Document:

Exhibit 4.3

Exhibit 4.3

CAMBIUM LEARNING, INC.

And

Certain of Its Direct and Indirect Subsidiaries

from time to time Parties Hereto,

as Borrowers

LOAN AND SECURITY AGREEMENT

Dated: February 17, 2011

$40,000,000

HARRIS N.A.,

Individually and as Agent for any Lender which is

or becomes a Party hereto

BARCLAYS BANK PLC,

Individually and as Collateral Agent

BMO CAPITAL MARKETS

and

BARCLAYS CAPITAL,

as Joint Lead Arrangers

and Joint Book Runners

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	SECTION 1. CREDIT FACILITY
	 	 	1	 
	 
	 	 	 	 
	1.1 Loans
	 	 	1	 
	1.2 Letters of Credit; LC Guaranties
	 	 	3	 
	1.3 Incremental Extensions of Credit
	 	 	4	 
	 
	 	 	 	 
	SECTION 2. INTEREST, FEES AND CHARGES
	 	 	4	 
	 
	 	 	 	 
	2.1 Interest
	 	 	4	 
	2.2 Computation of Interest and Fees
	 	 	5	 
	2.3 Fee Letter
	 	 	5	 
	2.4 Letter of Credit and LC Guaranty Fees
	 	 	5	 
	2.5 Unused Line Fee
	 	 	6	 
	2.6 Audit Fees
	 	 	6	 
	2.7 Reimbursement of Expenses
	 	 	6	 
	2.8 Bank Charges
	 	 	7	 
	2.9 Collateral Protection Expenses; Appraisals
	 	 	7	 
	2.10 Payment of Charges
	 	 	7	 
	2.11 No Deductions
	 	 	8	 
	 
	 	 	 	 
	SECTION 3. LOAN ADMINISTRATION
	 	 	11	 
	 
	 	 	 	 
	3.1 Manner of Borrowing Revolving Credit Loans/LIBOR Option
	 	 	11	 
	3.2 Payments
	 	 	14	 
	3.3 Mandatory and Optional Prepayments
	 	 	15	 
	3.4 Application of Payments and Collections
	 	 	16	 
	3.5 All Loans to Constitute One Obligation
	 	 	17	 
	3.6 Loan Account
	 	 	17	 
	3.7 Statements of Account
	 	 	18	 
	3.8 Increased Costs
	 	 	18	 
	3.9 Basis for Determining Interest Rate Inadequate
	 	 	19	 
	3.10 Sharing
of Payments, Etc.
	 	 	19	 
	 
	 	 	 	 
	SECTION 4. TERM AND TERMINATION
	 	 	19	 
	 
	 	 	 	 
	4.1 Term of Agreement
	 	 	19	 
	4.2 Termination
	 	 	19	 
	 
	 	 	 	 
	SECTION 5. SECURITY INTERESTS
	 	 	20	 
	 
	 	 	 	 
	5.1 Security Interest in Collateral
	 	 	20	 
	5.2 Other Collateral
	 	 	22	 
	5.3 Lien Perfection; Further Assurances
	 	 	22	 

 

i

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	5.4 Lien on Realty
	 	 	23	 
	 
	 	 	 	 
	SECTION 6. COLLATERAL ADMINISTRATION
	 	 	23	 
	 
	 	 	 	 
	6.1 General
	 	 	23	 
	6.2 Administration of Accounts
	 	 	24	 
	6.3 Administration of Inventory
	 	 	26	 
	6.4 Payment of Charges
	 	 	26	 
	 
	 	 	 	 
	SECTION 7. REPRESENTATIONS AND WARRANTIES
	 	 	26	 
	 
	 	 	 	 
	7.1 General Representations and Warranties
	 	 	26	 
	7.2 Continuous Nature of Representations and Warranties
	 	 	33	 
	7.3 Survival of Representations and Warranties
	 	 	33	 
	 
	 	 	 	 
	SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
	 	 	33	 
	 
	 	 	 	 
	8.1 Affirmative Covenants
	 	 	33	 
	8.2 Negative Covenants
	 	 	38	 
	8.3 Specific Financial Covenants
	 	 	48	 
	 
	 	 	 	 
	SECTION 9. CONDITIONS PRECEDENT
	 	 	48	 
	 
	 	 	 	 
	9.1 Initial Loans
	 	 	48	 
	9.2 Conditions Precedent to All Loans and Credit Accommodations
	 	 	49	 
	 
	 	 	 	 
	SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
	 	 	49	 
	 
	 	 	 	 
	10.1 Events of Default
	 	 	49	 
	10.2 Acceleration of the Obligations
	 	 	51	 
	10.3 Other Remedies
	 	 	52	 
	10.4 Setoff and Sharing of Payments
	 	 	53	 
	10.5 Remedies Cumulative; No Waiver
	 	 	53	 
	 
	 	 	 	 
	SECTION 11. AGENT
	 	 	54	 
	 
	 	 	 	 
	11.1 Authorization and Action
	 	 	54	 
	11.2
Agent’s Reliance, Etc.
	 	 	54	 
	11.3 Harris and Affiliates
	 	 	55	 
	11.4 Lender Credit Decision
	 	 	55	 
	11.5 Indemnification
	 	 	56	 
	11.6 Rights and Remedies to Be Exercised by Agent Only
	 	 	56	 
	11.7 Agency Provisions Relating to Collateral
	 	 	56	 

 

ii

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	11.8 Agent’s Right to Purchase Commitments
	 	 	57	 
	11.9 Right of Sale; Assignment; Participations
	 	 	57	 
	11.10 Amendment
	 	 	58	 
	11.11 Resignation of Agent; Appointment of Successor
	 	 	59	 
	11.12 Audit, Appraisal and Examination Reports; Disclaimer by Lenders
	 	 	60	 
	11.13 Collateral Agent
	 	 	60	 
	 
	 	 	 	 
	SECTION 12. MISCELLANEOUS
	 	 	61	 
	 
	 	 	 	 
	12.1 Power of Attorney
	 	 	61	 
	12.2 Indemnity
	 	 	62	 
	12.3 Sale of Interest
	 	 	62	 
	12.4 Severability
	 	 	62	 
	12.5 Successors and Assigns
	 	 	62	 
	12.6 Cumulative Effect; Conflict of Terms
	 	 	62	 
	12.7 Execution in Counterparts
	 	 	63	 
	12.8 Notice
	 	 	63	 
	12.9 Consent
	 	 	64	 
	12.10 Reserved
	 	 	64	 
	12.11 Time of Essence
	 	 	64	 
	12.12 Entire Agreement
	 	 	64	 
	12.13 No Control; No Advisory or Fiduciary Responsibility
	 	 	64	 
	12.14 Interpretation
	 	 	65	 
	12.15 Confidentiality
	 	 	65	 
	12.16 GOVERNING LAW; CONSENT TO FORUM
	 	 	65	 
	12.17 WAIVERS BY BORROWERS
	 	 	66	 
	12.18 Advertisement
	 	 	66	 
	12.19 Reimbursement
	 	 	67	 
	12.20 Patriot Act Notice
	 	 	67	 
	12.21 OTHER
LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENT; ETC.
	 	 	68	 

 

iii

 

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT is made as of this 17th day of February, 2011, by and among
HARRIS N.A. (“Harris”) with an office at 111 West Monroe Street, Chicago, Illinois 60603,
individually as a Lender and as Agent (“Agent”) for itself and any other financial institution
which is or becomes a party hereto (each such financial institution, including Harris, is referred
to hereinafter individually as a “Lender” and collectively as the “Lenders”), BARCLAYS BANK PLC, as
Collateral Agent, the LENDERS and CAMBIUM LEARNING, INC., a Delaware corporation, with its chief
executive office and principal place of business at 1800 Valley View Lane, Suite 400, Dallas, Texas
75234 (“Cambium” or “Borrower Representative”) and each Subsidiary of Cambium that is or may become
a party hereto as a borrower (Cambium and each such Subsidiary, individually a “Borrower” and
collectively, “Borrowers”). Capitalized terms used in this Agreement have the meanings assigned to
them in Appendix A, General Definitions. Accounting terms not otherwise specifically defined
herein shall be construed in accordance with GAAP consistently applied.

