similar payment
        shall be replaced with a requirement that the Transferred Employee remain
        employed with Purchaser and its affiliates as of December 31, 2005 in order
        to
        receive any applicable bonus or similar payment and (ii) with respect to
        the
        2005 calendar year any applicable performance criteria that relate to the
        performance of Seller or any subsidiary, division, business unit or other
        measuring grouping other than the Company and its Subsidiaries shall receive
        a
        weighting of 0% (and thus be disregarded), and the performance criteria that
        relate to the performance of the Company and its Subsidiaries shall be weighted
        100%. 

       

      SECTION
        7.09.   Vacation
        Benefits.
        Purchaser shall cause the Company and the Subsidiaries to assume and honor,
        and
        permit the Transferred Employees to fully utilize, all vacation days accrued
        but
        not yet taken by Transferred Employees as of the Closing, including historical
        accruals of vacation under the policy set forth in Schedule 7.09.

       

      SECTION
        7.10.   Employment
        and Other Agreements.
        Effective as of the Closing, Purchaser shall cause the Company or the
        Subsidiaries to remain solely responsible for all liabilities and obligations
        with respect to all employment agreements and supplemental benefit agreements
        which have been entered into between a Transferred Employee, on the one hand,
        and the Company and its subsidiaries and affiliates, on the other
        hand.

       

      SECTION
        7.11.   Retention
        Arrangements.
        Purchaser shall cause the Company and the Subsidiaries to retain sole
        responsibility for and honor without amendment the terms of the Company’s
        retention program (the “Retention
        Program”)
        (a
        correct and complete copy of which has been provided to Purchaser) as in
        effect
        immediately prior to the Closing.

       

      SECTION
        7.12.   No
        Third-Party Beneficiaries.
        This
        Article VII is for the sole benefit of the parties hereto and their permitted
        assigns and nothing in this Article VII expressed or implied shall
        give or
        be construed to give to any person (including any current or former employee),
        other than the parties hereto and such assigns, any legal or equitable rights
        hereunder.

       

       

      
        
          
          

        

        
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      ARTICLE
        VIII

       

      Termination,
        Amendment and Waiver

       

      SECTION
        8.01.   Termination.
        (a)
         Notwithstanding
        anything to the contrary in this Agreement, this Agreement may be terminated
        and
        the Acquisition and the other transactions contemplated by this Agreement
        abandoned at any time prior to the Closing:

       

      (i)
          by
        mutual
        written consent of Seller and Purchaser;

       

      (ii)
          by
        Seller
        if any of the conditions set forth in Sections 6.01 or 6.03 shall
        have
        become incapable of fulfillment, and shall not have been waived by
        Seller;

       

      (iii)
          by
        Purchaser if any of the conditions set forth in Sections 6.01 or 6.02 shall
        have
        become incapable of fulfillment, and shall not have been waived by Purchaser;
        or

       

      (iv)
          by
        Seller
        or Purchaser, if the Closing does not occur on or prior to July 31,
        2005;

       

      provided,
        however,
        that
        the party seeking termination pursuant to clause (ii), (iii) or (iv)
        is not
        then in material breach of any of its representations, warranties, covenants
        or
        agreements contained in this Agreement.

       

      (b)
          In
        the
        event of termination by Seller or Purchaser pursuant to this Section 8.01,
        written notice thereof shall forthwith be given to the other and the
        transactions contemplated by this Agreement shall be terminated, without
        further
        action by any party. If the transactions contemplated by this Agreement are
        terminated as provided herein:

       

      (i)
          Purchaser
        shall return all documents and other material received from Seller or the
        Company relating to the transactions contemplated hereby, whether so obtained
        before or after the execution hereof, to Seller; and

       

      (ii)
          all
        confidential information received by Purchaser with respect to the business
        of
        the Company and the Subsidiaries shall be treated in accordance with the
        Confidentiality Agreement, which shall remain in full force and effect
        notwithstanding the termination of this Agreement.

       

      SECTION
        8.02.   Effect
        of Termination.
        If this
        Agreement is terminated and the transactions contemplated hereby are abandoned
        as described in Section 8.01, this Agreement shall become null and
        void and
        of no further force and effect, except for the provisions of
        (i) Section 5.03(a) relating to the obligation of Purchaser
        to keep
        confidential certain information and data obtained by it,
        (ii) Section 5.05 relating to 

       

       

       

      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

       

       

       

      certain
        expenses, (iii) Section 5.06 relating to finder’s fees and broker’s fees,
        (iv) Section 5.10 relating to publicity and (v) Section 8.01
        and this Section 8.02. Nothing in this Section 8.02 shall be deemed
        to
        release any party from any liability for any breach by such party of the
        terms
        and provisions of this Agreement or to impair the right of any party to compel
        specific performance by any other party of its obligations under this
        Agreement.

       

      SECTION
        8.03.   Amendments
        and Waivers.
        This
        Agreement may not be amended except by an instrument in writing signed on
        behalf
        of each of the parties hereto. By an instrument in writing Purchaser, on
        the one
        hand, or Seller, on the other hand, may waive compliance by the other with
        any
        term or provision of this Agreement that such other party was or is obligated
        to
        comply with or perform.

       

      ARTICLE
        IX

       

      Indemnification

       

      SECTION
        9.01.   Tax
        Indemnification. (a)
        Seller
        shall indemnify the Purchaser Indemnitees against and hold them harmless
        from
        any Losses attributable to Income Taxes (i) imposed on Seller or any other
        member of an Affiliated Group, other than the Company or any Subsidiary,
        for any
        Tax period, (ii) imposed on the Company or any Subsidiary under Treasury
        Regulation 1.1502-6 (or any similar provision of state, local, foreign or
        other
        law) by reason of the Company or any Subsidiaries being included in any
        affiliated group at any time on or before the Closing Date, (iii) imposed
        on or
        payable by the Company or any Subsidiary with respect to any Tax period or
        portion thereof that ends on or before the Closing Date or (iv) for
        any
        Straddle Period but only for that portion of the Straddle Period relating
        to the
        Pre-Closing Tax Period as computed in accordance with Section 9.01(d).
        Payment by Seller of any amount due to a Purchaser Indemnitee under this
        Section
        9.01(a) (other than payments the timing of which is provided for under Section
        5.07(b)) shall be made within twenty days following written notice by the
        Indemnified Party that payment of such amounts to the appropriate Tax Authority
        is due by the Indemnified Party; provided, that Seller shall not be required
        to
        make any payment earlier than two business days before it is due to the
        appropriate Taxing Authority. In the case of a Tax that is contested in
        accordance with the provisions of Section 9.03(c), payment of the Tax to
        the
        appropriate Tax Authority will not be considered to be due earlier than the
        date
        that a final determination to such effect is made by such Taxing Authority
        or a
        court or liability for such Tax is otherwise conclusively settled or
        compromised.