SECTION 1. CREDIT FACILITY

Subject to the terms and conditions of, and in reliance upon the representations and
warranties made in, this Agreement and the other Loan Documents, Lenders agree to make a Total
Credit Facility of up to $40,000,000 (as such amount may be increased or reduced from time to time
pursuant to the terms of this Agreement) available upon Borrowers’ request therefor, as follows:

1.1 Loans.

1.1.1 Revolving Credit Loans. Each Lender agrees, severally and not jointly, to make
Revolving Credit Loans to Borrowers from time to time during the period from the date hereof to but
not including the last day of the Term, as requested by Borrower Representative, on its own behalf
and on behalf of all other Borrowers in the manner set forth in subsection 3.1.1 hereof, up to a
maximum principal amount at any time outstanding equal to the lesser of (i) such Lender’s Revolving
Loan Commitment minus the product of such Lender’s Revolving Loan Percentage and the LC
Amount minus the product of such Lender’s Revolving Loan Percentage and Reserves, if any
and (ii) the product of such Lender’s Revolving Loan Percentage and an amount equal to the
Borrowing Base at such time minus the LC Amount minus Reserves, if any.

1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely for (i) the
satisfaction of existing Indebtedness of Borrowers under their senior secured credit facility and
outstanding pursuant to their existing senior unsecured notes; (ii) Borrowers’ general operating
capital needs in a manner consistent with the provisions of this Agreement and all applicable laws,
(iii) working capital and other general corporate purposes in a manner consistent with the
provisions of this Agreement and all applicable laws, (iv) to pay certain fees and expenses
incurred in connection with this Agreement and/or the Senior Secured Notes Documents, and (v) other
purposes permitted under this Agreement.

 

1

 

1.1.3 Overadvances. Insofar as Borrower Representative, on its own behalf and on
behalf of all other Borrowers, may request and Agent or Majority Lenders (as provided
below) may be willing in their sole and absolute discretion to make Revolving Credit Loans to
Borrowers at a time when the unpaid balance of Revolving Credit Loans plus the sum of the
LC Amount plus the amount of LC Obligations that have not been reimbursed by Borrowers or
funded with a Revolving Credit Loan, plus Reserves, exceeds, or would exceed with the
making of any such Revolving Credit Loan, the Borrowing Base (and such Loan or Loans being herein
referred to individually as an “Overadvance” and collectively, as “Overadvances”), Agent shall
enter such Overadvances as debits in the Loan Account. All Overadvances shall be repaid on demand,
shall be secured by the Collateral and shall bear interest as provided in this Agreement for
Revolving Credit Loans generally. Any Overadvance made pursuant to the terms hereof shall be made
by all Lenders ratably in accordance with their respective Revolving Loan Percentages.
Overadvances in the aggregate amount of $500,000 or less may, unless an Event of Default has
occurred and is continuing, be made in the sole and absolute discretion of Agent. Overadvances in
an aggregate amount of more than $500,000 but less than $2,000,000 may, unless an Event of Default
has occurred and is continuing, be made in the sole and absolute discretion of the Majority
Lenders. Overadvances in an aggregate amount of $2,000,000 or more and Overadvances to be made
after the occurrence and during the continuation of an Event of Default shall require the consent
of all Lenders. The foregoing notwithstanding, in no event, unless otherwise consented to by all
Lenders, (w) shall any Overadvances be outstanding for more than ninety (90) consecutive days, (x)
after all outstanding Overadvances have been repaid, shall Agent or Lenders make any additional
Overadvances unless ninety (90) days or more have expired since the last date on which any
Overadvances were outstanding, (y) shall Overadvances be outstanding on more than ninety (90) days
within any one hundred eighty day (180) period or (z) shall Agent make Revolving Credit Loans on
behalf of Lenders under this subsection 1.1.2 to the extent such Revolving Credit Loans would cause
a Lender’s share of the Revolving Credit Loans to exceed such Lender’s Revolving Loan Commitment
minus such Lender’s Revolving Loan Percentage of the LC Amount.

1.1.4 Swingline Loans. In order to reduce the frequency of transfers of funds from
Lenders to Agent for making Revolving Credit Loans and for so long as no Default or Event of
Default exists, Agent shall be permitted (but not required) to make Revolving Credit Loans to
Borrowers upon request by Borrowers (such Revolving Credit Loans to be designated as “Swingline
Loans”) provided that the aggregate amount of Swingline Loans outstanding at any time will
not (i) exceed $5,000,000; (ii) when added to the principal amount of Agent’s other Revolving
Credit Loans then outstanding plus Agent’s Revolving Loan Percentage of the LC Amount,
exceed Agent’s Revolving Loan Commitment; or (iii) when added to the principal amount of all other
Revolving Credit Loans then outstanding plus the LC Amount, exceed the Borrowing Base
minus Reserves. Within the foregoing limits, Borrowers may borrow, repay and reborrow
Swingline Loans. All Swingline Loans shall be treated as Revolving Credit Loans for purposes of
this Agreement, except that (a) all Swingline Loans shall be Base Rate Revolving Loans and (b)
notwithstanding anything herein to the contrary (other than as set forth in the next succeeding
sentence), all principal and interest paid with respect to Swingline Loans shall be for the sole
account of Agent in its capacity as the lender of Swingline Loans. Notwithstanding the foregoing,
not more than 2 Business Days after (1) Lenders receive notice from Agent that a Swingline Loan has
been advanced in respect of a drawing under a Letter of Credit or LC Guaranty or (2) in any other
circumstance, demand is made by Agent during the continuance of an Event of Default, each Lender
shall irrevocably and unconditionally purchase and receive from Agent, without recourse or warranty
from Agent, an undivided interest and participation in
each Swingline Loan to the extent of such Lender’s Revolving Loan Percentage thereof, by
paying to Agent, in same day funds, an amount equal to such Lender’s Revolving Loan Percentage of
such Swingline Loan.

 

2

 

1.1.5 Agent Loans. Upon the occurrence and during the continuance of an Event of
Default, Agent, in its sole discretion, may make Revolving Credit Loans on behalf of Lenders, in an
aggregate amount not to exceed, when aggregated with the amount of all existing Overadvances,
$4,000,000, if Agent, in its reasonable business judgment, deems that such Revolving Credit Loans
are necessary or desirable (i) to protect all or any portion of the Collateral, (ii) to enhance the
likelihood, or maximize the amount of, repayment of the Loans and the other Obligations, or (iii)
to pay any other amount chargeable to Borrowers pursuant to this Agreement, including without
limitation costs, fees and expenses as described in Sections 2.8 and 2.9 (hereinafter, “Agent
Loans”); provided, that in no event shall (a) the maximum principal amount of the Revolving
Credit Loans exceed the aggregate Revolving Loan Commitments and (b) Majority Lenders may at any
time revoke Agent’s authorization to make Agent Loans. Any such revocation must be in writing and
shall become effective prospectively upon Agent’s receipt thereof. Each Lender shall be obligated
to advance its Revolving Loan Percentage of each Agent Loan. If Agent Loans are made pursuant to
the preceding sentence, then (a) the Borrowing Base shall be deemed increased by the amount of such
permitted Agent Loans, but only for so long as Agent allows such Agent Loans to be outstanding, and
(b) all Lenders that have committed to make Revolving Credit Loans shall be bound to make, or
permit to remain outstanding, such Agent Loans based upon their Revolving Loan Percentages in
accordance with the terms of this Agreement.

1.2 Letters of Credit; LC Guaranties. Issuing Bank agrees, and if requested by
Borrower Representative, on its own behalf and on behalf of all other Borrowers, to (i) issue its,
or cause to be issued by it or an Affiliate of Issuing Bank, on the date requested by Borrower
Representative, on its own behalf and on behalf of all other Borrowers, Letters of Credit for the
account of Borrowers or (ii) execute LC Guaranties by which Issuing Bank, or another Affiliate of
Issuing Bank, on the date requested by Borrower Representative, on its own behalf and on behalf of
all other Borrowers, shall guaranty the payment or performance by Borrowers of their reimbursement
obligations with respect to letters of credit; provided that the LC Amount shall not exceed
$5,000,000 at any time. No Letter of Credit or LC Guaranty may have an expiration date after the
earlier of (x) the date which is 30 days prior to the last day of the Term unless the Letter of
Credit or LC Guaranty is cash collateralized in accordance with subsection 4.2.2 or (y) one year
after the issuance date thereof. Notwithstanding anything to the contrary contained herein,
Borrowers, Agent and Lenders hereby agree that all LC Obligations and all obligations of Borrowers
relating thereto shall be satisfied by the prompt issuance of one or more Revolving Credit Loans
that are Base Rate Revolving Loans, which Borrowers hereby acknowledge are requested and Lenders
hereby agree to fund. In the event that Revolving Credit Loans are not, for any reason, promptly
made to satisfy all then existing LC Obligations, each Lender hereby agrees to pay to Agent, on
demand, an amount equal to such LC Obligations multiplied by such Lender’s
Revolving Loan Percentage, and until so paid, such amount shall be secured by the Collateral and
shall bear interest and be payable at the same rate and in the same manner as Base Rate Revolving
Loans. Immediately upon the issuance of a Letter of Credit or an LC Guaranty under this Agreement,
each Lender shall be deemed to have irrevocably and unconditionally purchased and received from
Issuing Bank, without recourse or warranty, an undivided interest
and participation therein equal to such LC Obligations multiplied by such
Lender’s Revolving Loan Percentage. Letters of Credit issued by Barclays Bank PLC pursuant to
Borrowers’ existing senior secured revolving credit facility which is to be terminated and
refinanced in connection with the consummation of the transactions contemplated by this Agreement
shall continue to remain outstanding and shall be deemed Letters of Credit issued pursuant to this
Section 1.2.

 

3

 

1.3 Incremental Extensions of Credit. Subject to the terms and conditions set forth
herein after the Closing Date, Borrowers may at any time and from time to time, request, upon
thirty (30) days’ written notice to Agent, to add additional Revolving Loan Commitments hereunder
(the “Incremental Revolving Loan Commitments”) in minimum principal amounts of $5,000,000 up to a
maximum aggregate amount of $20,000,000 so long as immediately prior to, and after giving effect
to, any Incremental Revolving Loan Commitments, no Default or Event of Default has occurred and is
continuing of shall result therefrom. Any additional bank, financial institution, existing Lender
or other Person that elects to extend commitments to provide Incremental Revolving Loan Commitments
shall be reasonably satisfactory to Borrowers and Agent (any such bank, financial institution,
existing Lender or other Person being called an “Additional Lender”) and shall become a Lender
under this Agreement, pursuant to an amendment or joinder agreement (an “Incremental Facility
Joinder”) to this Agreement in form and substance reasonably satisfactory to the Agent, giving
effect to the modifications permitted by this Section 1.3, and, as appropriate, the other Loan
Documents, executed by Borrowers, each existing Lender agreeing to provide a commitment in respect
of the Incremental Revolving Loan Commitments, if any, each Additional Lender, if any, and Agent.
It is understood and agreed that no Lender shall have an obligation to provide the Incremental
Revolving Loan Commitments. An Incremental Facility Joinder may, without the consent of any other
Lenders, effect such amendments to this Agreement and the other Loan Documents as may be reasonably
necessary or appropriate, in the opinion of Agent, to effect the provisions of this Section 1.3.
The effectiveness of any Incremental Facility Joinder shall be subject to the receipt on the date
thereof by Agent of such legal opinions, board resolutions and other closing documents and
certificates reasonably requested by Agent and consistent with those delivered on the Closing Date.

SECTION 2. INTEREST, FEES AND CHARGES

2.1 Interest.

2.1.1 Rates of Interest. Interest shall accrue on the principal amount of the Base
Rate Loans outstanding at the end of each day at a fluctuating rate per annum equal to the
Applicable Margin then in effect plus the Base Rate. Said rate of interest shall increase
or decrease by an amount equal to any increase or decrease in the Base Rate, effective as of the
opening of business on the day that any such change in the Base Rate occurs. If Borrower
Representative, on its own behalf and on behalf of all other Borrowers, exercises the LIBOR Option
as provided in Section 3.1, interest shall accrue on the principal amount of the LIBOR Loans
outstanding at the end of each day at a rate per annum equal to the Applicable Margin then in
effect plus the LIBOR Lending Rate applicable to each LIBOR Loan for the corresponding
Interest Period.

2.1.2 Default Rate of Interest. Upon and after the occurrence of an Event of Default,
and during the continuation thereof, the Obligations may, in the sole discretion of Agent or
Majority Lenders, bear interest or earn the Letter of Credit fees set forth in Section 2.4(i) at a
per annum rate equal to 2% plus the rate otherwise applicable thereto (the “Default Rate”).

 

4

 

2.1.3 Maximum Interest. In no event whatsoever shall the aggregate of all amounts
deemed interest hereunder or under the Notes and charged or collected pursuant to the terms of this
Agreement or pursuant to the Notes exceed the highest rate permissible under any law which a court
of competent jurisdiction shall, in a final determination, deem applicable hereto (the “Maximum
Rate”). If any provisions of this Agreement or the Notes are in contravention of any such law,
such provisions shall be deemed amended to conform thereto. If at any time, the amount of interest
paid hereunder is limited by the Maximum Rate, and the amount at which interest accrues hereunder
is subsequently below the Maximum Rate, the rate at which interest accrues hereunder shall remain
at the Maximum Rate, until such time as the aggregate interest paid hereunder equals the amount of
interest that would have been paid had the Maximum Rate not applied.

2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC Guaranty fees
and Unused Line Fees hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days.

2.3 Fee Letter. Borrowers shall pay to Agent certain fees and other amounts in
accordance with the terms of the fee letter between Borrowers and Agent (the “Fee Letter”).

2.4 Letter of Credit and LC Guaranty Fees. Borrowers shall pay to Agent or Issuing
Bank:

(i) for Letters of Credit and LC Guaranties of letters of credit, for the ratable
benefit of Lenders a per annum fee equal to the Applicable Margin then in effect for LIBOR
Revolving Loans of the aggregate undrawn available amount of such Letters of Credit and LC
Guaranties outstanding from time to time during the term of this Agreement, plus,
for the benefit of Issuing Bank, all normal and customary charges associated with the
issuance, processing and administration thereof, which fees and charges shall be deemed
fully earned upon issuance of each such Letter of Credit or LC Guaranty or as advised by
Agent or Issuing Bank. Such charges shall be due and payable on the issuance and each
renewal of any such Letter of Credit or LC Guaranty or as otherwise advised by Issuing Bank.
Such fees shall be due and payable quarterly in arrears on the first day of each calendar
quarter hereafter. Such charges and fees shall not be subject to rebate or proration upon
the termination of this Agreement for any reason; and

(ii) with respect to all Letters of Credit and LC Guaranties, for the account of
Issuing Bank only, a per annum fronting fee equal to 3/8% of the aggregate face amount of
such Letters of Credit and LC Guaranties outstanding from time to time during the term of
this Agreement, which fronting fees shall be payable upon issuance and each renewal thereof
and shall not be subject to rebate or proration upon the termination of this Agreement for
any reason.

 

5

 

2.5 Unused Line Fee. Borrowers shall pay to Agent, for the ratable benefit of
Lenders, a fee (the “Unused Line Fee”) equal to the Applicable Margin (then in effect) per annum
multiplied by the average daily amount by which the Revolving Credit Maximum Amount exceeds the sum
of (i) the outstanding principal balance of the Revolving Credit Loans plus (ii) the LC
Amount; provided, that for purposes of allocating the Unused Line Fee among Lenders,
outstanding Swingline Loans shall not be included as part of the outstanding balance of the Loans
for purposes of calculating such fees owed to Lenders other than Agent. The Unused Line Fee shall
be payable quarterly in arrears on the first day of each calendar quarter hereafter.