       

      (b)
          Seller
        shall indemnify the Purchaser Indemnitees against and hold them harmless
        from
        any Losses attributable to withholding or employment Taxes with respect to
        wages
        (including resulting from the erroneous classification of an employee as
        an
        independent contractor) for any Tax period or portion thereof that ends on
        or
        before the Closing Date, provided that this paragraph (b) shall only apply
        to
        the extent that such Taxes exceed in the aggregate $100,000 after which Seller
        shall be liable for all Losses in excess of such amount.

       

       

       

       

      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

       

       

      (c)
          Purchaser
        shall indemnify the Seller Indemnitees against and hold them harmless from
        any
        Losses attributable to: (i) all liability for Taxes of the Company and the
        Subsidiaries for any taxable period ending after the Closing Date (except
        to the
        extent such taxable period began before the Closing Date, in which case the
        indemnity under this Section 9.01(c) shall cover only that portion of any
        such
        Taxes that are not for the Pre-Closing Tax Period, as computed in accordance
        with Section 9.01(d)) and (ii) all liability for Taxes attributable
        to
        any action taken after the Closing on the Closing Date outside of the ordinary
        course of business by Purchaser, any of its affiliates (including the Company
        or
        any Subsidiary), or any transferee of Purchaser or any of its affiliates
        (other
        than expressly required by applicable law or by this Agreement).

       

      (d)
          Straddle
        Period.
        In the
        case of any Straddle Period, (i) real, personal and intangible property Taxes
        (“Property
        Taxes”)
        of the
        Company and Subsidiaries for the Pre-Closing Tax Period shall be allocated
        to
        the Pre-Closing Tax Period on a pro rata daily basis, and (ii) the Taxes
        of the
        Company and Subsidiaries (other than Property Taxes) for the Pre-Closing
        Tax
        Period shall be computed as if such taxable period ended as of the close
        of
        business on the day immediately preceding the Closing Date. 

       

      SECTION
        9.02.   Other
        Indemnification. (a)
        Seller
        shall indemnify Purchaser and its affiliates, shareholders and subsidiaries
        (including, following the Closing, the Company and the Subsidiaries) and
        their
        respective officers, directors, employees and agents (collectively the
“Purchaser
        Indemnitees”)
        against and hold them harmless from any and all damages, fines, fees, penalties,
        deficiencies, losses and expenses, including all interest, court costs and
        reasonable fees and expenses of attorneys, accountants and other experts
        and
        other expenses of litigation or other proceedings or of any claim, default
        or
        assessment or pursuit of rights to indemnification (collectively, “Losses”),
        suffered, incurred or sustained by any of them or to which any of them becomes
        subject, to the extent resulting from, arising out of or relating to
        (i) any breach of any representation or warranty of Seller contained
        in
        this Agreement, (ii) any breach of any covenant or agreement of Seller
        contained in this Agreement, (iii) any employee benefit obligations
        retained by Seller or any of its affiliates (other than the Company and the
        Subsidiaries) pursuant to Article VII and (iv) the failure of the
        Shares to
        be validly issued and outstanding as of the Closing Date.

       

      (b)
          Purchaser
        shall indemnify Seller and its affiliates, shareholders and subsidiaries
        and
        their respective officers, directors, employees and agents (collectively,
        the
“Seller
        Indemnitees”)
        against and hold them harmless from any and all Losses suffered, incurred
        or
        sustained by any of them or to which any of them becomes subject, to the
        extent
        resulting from, arising out of or relating to (i) any breach of any
        representation of Purchaser contained in this Agreement, (ii) any
        breach of
        any covenant or agreement of Purchaser contained in this Agreement and
        (iii) any employee benefit obligations assumed or retained by Purchaser
        or
        required to be assumed or retained by the Company or any Subsidiary pursuant
        to
        Article VII.

       

      SECTION
        9.03.   Indemnification
        Procedures. (a)
        Procedures
        Relating to Indemnification of Third Party Claims.
        If any
        party (the “Indemnified
        Party”)
        receives written notice of the commencement of any action or proceeding or
        the
        assertion of any 

       

       

       

       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

       

       

      claim
        by
        a third party or the imposition of any penalty or assessment (in each case
        other
        than with respect to Taxes) for which indemnity may be sought under
        Section 9.02 (a “Third
        Party Claim”)
        or
        such Indemnified Party has a reasonable basis to believe that there are grounds
        for a Third Party Claim to be asserted against it, and such Indemnified Party
        intends to seek indemnity pursuant to this Article IX, the Indemnified
        Party shall promptly provide the other party (the “Indemnifying
        Party”)
        with
        written notice of such Third Party Claim, stating the nature, basis and the
        amount thereof, to the extent known, along with copies of any relevant documents
        evidencing such Third Party Claim and the basis for indemnification sought.
        Failure of the Indemnified Party to give such notice will not relieve the
        Indemnifying Party from liability on account of this indemnification, except
        if
        and to the extent that the Indemnifying Party is actually prejudiced thereby.
        The Indemnifying Party will have 60 days from receipt of any such notice
        of a
        Third Party Claim to give notice to assume the defense thereof. If notice
        to the
        effect set forth in the immediately preceding sentence is given by the
        Indemnifying Party, the Indemnifying Party will have the right to assume
        the
        defense of the Indemnified Party against the Third Party Claim with counsel
        of
        its choice. At any time prior to the Indemnifying Party’s delivery of any notice
        to assume the defense of a Third Party Claim, the Indemnified Party may file
        any
        motion, answer or other pleadings or take any other action that the Indemnified
        Party reasonably believes to be necessary or appropriate to avoid a default
        judgment. So long as the Indemnifying Party has assumed the defense of the
        Third
        Party Claim in accordance herewith, (i) the Indemnified Party may
        retain
        separate co-counsel at its sole cost and expense and participate in the defense
        of the Third Party Claim, (ii) the Indemnified Party will not file
        any
        papers or consent to the entry of any judgment or enter into any settlement
        with
        respect to the Third Party Claim without the prior written consent of the
        Indemnifying Party and (iii) the Indemnifying Party will not (A) admit
        to any wrongdoing or (B) consent to the entry of any judgment or enter
        into
        any settlement with respect to the Third Party Claim, in each case, without
        the
        prior written consent of the Indemnified Party (which consent shall not be
        unreasonably withheld or delayed). The parties will use their commercially
        reasonable efforts to minimize Losses from Third Party Claims and will act
        in
        good faith in responding to, defending against, settling or otherwise dealing
        with such claims. The parties will also cooperate in any such defense and
        give
        each other reasonable access to all information relevant thereto. Whether
        or not
        the Indemnifying Party has assumed the defense, such Indemnifying Party will
        not
        be obligated to indemnify the Indemnified Party hereunder for any settlement
        entered into or any judgment that was consented to without the Indemnifying
        Party’s prior written consent.