2.6 Audit Fees. Borrowers shall pay to Agent audit fees in accordance with Agent’s
current schedule of fees in effect from time to time in connection with audits of the books and
records and Properties of Borrowers and their Subsidiaries and such other matters as Agent shall
deem appropriate in its reasonable credit judgment, plus all reasonable out-of-pocket
expenses incurred by Agent in connection with such audits; provided, that so long as no
Event of Default has occurred and is continuing, (i) Borrowers shall not be liable for such audit
fees incurred in connection with more than two (2) such audits during any fiscal year or three (3)
such audits during any fiscal year if a Trigger Period exists; and (ii) Borrowers’ reimbursement
obligations with respect to any such one audit shall not exceed $30,000, whether such audits are
conducted by employees of Agent or by third parties hired by Agent. Such audit fees and
out-of-pocket expenses shall be payable five (5) Business Days (or on demand if an Event of Default
has occurred and is continuing) following the date of issuance by Agent of a request for payment
thereof (together with reasonable supporting detail) to Borrowers. Agent may, in its discretion,
provide for the payment of such amounts by making appropriate Revolving Credit Loans to Borrowers
and charging Borrowers’ Loan Account therefor. Each audit shall be from an auditor reasonably
satisfactory to Agent and Collateral Agent.

2.7 Reimbursement of Expenses. If, at any time or times regardless of whether or not
an Event of Default then exists, unless otherwise specifically provided below, (i) Agent incurs
reasonable legal or accounting expenses or any other reasonable costs or reasonable out-of-pocket
expenses in connection with (1) the negotiation and preparation of this Agreement or any of the
other Loan Documents, any amendment of or modification of this Agreement or any of the other Loan
Documents, or any syndication or attempted syndication of the Obligations (including, without
limitation, printing and distribution of materials to prospective Lenders and all costs associated
with bank meetings, but excluding any closing fees paid to Lenders in connection therewith) or (2)
the administration of this Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; or (ii) Agent or any Lender incurs legal or accounting expenses or
any other costs or out-of-pocket expenses in connection with (1) any litigation, contest, dispute,
suit, proceeding or action (whether instituted by Agent, any Lender, any Borrower or any other
Person) relating to the Collateral, this Agreement or any of the other Loan Documents or any
Borrower’s, any of its Subsidiaries’ or any Guarantor’s affairs including any such costs or
expenses incurred in contemplation thereof or preparation therefor; (2) if an Event of Default has
occurred and is continuing, any attempt to enforce any rights of Agent or any Lender against any
Borrower or any other Person which may be obligated to Agent or any Lender by virtue of this
Agreement or any of the other Loan Documents, including, without limitation, the Account Debtors;
or (3) subject to any specific limitations contained in this Agreement, any attempt to inspect,
verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then all such legal and

 

6

 

accounting expenses, other costs and out of pocket expenses of Agent or any Lender, as
applicable, shall be charged to Borrowers; provided, that Borrowers shall not be
responsible for such costs and out-of-pocket expenses to the extent incurred because of the gross
negligence or willful misconduct of Agent or any Lender. All amounts chargeable to Borrowers under
this Section 2.7 shall be Obligations secured by all of the Collateral, shall be payable on demand
to Agent or such Lender, as the case may be, and shall bear interest from the date such demand is
made until paid in full at the rate applicable to Base Rate Revolving Loans from time to time.
Borrowers shall also reimburse Agent for expenses incurred by Agent in its administration of the
Collateral to the extent and in the manner provided in Sections 2.8 and 2.9 hereof.

2.8 Bank Charges. Borrowers shall pay to Agent, on demand, any and all fees, costs or
expenses which Agent or any Lender pays to a bank or other similar institution arising out of or in
connection with (i) the forwarding to any Borrower or any other Person on behalf of any Borrower,
by Agent or any Lender, of proceeds of Loans made to Borrowers pursuant to this Agreement and (ii)
the depositing for collection by Agent or any Lender of any check or item of payment received or
delivered to Agent or any Lender on account of the Obligations.

2.9 Collateral Protection Expenses; Appraisals. All out-of-pocket expenses incurred
in protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral,
and any and all excise, property, sales, and use taxes imposed by any state, federal, or local
authority on any of the Collateral or in respect of the sale thereof shall be borne and paid by
Borrowers. If Borrowers fail to promptly pay any portion thereof when due, Agent may, at its
option, but shall not be required to, pay the same and charge Borrowers therefor. Additionally,
from time to time, Agent may, at Borrowers’ expense, obtain appraisals from appraisers (who may be
personnel of Agent), stating the then current fair market value or orderly liquidation value of the
Inventory of any Borrower or any of its Subsidiaries; provided that so long as no Event of
Default has occurred and is continuing, Borrowers shall not be liable for appraisal fees or costs
in connection with more than one (1) such appraisal during any fiscal year or two (2) such
appraisals during any fiscal year if a Trigger Period exists. Each appraisal shall be from an
appraiser reasonably satisfactory to Agent and Collateral Agent.

2.10 Payment of Charges. All amounts chargeable to Borrowers under this Agreement
shall be Obligations secured by all of the Collateral, shall be, unless specifically otherwise
provided, payable on demand and shall bear interest from the date demand was made or such amount is
due, as applicable, until paid in full at the rate applicable to Base Rate Revolving Loans from
time to time.

 

7

 

2.11 No Deductions.

(a) Except as provided in Section 2.11(b), any and all payments or reimbursements made
hereunder shall be made free and clear of and without deduction for any and all Taxes (other
than Excluded Taxes).

(b) If any Borrower or any other Loan Party shall be required by law to deduct any
Taxes (other than Excluded Taxes) from or in respect of any sum payable hereunder to Agent
or any Lender, then (i) such Borrower or Loan Party shall make such deduction and pay the
full amount deducted to the relevant Governmental Authority in
accordance with applicable law (and provide evidence of such payment to the applicable
Lender) and (ii) the sum payable hereunder shall be increased as may be necessary so that,
after all required deductions are made, Agent or such Lender receives an amount equal to the
sum it would have received had no such deductions been made; provided that Borrowers
or other Loan Parties shall not be required to compensate Agent or any Lender pursuant to
this Section 2.11 for any amounts incurred more than six months prior to the date such Agent
or Lender notifies Borrower Representative of Agent’s or such Lender’s intention to claim
compensation therefor; provided, further, that if the circumstances giving
rise to such claim have a retroactive effect, then such six month period shall be extended
to include such period of retroactive effect; provided, further, that if
Borrower Representative reasonably believes that such Taxes were not correctly or legally
asserted, Agent or such Lender, as the case may be, will use reasonable efforts to cooperate
with Borrowers to obtain a refund of such Taxes so long as such efforts would not, in the
reasonable determination of Agent or such Lender, as the case may be, result in any
non-reimbursable additional costs, expenses or risks or be otherwise disadvantageous to it.

(c) Each of Agent and the Lenders agree that if it subsequently recovers, or receives a
permanent net tax benefit with respect to, any amount of Taxes (other than Excluded Taxes)
(i) previously paid by it and as to which it has been indemnified by or on behalf of
Borrowers or another Loan Party or (ii) previously deducted by Borrowers or Loan Parties
(including, without limitation, any Taxes deducted from any additional sums payable pursuant
to Section 2.11(b) above), Agent or such Lender, as the case may be, shall reimburse
Borrowers or Loan Parties to the extent of the amount of any such recovery or permanent net
tax benefit (but only to the extent of indemnity payments made, or additional amounts paid,
by or on behalf of Borrowers or other Loan Parties under this Section 2.11 with respect to
the Non-Excluded Taxes giving rise to such recovery or tax benefit), together with any
interest paid by the relevant Governmental Authority with respect to such recovery or tax
benefit within thirty (30) Business Days of the determination that such Borrower or Loan
Party is entitled to such recovery or tax benefit; provided, however, that
Borrowers or Loan Parties, upon the request of Agent or such Lender, agrees to repay Agent
or such Lender, as the case may be, the amount paid over to Borrowers or Loan Parties
(together with any penalties, interest or other charges), in the event Agent or such Lender
is required to repay such amount to the relevant Governmental Authority; provided,
further, that such Borrower or Loan Party shall not be required to repay Agent or
Lender an amount in excess of the amount paid over by such party to such Borrower or Loan
Party pursuant to this Section 2.11(c). If Agent or Lender shall become aware that its
entitled to receive a refund or credit in respect of Taxes (other than Excluded Taxes) with
respect to which it has been indemnified or any Borrower or Loan Party has paid additional
amounts, it shall promptly notify such Borrower or Loan Party of the availability of such
refund or credit and shall, within thirty (30) days after receipt of a request for such by
such Borrower or Loan Party (whether as a result of notification that it has made of such to
such Borrower or Loan Party or otherwise), make a claim to such Governmental Authority for
such refund or credit and contest such Taxes or liabilities if (i) any Borrower or Loan
Party has agreed in writing to pay all of such Agent’s or Lender’s reasonable costs and
expenses relating to such claim and

 

8

 

 (ii) such Agent or Lender determines, in its reasonable
discretion, that it
 would not be materially disadvantaged as a result of such refund claim (it being
understood that the mere existence of fees, charges, costs or expenses that any Borrower or
Loan Party has offered to and agreed to pay on behalf of the Agent or Lender shall not be
deemed to be materially disadvantageous to such Person). This paragraph shall not be
construed to require an Agent or Lender to make available its tax returns (or any other
information relating to its Taxes that it deems confidential) to any Borrower, Loan Party or
any other Person. The agreements in this Section 2.11(c) shall survive the termination of
this Agreement and the payment of all amounts payable hereunder.

(d) Agent or any Lender claiming any additional amounts payable pursuant to subsection
(b) of this Section 2.11 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document reasonably requested by Borrower
Representative or to change the jurisdiction of its applicable lending office if the making
of such filing or change of jurisdiction would avoid the need for or reduce the amount of
any such additional amounts that may thereafter accrue or avoid the circumstances giving
rise to such exercise and would not, in the sole reasonable determination of Agent or such
Lender, as the case may be, result in any additional costs, expenses or risks or be
otherwise disadvantageous to it. Each of Agent and each Lender agrees to use reasonable
efforts to notify Borrower Representative as promptly as practicable upon its becoming aware
that circumstances exist that would cause Borrowers or Loan Parties to become obligated to
pay additional amounts to the Agent or such Lender pursuant to Section 2.11(b).

(e) If Borrowers or Loan Parties become obligated to pay additional amounts to any
Lender pursuant to Section 2.11 or Section 3.8, if any Lender is unable to make LIBOR
Revolving Loans, if any Lender is a Defaulting Lender or if any Lender is a Dissenting
Lender, Borrower Representative may designate another Person in its reasonable discretion
(such other Person being called a “Replacement Lender”) which Replacement Lender shall be
acceptable to Agent to purchase the Loans of such Lender and such Lender’s rights hereunder,
without recourse to or warranty by, or expense to, such Lender, for a purchase price equal
to the outstanding principal amount of the Loans payable to such Lender plus any accrued but
unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any
other amounts payable to such Lender under this Agreement, and to assume all the obligations
of such Lender hereunder, and, upon such purchase and assumption (pursuant to an Assignment
Agreement), such Lender shall no longer be a party hereto or have any rights hereunder
(other than rights with respect to indemnities and similar rights applicable to such Lender
prior to the date of such purchase and assumption) and shall be relieved from all
obligations to Borrowers hereunder, and the Replacement Lender shall succeed to the rights
and obligations of such Lender hereunder.

 

9

 

(f) To the extent permitted by applicable law, Agent or each Lender that is not a
United States person within the meaning of Code section 7701(a)(30) (a “Non-US Participant”)
shall deliver to Borrower Representative on or prior to the Closing Date (or in the case of
a Lender that is an assignee, on the date of such assignment to such Lender) two accurate
and complete original signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor
or other applicable form prescribed by the IRS,

including an appropriate Form W-8 or W-9 for each partner, member, beneficiary or other
settler of any Non-US Participant delivering a Form W-8IMY) certifying to such Agent or
Lender’s entitlement to a complete exemption from, or a reduced rate in, United States
withholding Tax on (i) interest payments to be made hereunder or with respect to any Loan
and (ii) any fees payable to Agent or any Lender as provided in the Fee Letter. If Agent or
a Lender that is a Non-US Participant is claiming a complete exemption from withholding on
interest pursuant to Sections 871(h) or 881(c) of the Code, such Agent or Lender shall
deliver (along with two accurate and complete original signed copies of IRS Form W-8BEN) a
certificate in form and substance reasonably acceptable to Agent and Borrower Representative
(any such certificate, a “Withholding Certificate”). Each Agent or Lender, whether or not a
Non-US Participant, shall provide two (2) properly completed and duly executed copies of IRS
Form W-9 or W-8 (if applicable) (or any successor or other applicable form) to Borrower
Representative certifying that such Agent or such Lender is exempt from United States backup
withholding Tax.

(g) Borrowers and Loan Parties shall not be required to pay additional amounts to Agent
or any Lender, or indemnify Agent or any Lender, under this Section 2.11 to the extent that
such obligations would not have arisen but for the failure of Agent or such Lender to comply
with this Section 2.11.

(h) If Agent or any Lender determines, as a result of any change in applicable law,
regulation or treaty, or in any official application or interpretation thereof, that it is
unable to legally submit to Borrower Representative any form or certificate that such Agent
or Lender is legally obligated to submit pursuant to subsection (f) of this Section 2.11 or
that such Agent or such Lender is legally required to withdraw or cancel any such form or
certificate previously submitted, such Agent or such Lender shall promptly notify Borrower
Representative of such fact and such Agent or such Lender shall to that extent not be
obligated to provide any such form or certificate and will be entitled to withdraw or cancel
any affected form or certificate, as applicable. Each Agent or Lender which delivers a
valid form or certificate under subsection (f) of this Section 2.11 further undertakes to
deliver to Borrower Representative two additional copies of such form or certificate (or a
successor form) on or before the date that such form or certificate expires or becomes
obsolete or after the occurrence of any event requiring a change in the most recent form or
certificate so delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by Borrower Representative.

(i) If any of the forms or other documentation required under this subsection are not
delivered to Borrower Representative as required after Borrower Representative has issued a
written request for such forms, then Borrowers may withhold from any interest payment to
such Agent or such Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding Tax.

(j) If Agent or any Lender is entitled to a reduction in (and not a complete exemption
from) the applicable withholding Tax, Borrowers may withhold from any interest payment to
such Agent or such Lender an amount equivalent to the applicable withholding Tax after
taking into account such reduction.

 

10

 

SECTION 3. LOAN ADMINISTRATION

3.1 Manner of Borrowing Revolving Credit Loans/LIBOR Option. Borrowings under the
credit facility established pursuant to Section 1 hereof shall be as follows:

3.1.1 Loan Requests; Revolving Credit Loans. A request for a Revolving Credit Loan
shall be made, or shall be deemed to be made, in the following manner: (a) Borrower
Representative, on its own behalf and on behalf of all other Borrowers, may give Agent notice of
its intention to borrow, in which notice Borrower Representative shall specify the amount of the
proposed borrowing of a Revolving Credit Loan and the proposed borrowing date, which shall be a
Business Day, no later than 12:00 p.m. (Chicago time) on the proposed borrowing date (or in
accordance with subsection 3.1.7, 3.1.8 or 3.1.9, as applicable, in the case of a request for a
LIBOR Loan); and (b) the failure by Borrowers to pay when due any amount required to be paid under
this Agreement, or the Notes, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in the amount required to
pay such interest or other Obligation.

3.1.2 Disbursement. Borrowers hereby irrevocably authorize Agent to disburse the
proceeds of each Loan requested, or deemed to be requested, pursuant to subsection 3.1.1 as
follows: (i) the proceeds of each Revolving Credit Loan requested under subsection 3.1.1(a) shall
be disbursed by Agent in lawful money of the United States of America in immediately available
funds, in the case of the initial borrowing, in accordance with the terms of the written
disbursement letter from Borrower Representative, on its own behalf and on behalf of all other
Borrowers, and in the case of each subsequent borrowing, by wire transfer to such bank account as
may be agreed upon by Borrowers and Agent from time to time or elsewhere if pursuant to a written
direction from Borrowers; and (ii) the proceeds of each Revolving Credit Loan deemed requested
under subsection 3.1.1(b) shall be disbursed by Agent by way of direct payment of the relevant
interest or other Obligation. If at any time any Loan is funded by Agent or Lenders in excess of
the amount requested or deemed requested by Borrowers, Borrowers agree to repay the excess to Agent
immediately upon the earlier to occur of (a) any Borrower’s discovery of the error and (b) notice
thereof to Borrowers from Agent or any Lender.