       

      (b)
          Procedures
        for Non-Third Party Claims.
        The
        Indemnified Party will notify the Indemnifying Party in writing promptly
        of its
        discovery of any matter that does not involve a Third Party Claim being asserted
        against or sought to be collected from the Indemnified Party, giving rise
        to the
        claim of indemnity pursuant hereto. The failure so to notify the Indemnifying
        Party shall not relieve the Indemnifying Party from liability on account
        of this
        indemnification, except only to the extent that the Indemnifying Party is
        actually prejudiced thereby. The Indemnifying Party will have 60 days from
        receipt of any such notice to give notice of dispute of the claim to the
        Indemnified Party. The Indemnified Party will reasonably cooperate and assist
        the Indemnifying Party in determining the validity of any claim for indemnity
        by
        the Indemnified Party and in 

       

       

       

       

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

       

      otherwise
        resolving such matters. Such assistance and cooperation will include providing
        reasonable access to and copies of information, records and documents relating
        to such matters, furnishing employees to assist in the investigation, defense
        and resolution of such matters and providing legal and business assistance
        with
        respect to such matters.

       

      (c)
          Procedures
        Relating to Indemnification of Tax Claims. (i)
        If
        one
        party is responsible for the payment of Taxes pursuant to Sections 9.01 or
        9.02
        of this Agreement (the “Tax
        Indemnifying Party”),
        and
        the other party to this Agreement (the “Tax
        Indemnified Party”)
        receives a notice of deficiency, proposed adjustment, adjustment, assessment,
        audit, examination, suit, dispute or other claim (a “Tax
        Claim”)
        with
        respect (in whole or in part) to such Taxes, the Tax Indemnified Party shall
        promptly notify the Tax Indemnifying Party in writing of such Tax Claim.
        No
        failure or delay on the part of the Tax Indemnified Party to give notice
        to the
        Tax Indemnifying Party shall reduce or otherwise affect the obligations or
        liabilities of the Tax Indemnifying Party pursuant to this Agreement, except
        to
        the extent that such failure or delay shall have adversely affected the Tax
        Indemnifying Party’s ability to defend against any liability or claim for Taxes
        that the Tax Indemnifying Party is obligated to pay hereunder.

       

      (ii)
          The
        Tax
        Indemnifying Party shall assume and control the applicable audit or examination
        and the defense of a Tax Claim involving any Taxes for which it has an
        obligation to indemnify the Tax Indemnified Party pursuant to Sections 9.01
        or
        9.02 of this Agreement. The preceding sentence shall not apply to the extent
        the
        Tax Indemnifying Party has potential liability of less than 50% of the total
        potential liability of such Tax Claim. The party controlling the applicable
        audit or examination and the defense of the Tax Claim shall be referred to
        herein as the “Controlling Party” and the other party shall be referred to
        herein as the “Non-Controlling Party.” The Non-Controlling Party and its
        affiliates agree to cooperate with the Controlling Party in pursuing such
        contest, including execution of any powers of attorney in favor of the
        Controlling Party. Notwithstanding anything in this Agreement to the contrary,
        the Controlling Party shall keep the Non-Controlling Party informed of all
        material developments and events relating to such Tax Claim and the
        Non-Controlling Party, at its own cost and expense and with its own counsel,
        shall have the right to participate in (but not control) the applicable audit
        or
        examination and defense of such Tax Claim. The Controlling Party shall not
        settle or otherwise compromise any Tax Claim if such settlement or compromise
        could reasonably be expected to have the effect of materially increasing
        the Tax
        liability of the Non-Controlling Party without the consent of the
        Non-Controlling Party, such consent not to be unreasonably
        withheld.

       

      If
        Controlling Party elects not to assume and control the applicable audit or
        examination and the defense of a Tax Claim, the Non-Controlling Party may
        pursue
        contest of or settle or otherwise compromise such Tax Claim, at Controlling
        Party’s sole expense.

       

      Notwithstanding
        the foregoing, in no case shall any Non-Controlling Party settle or otherwise
        compromise (or extend the statute of limitations for) any Tax Claim without
        the
        Controlling Party’s prior written consent. Further, in no case shall any Tax
        Indemnified Party settle or otherwise compromise (or extend the statute of
        limitations

       

       

       

      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

       

      for)
        any
        Tax Claim for which the Tax Indemnifying Party will have an obligation to
        indemnify without the Tax Indemnifying Party’s prior written consent. Neither
        party shall settle a Tax Claim relating solely to Income Taxes of the
        Non-Controlling Party or any of its subsidiaries for a Straddle Period without
        the other party’s prior written consent.

       

      Whether
        or not the Non-Controlling Party chooses to participate in the defense of
        any
        Tax Claim, all of the parties hereto shall cooperate in the defense
        thereof.

       

      SECTION
        9.04.   Limitations
        on Indemnification. (a)
        The
        aggregate liability of Seller pursuant to clauses (i) and (ii) of
        Section 9.02(a) (in the case of clause (ii) of Section 9.02(a),
        only with respect to breaches of covenants or agreements contained in Sections
        5.01, 5.02 or 5.04 that occur prior to the Closing) and the aggregate liability
        of Purchaser pursuant to clauses (i) and (ii) of Section 9.02(b)
        (in the case of clause (ii) of Section 9.02(b), only with respect
        to
        breaches of covenants or agreements contained in Sections 5.01, 5.02 or 5.04
        that occur prior to Closing) (such clauses of Sections 9.02(a) and
        9.02(b)
        as so qualified in the case of clause (ii) of each such Section,
        collectively, the “Limited
        Indemnity Provisions”)
        for
        claims for indemnification asserted in a notice delivered pursuant to Section
        9.03

       

      (i)
          prior
        to
        the date that is six months after the Closing Date, shall not exceed 20%
        of the
        Purchase Price,

       

      (ii)
          on
        or
        after the date that is six months after the Closing Date and prior to the
        date
        that is nine months after the Closing Date, shall not exceed, taken together
        with the aggregate liability of such party pursuant to the Limited Indemnity
        Provisions for claims asserted in notices delivered prior to the date that
        is
        six months after the Closing Date, 10% of the Purchase Price, and

       

      (iii)
          on
        or
        after the date that is nine months after the Closing Date and prior to the
        date
        that is twelve months after the Closing Date (or, in the case of a claim
        with
        respect to a breach of any representation and warranty contained in
        Section 3.10, prior to the date that is 60 days following the
        expiration of the applicable statute of limitations), shall not exceed, taken
        together with the aggregate liability of such party pursuant to the Limited
        Indemnity Provisions for claims asserted in notices delivered prior to the
        date
        that is nine months after the Closing Date, 5% of the Purchase
        Price;

       

      provided,
        further,
        that in
        no event shall the aggregate liability of Seller or Purchaser for claims
        for
        indemnification pursuant to the Limited Indemnity Provisions exceed 20% of
        the
        Purchase Price no matter when the notices asserting the claims therefor are
        delivered. For purposes of determining the limitation under the foregoing
        sentence applicable to any claim for indemnification, a notice of such claim
        shall not be deemed delivered unless such notice states in reasonable detail
        the
        basis of such claim.

       

       

      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

       

      (b)
          Neither
        Seller nor Purchaser shall have any liability for any claim for indemnification
        pursuant to the Limited Indemnity Provisions unless such claim is asserted
        in a
        notice (stating in reasonable detail the basis of such claim) delivered pursuant
        to Section 9.03 prior to the date that is twelve months after the
        Closing
        Date or, in the case of a claim with respect to a breach of any representation
        and warranty contained in Section 3.10, prior to the date that is
        60 days
        following the expiration of the applicable statute of limitations. Seller
        shall
        not have any liability for any claim for indemnification pursuant to clause
        (iv)
        of Section 9.02(a) unless such claim is asserted in a notice (stating in
        reasonable detail the basis of such claim) delivered pursuant to
        Section 9.03 prior to the date that is sixty months after the Closing
        Date.

       

      (c)
          Neither
        Seller nor Purchaser shall be required to indemnify or hold harmless any
        person
        with respect to any claim for indemnification pursuant to the Limited Indemnity
        Provisions (x) unless and until the aggregate Losses of the Purchaser
        Indemnities, in the case of Seller, or the Seller Indemnitees, in the case
        of
        Purchaser, in respect of all such claims exceed $5,000,000, after which such
        party shall be liable for all Losses in excess of such amount, and (y) for
        any
        individual items (or group of substantially related items) where the loss
        relating thereto is less than $100,000 and such items (or group of substantially
        related items) shall not be aggregated for purposes of the immediately preceding
        clause (x).

       

      (d)
          Except
        as
        otherwise specifically provided in this Agreement or in any Ancillary Agreement,
        Purchaser acknowledges that its sole and exclusive remedy with respect to
        any
        and all claims relating to this Agreement and the Ancillary Agreements, the
        Acquisition and the other transactions contemplated hereby and thereby, the
        Company or any Subsidiary and its assets and liabilities (other than claims
        of,
        or causes of action arising from, fraud, or actions seeking specific performance
        of Section 5.03(b) or Section 5.13) shall be pursuant to the
        indemnification provisions set forth in this Article IX. In furtherance
        of
        the foregoing, Purchaser hereby waives, from and after the Closing, to the
        fullest extent permitted under applicable law, any and all rights, claims
        and
        causes of action (other than claims of, or causes of action arising from,
        fraud,
        or actions seeking specific performance of Section 5.03(b) or
        Section 5.13) it may have against Seller arising under or based upon
        this
        Agreement, any Ancillary Agreement, any document or certificate delivered
        in
        connection herewith, any Applicable Law (including any relating to environmental
        matters), common law or otherwise (except pursuant to the indemnification
        provisions set forth in this Article IX).

       

      (e)
          Neither
        party hereto shall be liable to the other for any special, incidental,
        consequential or punitive damages (including loss of profits, loss of use,
        damage to goodwill or loss of business) claimed by such other party resulting
        from such first party’s breach of its representations, warranties, covenants or
        agreements hereunder. In no event shall Seller be obligated to indemnify
        the
        Purchaser Indemnitees or any other person with respect to any matter to the
        extent that such matter was reflected in the calculation of the adjustment
        to
        the Closing Date Amount, if any, pursuant to Section 1.04(c).