3.1.3 Payment by Lenders. Agent shall give to each Lender prompt written notice by
facsimile, telex or cable of the receipt by Agent from Borrower Representative of any request for a
Revolving Credit Loan. Each such notice shall specify the requested date and amount of such
Revolving Credit Loan, whether such Revolving Credit Loan shall be subject to the LIBOR Option, and
the amount of each Lender’s advance thereunder (in accordance with its applicable Revolving Loan
Percentage. Each Lender shall, not later than 12:00 p.m. (Chicago time) on such requested date,
wire to a bank designated by Agent the amount of that Lender’s Revolving Loan Percentage of the
requested Revolving Credit Loan. The failure of any Lender to make the Revolving Credit Loans to
be made by it shall not release any other Lender of its obligations hereunder to make its Revolving
Credit Loan. Neither Agent nor any other Lender shall be responsible for the failure of any other
Lender to make the Revolving Credit Loan to be made by such other Lender. The foregoing
notwithstanding, Agent, in its sole discretion, may from its own funds make a Revolving Credit Loan
on behalf of any Lender. In such event, the Lender on behalf of whom Agent made the Revolving
Credit Loan shall reimburse Agent for the amount of such Revolving Credit Loan made on its behalf,
on a weekly (or more frequent, as
determined by Agent in its sole discretion) basis. On each such settlement date, Agent will
pay to each Lender the net amount owing to such Lender in connection with such settlement,
including without limitation amounts relating to Loans, fees, interest and other amounts payable
hereunder. The entire amount of interest attributable to such Revolving Credit Loan for the period
from the date on which such Revolving Credit Loan was made by Agent on such Lender’s behalf until
Agent is reimbursed by such Lender, shall be paid to Agent for its own account.

 

11

 

3.1.4 Authorization. Borrowers hereby irrevocably authorize Agent, in Agent’s sole
discretion, to advance to Borrowers, and to charge to Borrowers’ Loan Account hereunder as a
Revolving Credit Loan (which shall be a Base Rate Revolving Loan), a sum sufficient to pay all
interest accrued on the Obligations upon Borrowers’ failure to pay when due and to pay all fees,
costs and expenses and other Obligations at any time owed by any Borrower to Agent or any Lender
hereunder.

3.1.5 Letter of Credit and LC Guaranty Requests. A request for a Letter of Credit or
LC Guaranty shall be made in the following manner: Borrower Representative, on its own behalf and
on behalf of all other Borrowers, may give Agent and Issuing Bank a written notice of its request
for the issuance of a Letter of Credit or LC Guaranty, not later than 11:00 a.m. (Chicago, Illinois
time), one Business Day before the proposed issuance date thereof, in which notice Borrower
Representative shall specify the issuance date and format and wording for the Letter of Credit or
LC Guaranty being requested (which shall be satisfactory to Agent and the Person being asked to
issue such Letter of Credit or LC Guaranty). Such request shall be accompanied by an executed
application and reimbursement agreement in form and substance satisfactory to Agent and the Person
being asked to issue the Letter of Credit or LC Guaranty, as well as any required resolutions and
other documents.

3.1.6 Method of Making Requests. As an accommodation to Borrowers, unless a Default
or an Event of Default is then in existence, (i) Agent shall permit telephonic or electronic
requests for Revolving Credit Loans to Agent, (ii) Agent and Bank may, in their discretion, permit
electronic transmittal of requests for Letters of Credit and LC Guaranties to them, and (iii) Agent
may, in Agent’s discretion, permit electronic transmittal of instructions, authorizations,
agreements or reports to Agent. Unless Borrower Representative, on its own behalf and on behalf of
all other Borrowers specifically directs Agent or Bank in writing not to accept or act upon
telephonic or electronic communications from any Borrower, neither Agent nor Bank shall have any
liability to Borrowers for any loss or damage suffered by any Borrower as a result of Agent’s or
Bank’s honoring of any requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to it telephonically or electronically and purporting to have
been sent to Agent or Bank by any Borrower, and neither Agent nor Bank shall have any duty to
verify the origin of any such communication or the authority of the Person sending it;
provided that the foregoing shall not apply to liability resulting from the gross
negligence or willful misconduct of Agent or Bank, as applicable, in either case as determined by a
final non-appealable judgment of a court of competent jurisdiction. Each telephonic request for a
Revolving Credit Loan, Letter of Credit or LC Guaranty accepted by Agent and Bank, if applicable,
hereunder shall be promptly followed by a written confirmation of such request from Borrower
Representative to Agent and Bank, if applicable.

 

12

 

3.1.7 LIBOR Loan Request. By delivering a borrowing request to Agent on or before
11:00 a.m., Chicago time, on a Business Day, Borrower Representative, on its own behalf and on
behalf of each other Borrower, may from time to time irrevocably request, on not less than three
nor more than five Business Days’ notice, that a LIBOR Loan be made in a minimum amount of $500,000
and integral multiples of $100,000, with an Interest Period of one, two, three or six months. On
the terms and subject to the conditions of this Agreement, each LIBOR Loan shall be made available
to Borrowers no later than 12:00 p.m. Chicago time on the first day of the applicable Interest
Period by deposit to the account of the applicable Borrower as shall have been specified in its
borrowing request. In no event shall Borrowers be permitted to have outstanding at any one time
LIBOR Loans with more than six (6) different Interest Periods.

3.1.8 Continuation and Conversion Elections. By delivering a continuation/ conversion
notice to Agent on or before 11:00 a.m., Chicago time, on a Business Day, Borrower Representative,
on its own behalf and on behalf of each other Borrower, may from time to time irrevocably elect, on
not less than three nor more than five Business Days’ notice, that all, or any portion in an
aggregate minimum amount of $500,000 and integral multiples of $100,000, of any LIBOR Loan be
converted on the last day of an Interest Period into a LIBOR Loan with a different Interest Period,
or continued on the last day of an Interest Period as a LIBOR Loan with a similar Interest Period,
provided, however, that no portion of the outstanding principal amount of any LIBOR
Loans may be converted to, or continued as, LIBOR Loans when any Event of Default has occurred and
is continuing. If any Event of Default has occurred and is continuing (if Agent or Majority
Lenders does or do not otherwise elect to exercise any right to accelerate the Loans it is granted
hereunder), or in the absence of delivery of a continuation/conversion notice with respect to any
LIBOR Loan at least three Business Days before the last day of the then current Interest Period
with respect thereto, each maturing LIBOR Loan shall automatically be continued as a Base Rate
Loan.

3.1.9 Voluntary Prepayment of LIBOR Loans. LIBOR Loans may be prepaid upon the terms
and conditions set forth herein. For LIBOR Loans in connection with which Borrowers have or may
incur Derivative Obligations, additional obligations may be associated with prepayment, in
accordance with the terms and conditions of the applicable underlying agreements relating to said
Derivative Obligations. Borrower Representative, on its own behalf and on behalf of each other
Borrower, shall give Agent, no later than 10:00 a.m., Chicago time, at least three (3) Business
Days notice of any proposed prepayment of any LIBOR Loan, specifying the proposed date of payment
of such LIBOR Loan, and the principal amount to be paid. Each partial prepayment of the principal
amount of LIBOR Loans shall be in an integral multiple of $500,000 and integral multiples of
$100,000 and accompanied by the payment of all charges outstanding on such LIBOR Loans and of all
accrued interest on the principal repaid to the date of payment. Borrowers acknowledge that
prepayment or acceleration of a LIBOR Loan during an Interest Period may result in Lenders
incurring additional costs, expenses and/or liabilities and that it is extremely difficult and
impractical to ascertain the extent of such costs, expenses and/or liabilities. Therefore, all
full or partial prepayments of LIBOR Loans shall be accompanied by, and Borrowers hereby promise to
pay, on each date a LIBOR Loan is prepaid or the date all sums payable hereunder become due and
payable, by acceleration or otherwise, in addition to all other sums then owing, an amount (“LIBOR
Loan Prepayment Fee”) determined by Agent pursuant to the following formula:

(a) the then current rate for United States Treasury securities (bills on a discounted
basis shall be converted to a bond equivalent) with a maturity date closest to the end of
the Interest Period as to which prepayment is made, subtracted from

(b) the LIBOR Lending Rate plus the Applicable Margin applicable to the LIBOR
Loan being prepaid.

 

13

 

If the result of this calculation is zero or a negative number, then there shall be no LIBOR Loan
Prepayment Fee. If the result of this calculation is a positive number, then the resulting
percentage shall be multiplied by:

(a) the amount of the LIBOR Loan being prepaid.

The resulting amount shall be divided by:

(b) 360

and multiplied by:

(c) the number of days remaining in the Interest Period as to which the prepayment is
being made.

Said amount shall be reduced to present value calculated by using the referenced United States
Treasury securities rate and the number of days remaining on the Interest Period for the LIBOR Loan
being prepaid.

The resulting amount of these calculations shall be the LIBOR Loan Prepayment Fee.

3.2 Payments. The Obligations shall be payable as follows or as provided in any of
the Loan Documents issued or made by Borrowers (provided that in the event of any conflict,
the provisions of this Agreement shall control):

3.2.1 Principal; Revolving Credit Loans. Principal on account of Revolving Credit
Loans shall be payable by Borrowers to Agent for the ratable benefit of Lenders immediately upon
the earliest of (i) if a Trigger Period has occurred and is continuing, the receipt by Agent or any
Borrower of any proceeds of any of the Collateral (except as otherwise provided herein), including
without limitation pursuant to subsections 3.3.1 and 6.2.4, to the extent of said proceeds, subject
to Borrowers’ rights to reborrow such amounts in compliance with subsection 1.1.1 hereof; (ii) the
occurrence and continuance of an Event of Default in consequence of which Agent or Majority Lenders
elect to accelerate the maturity and payment of the Obligations, or (iii) termination of this
Agreement pursuant to Section 4 hereof; provided, however, that, if an Overadvance
shall exist at any time, Borrowers shall, on demand, repay the Overadvance. Each payment
(including principal prepayment) by Borrowers on account of principal of the Revolving Credit Loans
shall be applied first to Base Rate Revolving Loans and then to LIBOR Revolving Loans.

3.2.2 Interest Provisions. Interest on the outstanding principal amount of any Loan
shall be payable on each Interest Payment Date.

 

14

 

3.2.3 Costs, Fees and Charges. Costs, fees and charges payable pursuant to this
Agreement shall be payable by Borrowers to Agent, as and when provided in Section 2 or Section 3
hereof, as applicable to Agent or a Lender, as applicable, or to any other Person designated by
Agent or such Lender in writing.

3.2.4 Other Obligations. The balance of the Obligations requiring the payment of
money, if any, shall be payable by Borrowers to Agent for distribution to Lenders, as appropriate,
as and when provided in this Agreement, the Other Agreements or the Security Documents, or on
demand, whichever is later.

3.2.5 LIBOR Loans. If the application of any payment made in accordance with the
provisions of this Section 3.2 at a time when no Event of Default has occurred and is continuing
would result in termination of a LIBOR Loan prior to the last day of the Interest Period for such
LIBOR Loan, the amount of such prepayment shall not be applied to such LIBOR Loan, but will, at
Borrowers’ option, be held by Agent in a non-interest-bearing account at Bank, which account is in
the name of Agent and from which account only Agent can make any withdrawal, in each case to be
applied as such amount would otherwise have been applied under this Section 3.2 at the earlier to
occur of (i) the last day of the relevant Interest Period or (ii) the occurrence of an Event of
Default.

3.3 Mandatory and Optional Prepayments.

3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. If, during a
Trigger Period any Borrower or any of its Subsidiaries sells any of the ABL Priority Collateral or
if any of the ABL Priority Collateral is lost or destroyed or taken by condemnation, Borrowers
shall, unless otherwise agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders
as and when received by any Borrower or such Subsidiary and as a mandatory prepayment of the Loans,
as herein provided, a sum equal to the proceeds (including insurance payments but net of costs and
taxes incurred in connection with such sale or event) received by Borrowers or such Subsidiary from
such sale, loss, destruction or condemnation. Any prepayment pursuant to this subsection shall be
applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not
permanently reduce the Revolving Loan Commitments.

3.3.2 Optional Reductions of Revolving Loan Commitments. Borrowers may, at their
option from time to time upon not less than 3 Business Days’ prior written notice to Agent,
terminate in whole or permanently reduce ratably in part, the unused portion of the Revolving Loan
Commitments, provided, however, that each such partial reduction shall be in an
amount of $1,000,000 or integral multiples of $1,000,000 in excess thereof. Except for charges
under subsection 3.1.9 applicable to prepayments of LIBOR Revolving Loans, such prepayments shall
be without premium or penalty.

 

15

 

3.3.3 Optional Prepayments. If a Trigger Period is not in effect or if a Trigger is
in effect but the source of repayment is not proceeds of ABL Priority Collateral, Borrowers may, at
their option from time to time upon written notice to Agent delivered on or prior to 2:00 p.m.
Chicago time on the date of payment (which shall be a Business Day), make principal payments of
outstanding Revolving Credit Loans; provided that any such payment shall be in a minimum
amount of $2,000,000 or integral multiples of $500,000 in excess thereof. Except for charges under
subsection 3.1.9 applicable to prepayments of LIBOR Loans, such prepayments shall be without
premium or penalty.

3.4 Application of Payments and Collections.

3.4.1 Collections. All items of payment received by Agent by 2:00 p.m., Chicago time,
on any Business Day shall be deemed received on that Business Day. All items of payment received
after 2:00 p.m., Chicago time, on any Business Day shall, in Agent’s discretion, be deemed received
on the following Business Day. If as the result of collections of Accounts as authorized by
subsection 6.2.4 hereof or otherwise, a credit balance exists in the Loan Account, such credit
balance shall not accrue interest in favor of Borrowers but shall be disbursed to Borrowers or
otherwise at Borrower Representative’s direction in the manner set forth in subsection 3.1.2, upon
Borrower Representative’s request at any time, so long as no Default or Event of Default then
exists. Agent may at its option, offset such credit balance against any of the Obligations upon
and during the continuance of an Event of Default.

3.4.2 Apportionment, Application and Reversal of Payments. Principal and interest
payments shall be apportioned ratably among Lenders (according to the unpaid principal balance of
the Loans to which such payments relate held by each Lender). Prior to the occurrence and
continuance of an Event of Default and the resultant declaration that all Obligations are
immediately due and payable, all proceeds of Collateral shall be applied by Agent against the
outstanding Obligations as otherwise provided in the Agreement. Anything contained herein or in
any other Loan Document to the contrary notwithstanding, all payments and collections received in
respect of the Obligations and all proceeds of the Collateral received, in each instance, by Agent
or any Lender after the occurrence and during the continuance of an Event of Default and the
resultant declaration that all Obligations are immediately due and payable shall be remitted to
Agent and distributed as follows:

(i) first, to the payment of any outstanding costs and expenses incurred by
Agent in monitoring, verifying, protecting, preserving or enforcing the Liens on the
Collateral, and in protecting, preserving or enforcing rights under this Agreement or any of
the other Loan Documents, and payable by Borrowers under this Agreement, including, without
limitation, under Sections 2.7 and 12.2 hereof (such funds to be retained by Agent for its
own account unless it has previously been reimbursed for such costs and expenses by Lenders,
in which event such amounts shall be remitted to Lenders to reimburse them for payments
theretofore made to Agent);

(ii) second, to the payment of any outstanding interest or fees due under the
Loan Documents to be allocated pro rata in accordance with the aggregate unpaid amounts
owing to each holder thereof;

 

16

 

(iii) third, to the payment of the principal balance of the Swingline Loans and
Agent Loans;

(iv) fourth, to the payment of principal on the Revolving Credit Loans, unpaid
reimbursement obligations in respect of Letters of Credit and LC Guaranties, together with
amounts to be held by Agent as collateral security for any outstanding Letters of Credit and
LC Guaranties pursuant to subsection 10.3.5 hereof, amounts owing with respect to Derivative
Obligations, the aggregate amount paid to, or held as collateral security for, Lenders (and
their Affiliates, as applicable in the case of Derivative Obligations) to be allocated pro
rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

(v) fifth, to the payment of all other unpaid Obligations (including, without
limitation, Product Obligations, other than Derivative Obligations) and all other
indebtedness, obligations, and liabilities of Borrowers and any Guarantor secured by the
Security Documents to be allocated pro rata in accordance with the aggregate unpaid amounts
owing to each holder thereof; and

(vi) finally, to Borrowers or otherwise as required by law or court order.