       

       

      
        
          
          

        

        
          50

          
            

          

        

        
          
          

        

      

       

       

      SECTION
        9.05.   Calculation
        of Losses.
        The
        amount of any Losses for which indemnification is provided under this Article
        IX
        shall be computed net of any insurance proceeds received by the Indemnified
        Party in connection with such Losses. If the amount with respect to which
        any
        claim is made under this Article IX (an “Indemnity
        Claim”)
        gives
        rise to the party making the claim an actual Tax Benefit (as defined below),
        the
        indemnity payment shall be reduced by the amount of the Tax Benefit available
        to
        the party making the claim. To the extent such Indemnity Claim does not give
        rise to an actual Tax Benefit, if the amount with respect to which any Indemnity
        Claim is made gives rise to a Tax Benefit that is realized within five years
        of
        the close of the taxable year that includes the year of the Loss subject
        to this
        Section 9.05 to the party that made the claim, such party shall refund to
        the
        Indemnifying Party the amount of such Tax Benefit when, as and if realized.
        For
        the purposes of this Agreement, any subsequently realized Tax Benefit shall
        be
        treated as though it were a reduction in the amount of the initial Indemnity
        Claim, and the liabilities of the parties shall be redetermined as though
        both
        occurred at or prior to the time of the indemnity payment. For purposes of
        this
        Section 9.05, a “Tax
        Benefit”
        means
        an amount by which the Income Tax
        liability of the party (or group of corporations including the party) is
        reduced
        (including, without limitation, by deduction, reduction of income by virtue
        of
        increased tax basis or otherwise, entitlement to refund, credit or otherwise)
        plus any related interest received from the relevant Taxing Authority. Where
        a
        party has other losses, deductions, credits or items available to it, the
        determination
        of any Tax Benefit shall be calculated by comparing the Income Tax
        liability of the Indemnified Party, computed without regard to any losses,
        deductions, credits or items relating to the Indemnity Claim, to the
        Income Tax
        liability of the Indemnified Party, computed after taking into account any
        losses, deductions, credits or items relating to the Indemnity
        Claim.
        In the
        event that there should be a determination disallowing the Tax Benefit, the
        Indemnifying Party shall be liable to refund to the Indemnified Party the
        amount
        of any related reduction previously allowed or payments previously made to
        the
        Indemnifying Party pursuant to this Section 9.05. The amount of the refunded
        reduction or payment shall be deemed a payment under this Section 9.05 and
        thus
        shall be paid subject to any applicable reductions under this Section 9.05.
        Any
        indemnity payment under this Agreement shall be treated as an adjustment
        to the
        Purchase Price for Tax purposes, unless a final determination (which shall
        include the execution of a Form 870-AD or successor form) with respect to
        the
        Indemnified Party or any of its affiliates causes any such payment not to
        be
        treated as an adjustment to the Purchase Price for United States Federal
        income
        purposes.

       

      ARTICLE
        X

       

      General
        Provisions

       

      SECTION
        10.01.   No
        Additional Representations; Survival of Representations. (a)
        Purchaser
        acknowledges that (i) none of Seller, the Company or any other person
        has
        made any representation or warranty, expressed or implied, as to the Company
        or
        any Subsidiary or the accuracy or completeness of any information regarding
        the
        Company and the Subsidiaries furnished or made available to Purchaser and
        its
        representatives, except as expressly set forth in this Agreement,
        (ii) Purchaser has not relied on any representation or warranty from
        Seller
        or any other person in 

       

       

      
        
          
          

        

        
          51

          
            

          

        

        
          
          

        

      

       

       

      determining
        to enter into this Agreement, except as expressly set forth in this Agreement,
        and (iii) none of Seller or any other person shall have or be subject to
        any
        liability to Purchaser or any other person resulting from the distribution
        to
        Purchaser, or Purchaser’s use of, any such information, including the Project
        Learning Data Pack prepared by Goldman Sachs & Co. dated December 2004
        and any information, documents or material made available to Purchaser in
        any
        virtual or physical “data rooms”, management presentations or in any other form
        in expectation of the transactions contemplated hereby.

       

      (b)
          The
        representations and warranties contained in this Agreement shall survive
        in full
        force and effect solely for the purpose of indemnification under Article
        IX
        until the first anniversary of the Closing Date (except that the representations
        and warranties contained in Section 3.10 shall survive solely for the purpose
        of
        indemnification under Article IX for 60 days following the expiration
        of
        the applicable statute of limitations); provided,
        however,
        that if
        a claim for indemnification under a representation or warranty stating in
        reasonable detail the basis of such claim is delivered to the applicable
        Indemnifying Party prior to the first anniversary of the Closing Date (or,
        in
        the case of a claim with respect to a breach of any representation and warranty
        in Section 3.10, prior to the date that is 60 days following the expiration
        of the applicable statute of limitations), such representation and warranty
        shall continue to survive solely for the purposes of such claim until such
        claim
        has been satisfied or resolved.

       

      SECTION
        10.02.   Assignment.
        This
        Agreement and the rights and obligations hereunder shall not be assignable
        or
        transferable by any party without the prior written consent of the other
        parties
        hereto, except that rights under this Agreement shall be assignable by Purchaser
        in whole or in part to one or more of its subsidiaries (provided that (i)
        no
        such assignment shall release Purchaser from its obligations hereunder and
        (ii) such assignment shall only be effective to the extent the assignee
        remains a subsidiary of Purchaser). Any attempted assignment in violation
        of
        this Section 10.02 shall be void.

       

      SECTION
        10.03.   No
        Third-Party Beneficiaries.
        This
        Agreement is for the sole benefit of the parties hereto and their permitted
        assigns and nothing herein expressed or implied shall give or be construed
        to
        give to any person, other than the parties hereto and such assigns, any legal
        or
        equitable rights hereunder.

       

      SECTION
        10.04.   Notices.
        All
        notices or other communications required or permitted to be given hereunder
        shall be in writing and shall be delivered by hand or sent by facsimile or
        sent,
        postage prepaid, by registered, certified or express mail or overnight courier
        service and shall be deemed given when so delivered by hand or confirmed
        facsimile, or if mailed, three days after mailing (one business day in the
        case
        of express mail or overnight courier service), as follows:

       

          (i)    if
        to
        Purchaser,

       

          c/o
        Pearson
        Inc.

          1330
        Avenue of the
        Americas

          New
        York, NY 
        10019

       

       

      
        
          
          

        

        
          52

          
            

          

        

        
          
          

        

      

       

      Attention:
        Phillip J. Hoffman

       

      Facsimile:
        (212) 641-2532

       

      with
        a
        copy to:

       

      Morgan,
        Lewis & Bockius LLP

      101
        Park
        Avenue

      New
        York,
        NY 10178

       

      Attention:
        Charles E. Engros, Jr., Esq.

       

      Facsimile:
        (212) 309-6001

       

      (ii)    if
        to
        Seller,

       

      Weekly
        Reader Corporation

      c/o
        Ripplewood Holdings L.L.C.

      One
        Rockefeller Plaza, 32nd
        Floor

      New
        York,
        NY 10020

       

      Attention:
        Christopher Minnetian

       

      Facsimile: (212)
        218-4699

       

      with
        a
        copy to:

       

      Cravath,
        Swaine & Moore LLP

      Worldwide
        Plaza

      825
        Eighth Avenue

      New
        York,
        NY 10019

       

      Attention: Peter
        S.
        Wilson, Esq.

       

      Facsimile: (212)
        474-3700

       

      SECTION
        10.05.   Interpretation;
        Exhibits and Schedules; Certain Definitions. (a)
        The
        headings contained in this Agreement, in any Exhibit or Schedule hereto and
        in
        the table of contents to this Agreement are for reference purposes only and
        shall not affect in any way the meaning or interpretation of this Agreement.
        Any
        matter set forth in any provision, subprovision, section or subsection of
        the
        Disclosure Schedule shall be deemed set forth in other provisions,
        subprovisions, sections or subsections of the Disclosure Schedule to the
        extent
        relevant and reasonably apparent. For purposes of determining whether any
        representation and warranty has been breached, any items not set forth in
        the
        Disclosure Schedule shall not be aggregated with items set forth in the

       

       

       

      
        
          
          

        

        
          53

          
            

          

        

        
          
          

        

      

       

       

       

      Disclosure
        Schedule when determining if such items not set forth in the Disclosure Schedule
        have had or would be reasonably likely to have, individually or in the
        aggregate, a Seller Material Adverse Effect or a Company Material Adverse
        Effect. All Exhibits and Schedules annexed hereto or referred to herein are
        hereby incorporated in and made a part of this Agreement as if set forth
        in full
        herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise
        defined therein, shall have the meaning as defined in this Agreement. When
        a
        reference is made in this Agreement to a Section, Article, Exhibit or Schedule,
        such reference shall be to a Section or Article of, or an Exhibit or Schedule
        to, this Agreement unless otherwise indicated.

       

      (b)
          For
        all
        purposes hereof:

       

      “affiliate”
        of any
        person means another person that directly or indirectly, through one or more
        intermediaries, controls, is controlled by, or is under common control with,
        such first person.

       

      “Company
        Material Adverse Effect”
        means
        any change or event that has a material and adverse effect on the business,
        financial condition or results of operations of the Company and the
        Subsidiaries, taken as a whole; provided,
        however,
        that
        none of the following, either alone or in combination, shall be considered
        in
        determining whether there has been a “Company Material Adverse Effect”: (i) any
        change relating to United States or foreign economies in general or the
        Company’s and the Subsidiaries’ industries in general which, in each such case,
        does not disproportionately affect the Company and the Subsidiaries, taken
        as a
        whole, or (ii) any disruption to the Company’s and the Subsidiaries’ business as
        a result of the announcement by Seller of its intention to sell the Company
        or
        the execution of this Agreement and the consummation of the transactions
        contemplated hereby.

       

      “Credit
        Facilities”
        means,
        collectively, (i) the credit facilities governed by the Credit Agreement,
        dated as of March 29, 2004, among Seller, CompassLearning, Inc., WRC
        Media
        Inc., Credit Suisse First Boston, Bank of America, N.A. and General Electric
        Capital Corporation and (ii) the credit facilities governed by the Second
        Lien
        Credit Agreement, dated as of March 29, 2004, among Seller,
        CompassLearning, Inc., WRC Media Inc., Credit Suisse First Boston, Bank of
        America, N.A. and General Electric Capital Corporation.

       

      “including”
        means
        including, without limitation.

       

      “knowledge
        of Seller”
        means
        the actual knowledge of Ralph D. Caulo, Richard Nota, Kevin Brueggeman, Joe
        Fraulo and Mark Lawless.

       

      “person”
        means
        any individual, firm, corporation, partnership, limited liability company,
        trust, joint venture, Governmental Entity or other entity.

       

      “subsidiary”
        of any
        person means another person, an amount of the voting securities, other voting
        ownership or voting partnership interests of which is sufficient to elect
        at
        least a majority of its Board of Directors or other governing body (or, if
        there
        are 

       

       

       

      
        
          
          

        

        
          54

          
            

          

        

        
          
          

        

      

       

       

      no
        such
        voting interests, 50% or more of the equity interests of which) is owned
        directly or indirectly by such first person or by another subsidiary of such
        first person.

       

      (c)
          The
        following terms have the meanings given such terms in the sections set forth
        below:

       

       

      
        
          	
                  Term

                	
                  Section

                
	 	 
	
                  “Accounting
                    Firm”

                	
                  1.04(b)

                
	
                  “Accounts
                    Receivable”

                	
                  1.04(d)

                
	
                  “Acquisition”

                	
                  1.01

                
	
                  “Adjusted
                    Purchase Price”

                	
                  1.04(c)

                
	
                  “Agreement”

                	
                  Preamble

                
	
                  “Affiliated
                    Group”

                	
                  3.10(b)

                
	
                  “Ancillary
                    Agreements”

                	
                  2.02

                
	
                  “Applicable
                    Law”

                	
                  2.03

                
	
                  “Applicable
                    Percentage”

                	
                  1.04(d)

                
	
                  “Audited
                    Financial Statements”

                	
                  3.04(a)

                
	
                  “Audited
                    Balance Sheet”

                	
                  3.04(a)

                
	
                  “Balance
                    Sheet Principles”

                	
                  1.04(d)

                
	
                  “Benefit
                    Plans”

                	
                  3.12(a)

                
	
                  “Closing”

                	
                  1.02

                
	
                  “Closing
                    Accounts Receivable”

                	
                  1.04(a)

                
	
                  “Closing
                    Date”

                	
                  1.02

                
	
                  “Closing
                    Date Amount”

                	
                  1.03(b)

                
	
                  “Closing
                    Tangible Net Worth”

                	
                  1.04(a)

                
	
                  “Code”

                	
                  3.10(a)

                
	
                  “Commonly
                    Controlled Entity”

                	
                  3.12(a)

                
	
                  “Company”

                	
                  Recitals

                
	
                  “Company
                    Benefit Plan”

                	
                  3.12(a)

                
	
                  “Company
                    Contracts”

                	
                  3.08(b)

                
	
                  “Company
                    Intellectual Property”

                	
                  3.07(a)

                
	
                  “Company-Owned
                    Intellectual Property”

                	
                  3.07(a)

                
	
                  “Company
                    Pension Plan”

                	
                  3.12(c)

                
	
                  “Confidential
                    Information”

                	
                  3.07(g)

                
	
                  “Confidentiality
                    Agreement”

                	
                  5.03(a)

                
	
                  “Consent”

                	
                  2.03

                
	
                  “Continuation
                    Period”

                	
                  7.04

                
	
                  “Contract”

                	
                  2.03

                
	
                  “Controlling
                    Party”

                	
                  9.03(c)

                
	
                  “Covered
                    Employee Liabilities”

                	
                  7.02

                
	
                  “Disclosure
                    Schedule”

                	
                  Article
                    II

                
	
                  “DOJ”

                	
                  5.04(b)

                
	
                  “Environmental
                    Laws”

                	
                  3.14(b)

                
	
                  “Exchange
                    Act”

                	
                  2.03

                
	
                  “Financing”

                	
                  4.06

                
	
                  “FTC”

                	
                  5.04(b)

                

        

        
 

      

      
        
          
          

        

        
          55

          
            

          

        

        
          
          

        

      

      

       

    

    
      
        
          	
                  “GAAP”

                	
                  1.04(d)

                
	
                  “Governmental
                    Entity”

                	
                  2.03

                
	
                  “Hazardous
                    Materials”

                	
                  3.14(b)

                
	
                  “HSR
                    Act”

                	
                  2.03

                
	
                  “Income
                    Tax”

                	
                  3.10(a)

                
	
                  “Indemnified
                    Party”

                	
                  9.03(a)

                
	
                  “Indemnifying
                    Party”

                	
                  9.03(a)

                
	
                  “Indemnity
                    Claim”

                	
                  9.05

                
	
                  “Intellectual
                    Property”

                	
                  3.07(g)

                
	
                  “Judgment”

                	
                  2.03

                
	
                  “July
                    A/R Amount”

                	
                  1.04(a)

                
	
                  “Lease”

                	
                  3.06

                
	
                  “Leased
                    Property”

                	
                  3.06

                
	
                  “Liens”

                	
                  3.05(a)

                
	
                  “Limited
                    Indemnity Provisions”

                	
                  9.04(a)

                
	
                  “Losses”

                	
                  9.02(a)

                
	
                  “Non-Controlling
                    Party”

                	
                  9.03(c)

                
	
                  “Notice
                    of Disagreement”

                	
                  1.04(b)

                
	
                  “Plan”

                	
                  3.12(a)

                
	
                  “Pension
                    Plan”

                	
                  3.12(a)

                
	
                  “Permits”

                	
                  3.14(a)

                
	
                  “Permitted
                    Business”

                	
                  5.13(b)

                
	
                  “Permitted
                    Liens”

                	
                  3.05(a)

                
	
                  “Post-Closing
                    Tax Period”

                	
                  3.10(a)

                
	
                  “Pre-Closing
                    Health Care Claims”

                	
                  7.05(f)

                
	
                  “Pre-Closing
                    Service”

                	
                  7.03

                
	
                  “Pre-Closing
                    Tax Period”

                	
                  3.10(a)

                
	
                  “Proceeding”

                	
                  3.11

                
	
                  “Property
                    Taxes”

                	
                  9.01(d)

                
	
                  “Purchase
                    Price”

                	
                  1.01

                
	
                  “Purchaser”

                	
                  Preamble

                
	
                  “Purchaser
                    Indemnitees”

                	
                  9.02(a)

                
	
                  “Purchaser
                    Material Adverse Effect”

                	
                  4.01

                
	
                  “Purchaser
                    Statement”

                	
                  1.04(a)

                
	
                  “Purchaser’s
                    Reimbursement Plans”

                	
                  7.06(b)

                
	
                  “Purchaser’s
                    Severance Policies”

                	
                  7.07

                
	
                  “Purchaser’s
                    Welfare Plans”

                	
                  7.06(a)

                
	
                  “Purchaser’s
                    401(k) Plan”

                	
                  7.05(a)

                
	
                  “Records”

                	
                  5.11

                
	
                  “Restricted
                    Business”

                	
                  5.13(b)

                
	
                  “Restricted
                    Tests”

                	
                  5.13(b)

                
	
                  “Restricted
                    Texts”

                	
                  5.13(b)

                
	
                  “Retention
                    Program”

                	
                  7.11

                
	
                  “Seller”

                	
                  Preamble

                
	
                  “Seller
                    Benefit Plan”

                	
                  3.12(a)

                
	
                  “Seller
                    Indemnitees”

                	
                  9.02(b)

                

        

      

    

    

     

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

       

    

    
      	
              “Seller
                Material Adverse Effect”

            	
              2.01

            
	
              “Seller
                Parent”

            	
              3.04(d)

            
	
              “Seller
                Plan Liabilities”

            	
              7.02

            
	
              “Seller
                Statement”

            	
              1.04(a)

            
	
              “Seller’s
                Incentive Plans”

            	
              7.08

            
	
              “Seller’s
                Reimbursement Plan”

            	
              7.06(b)

            
	
              “Seller’s
                401(k) Plan”

            	
              3.12(b)

            
	
              “Seller’s
                Welfare Plans”

            	
              7.06(a)

            
	
              “Shares”

            	
              Recitals

            
	
              “Software”

            	
              3.07(g)

            
	
              “Statement”

            	
              1.04(a)

            
	
              “Straddle
                Period”

            	
              5.07(b)

            
	
              “Subsidiary”

            	
              3.01(a)

            
	
              “Tax”

            	
              3.10(a)

            
	
              “Tax
                Benefit”

            	
              9.05

            
	
              “Tax
                Claim”

            	
              9.03(c)

            
	
              “Tax
                Indemnified Party”

            	
              9.03(c)

            
	
              “Tax
                Indemnifying Party”

            	
              9.03(c)

            
	
              “Tax
                Return”

            	
              3.10(a)

            
	
              “Taxing
                Authority”

            	
              3.10(a)

            
	
              “Tangible
                Net Worth”

            	
              1.04(d)

            
	
              “Third
                Party Claim”

            	
              9.03(a)

            
	
              “TNW
                Amount”

            	
              1.04(c)

            
	
              “Total
                Liabilities”

            	
              1.04(d)

            
	
              “Total
                Tangible Assets”

            	
              1.04(d)

            
	
              “Transferred
                Employee”

            	
              7.01

            
	
              “Transitional
                Services Agreement”

            	
              5.12

            
	
              “Trigger
                Date”

            	
              1.04(b)

            
	
              “Unaudited
                Balance Sheet”

            	
              3.04(b)

            
	
              “Unaudited
                Financial Statements”

            	
              3.04(b)

            
	
              “Voting
                Company Debt”

            	
              3.02(a)

            
	
              “Welfare
                Plan”

            	
              3.12(a)

            

    

    

    SECTION
      10.06.   Counterparts.
      This
      Agreement 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.

     

    SECTION
      10.07.   Entire
      Agreement.
      This
      Agreement, the Ancillary Agreements and the Confidentiality Agreement, along
      with the Schedules and Exhibits thereto, contain the entire agreement and
      understanding among the parties hereto with respect to the subject matter hereof
      and supersede all prior agreements and understandings relating to such subject
      matter. None of the parties shall be liable or bound to any other party in
      any
      manner by any representations, warranties or covenants relating to such subject
      matter except as specifically set forth herein or in the Ancillary Agreements
      or
      the Confidentiality Agreement.

     

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

     

    
    

    SECTION
      10.08.   Severability.
      If any
      provision of this Agreement (or any portion thereof) or the application of
      any
      such provision (or any portion thereof) to any person or circumstance shall
      be
      held invalid, illegal or unenforceable in any respect by a court of competent
      jurisdiction, such invalidity, illegality or unenforceability shall not affect
      any other provision hereof (or the remaining portion thereof) or the application
      of such provision to any other persons or circumstances.

     

    SECTION
      10.09.   Consent
      to Jurisdiction.
      Each
      party irrevocably submits to the exclusive jurisdiction of (a) the Supreme
      Court of the State of New York, New York County, and (b) the United
      States
      District Court for the Southern District of New York, for the purposes of any
      suit, action or other proceeding arising out of this Agreement, any Ancillary
      Agreement or any transaction contemplated hereby or thereby. Each party agrees
      to commence any such action, suit or proceeding either in the United States
      District Court for the Southern District of New York or if such suit, action
      or
      other proceeding may not be brought in such court for jurisdictional reasons,
      in
      the Supreme Court of the State of New York, New York County. Each party further
      agrees that service of any process, summons, notice or document by U.S.
      registered mail to such party’s respective address set forth above shall be
      effective service of process for any action, suit or proceeding in New York
      with
      respect to any matters to which it has submitted to jurisdiction in this
      Section 10.09. Each party irrevocably and unconditionally waives any
      objection to the laying of venue of any action, suit or proceeding arising
      out
      of this Agreement, any Ancillary Agreement or the transactions contemplated
      hereby and thereby in (i) the Supreme Court of the State of New York,
      New
      York County, or (ii) the United States District Court for the Southern
      District of New York, and hereby and thereby further irrevocably and
      unconditionally waives and agrees not to plead or claim in any such court that
      any such action, suit or proceeding brought in any such court has been brought
      in an inconvenient forum. 

     

    SECTION
      10.10.   Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      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, except to the extent that the Minnesota Business Corporation Act
      is
      mandatorily applicable.

     

    SECTION
      10.11.   Waiver
      of Jury Trial.
      Each
      party hereby waives, to the fullest extent permitted by applicable law, any
      right it may have to a trial by jury in respect to any litigation directly
      or
      indirectly arising out of, under or in connection with this Agreement, any
      Ancillary Agreement or any transaction contemplated hereby or thereby. Each
      party (a) certifies that no representative, agent or attorney of any
      other
      party has represented, expressly or otherwise, that such other party would
      not,
      in the event of litigation, seek to enforce the foregoing waiver and
      (b) acknowledges that it and the other parties hereto have been induced
      to
      enter into this Agreement and the Ancillary Agreements, as applicable, by,
      among
      other things, the mutual waivers and certifications in this
      Section 10.11.

     

    SECTION
      10.12.   Specific
      Performance. 
      The parties hereto agree that irreparable damage would occur in the
      event
      that any provision contained in Section 5.03

     

     

    
    

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

    
       

      
        or 5.13 was not performed in accordance with the terms
          thereof
          and that the parties hereto shall be entitled to specific performance of
          the
          terms thereof in addition to any other remedy available to them at law
          or in
          equity.

      

       

      
        
          
          

        

        
          59

          
            

          

        

        
          
          

        

      

       

                IN
        WITNESS WHEREOF, Seller and
        Purchaser have duly executed this Agreement as of the date first written
        above.

       

       

      
        	
                WEEKLY
                  READER CORPORATION,

                 

              
	 	 
	
                by

              	 /s/
                
	
              	
                Name: 
                  Richard Nota

              
	 	
                Title: 
                  Executive Vice President,
                  Operations

              

      

       

       

       

      
        	
                PEARSON
                  EDUCATION, INC., 

                 

              
	 	 
	
                by

              	 /s/
                
	 	
                Name: 
                  Philip Hoffman

              
	 	
                Title: 

              

      

      
      

      
      

       

       

      
        
                   
The
            undersigned irrevocably and
            unconditionally guarantees, as a primary obligor and not merely as a
            surety, all
            monetary (including indemnification) obligations of Purchaser under this
            Agreement.

           

           

        

      

      

        
          	
                  PEARSON,
                    INC., 

                   

                
	 	 
	
                  by

                	 /s/
                  
	 	
                  Name: 
                    Philip Hoffman

                
	 	
                  Title:

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