Except as otherwise specifically provided for herein, Borrowers hereby irrevocably
waive the right to direct the application of payments and collections at any time received
by Agent or any Lender during the continuance of an Event of Default from or on behalf of
Borrowers or any Guarantor, and Borrowers hereby irrevocably agree that Agent shall have the
continuing exclusive right to apply and reapply any and all such payments and collections
received at any time by Agent or any Lender against the Obligations in the manner described
herein. In the event that the amount of any Derivative Obligation is not fixed and
determined at the time proceeds of Collateral are received which are to be allocated
thereto, the proceeds of Collateral so allocated shall be held by Agent as collateral
security (in a non-interest bearing account) until such Derivative Obligation is fixed and
determined and then the same shall (if and when, and to the extent that, payment of such
liability is required by the terms of the relevant contractual arrangements) be applied to
such liability.

3.5 All Loans to Constitute One Obligation. The Loans and LC Guarantees shall
constitute one general Obligation of Borrowers and shall be secured by Agent’s Lien upon all of the
Collateral.

3.6 Loan Account. Agent shall enter all Loans as debits to a loan account (the “Loan
Account”) and shall also record in the Loan Account all payments made by Borrowers on any
Obligations and all proceeds of Collateral which are finally paid to Agent, and may record therein,
in accordance with customary accounting practice, other debits and credits, including interest and
all charges and expenses properly chargeable to Borrowers.

 

17

 

3.7 Statements of Account. Agent will account to Borrower Representative monthly with
a statement of Loans, charges and payments made pursuant to this Agreement during the
immediately preceding month, and such account rendered by Agent shall be deemed final, binding
and conclusive upon Borrowers absent demonstrable error unless Agent is notified by Borrowers in
writing to the contrary within 60 days of the date each accounting is received by Borrowers. Such
notice shall be deemed an objection only to those items specifically objected to therein.

3.8 Increased Costs. If on or after the date hereof the adoption of any applicable
law, rule or regulation or guideline (whether or not having the force of law), or any change
therein, or any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Agent or any Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency:

(a) shall subject Agent or any Lender to any Tax, duty or other charge with respect to
its LIBOR Loans or its obligation to make LIBOR Loans, or shall change the basis of taxation
of payments to Agent or any Lender of the principal of or interest on its LIBOR Loans or any
other amounts due under this agreement in respect of its LIBOR Loans or its obligation to
make LIBOR Loans (except for the introduction of, or change in the rate of, tax on the
overall net income of Agent or any Lender or franchise taxes, imposed by the jurisdiction
(or any political subdivision or taxing authority thereof) under the laws of which Agent or
any Lender is organized or in which Agent or such Lender maintains an office); or

(b) shall impose, modify or deem applicable any reserve, special deposit or similar
requirement (including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System of the United States) against assets of, deposits
with or for the account of, or credit extended by, Agent or any Lender or shall impose on
Agent or any Lender or on the London interbank market any other condition affecting its
LIBOR Loans or its obligation to make LIBOR Loans;

and the result of any of the foregoing is to increase the cost to Agent or any Lender of making or
maintaining any LIBOR Loan, or to reduce the amount of any sum received or receivable by Agent or
any Lender under this Agreement with respect thereto, by an amount deemed by Agent or any Lender to
be material, then, within 15 days after demand by Agent or such Lender, Borrowers shall pay to
Agent, for its own account or the account of the applicable Lender, such additional amount or
amounts as will compensate Agent or such Lender for such increased cost or reduction.

 

18

 

3.9 Basis for Determining Interest Rate Inadequate. In the event that Agent or any
Lender shall have determined that:

(i) reasonable means do not exist for ascertaining the LIBOR for any Interest Period;
or

(ii) dollar deposits in the relevant amount and for the relevant maturity are not
available in the London interbank market with respect to a proposed LIBOR Loan, or a
proposed conversion of a Base Rate Loan into a LIBOR Loan; then
Agent or such Lender shall give Borrowers prompt written, telephonic or electronic notice of the
determination of such effect. If such notice is given, (i) any such requested LIBOR Loan shall be
made as a Base Rate Loan, unless Borrower Representative, on its own behalf and on behalf of all
other Borrowers, shall notify Agent no later than 10:00 a.m. (Chicago, Illinois time) three (3)
Business Days’ prior to the date of such proposed borrowing (or, if such notice is given by Agent
or such Lender less than three (3) Business Days prior to the date of such proposed borrowing, on
the same date such notice is given to Borrower Representative) that the request for such borrowing
shall be canceled or made as an unaffected type of LIBOR Loan, and (ii) any Base Rate Loan which
was to have been converted to an affected type of LIBOR Loan shall be continued as or converted
into a Base Rate Loan, or, if Borrowers shall notify Agent, no later than 10:00 a.m. (Chicago,
Illinois time) three (3) Business Days prior to the proposed conversion (or, if such notice is
given by Agent or such Lender less than three (3) Business Days prior to the date of such proposed
conversion, on the same date such notice is given to Borrower Representative), shall be maintained
as an unaffected type of LIBOR Loan.

3.10 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of
any Loan made by it in excess of its ratable share of payments on account of Loans made by all
Lenders, such Lender shall forthwith purchase from each other Lender such participation in such
Loan as shall be necessary to cause such purchasing Lender to share the excess payment ratably with
each other Lender; provided, that, if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded
and such Lender shall repay to the purchasing Lenders the purchase price to the extent of such
recovery, together with an amount equal to such Lender’s ratable share (according to the proportion
of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 3.10 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of setoff) with respect
to such participation as fully as if such Lender were the direct creditor of Borrowers in the
amount of such participation. Notwithstanding anything to the contrary contained herein, all
purchases and repayments to be made under this Section 3.10 shall be made through Agent.

SECTION 4. TERM AND TERMINATION

4.1 Term of Agreement. Subject to the right of Lenders to cease making Loans to
Borrowers during the continuance of any Default or Event of Default, this Agreement shall be in
effect for a period of four (4) years from the date hereof, through and including February 16, 2015
(the “Term”), unless terminated as provided in Section 4.2 hereof.

4.2 Termination.

4.2.1 Termination by Lenders. Agent may, and at the direction of Majority Lenders
shall, terminate this Agreement without notice upon or after the occurrence and during the
continuance of an Event of Default.

 

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4.2.2 Termination by Borrowers. Upon at least 5 days’ prior written notice to Agent
and Lenders, Borrowers may, at their option, terminate this Agreement; provided,
however, that no such termination shall be effective until Borrowers have paid or
collateralized to Agent’s satisfaction all of the Obligations in immediately available funds, all
Letters of Credit and LC Guaranties have expired, terminated or have been cash collateralized to
Agent’s satisfaction in an amount equal to 105% of the aggregate undrawn face amounts of such
Letters of Credit and LC Guaranties (without duplication) and Borrowers have complied with
subsection 3.2.5. Any notice of termination given by Borrowers shall be irrevocable unless all
Lenders otherwise agree in writing and no Lender shall have any obligation to make any Loans or
issue or procure any Letters of Credit or LC Guaranties on or after the termination date stated in
such notice. Borrowers may elect to terminate this Agreement in its entirety only. No section of
this Agreement or type of Loan available hereunder may be terminated singly.

4.2.3 Effect of Termination. All of the Obligations shall be immediately due and
payable upon the termination date stated in any notice of termination of this Agreement. All
undertakings, agreements, covenants, warranties and representations of Borrowers contained in the
Loan Documents shall survive any such termination and Agent shall retain its Liens in the
Collateral and Agent and each Lender shall retain all of its rights and remedies under the Loan
Documents notwithstanding such termination until all Obligations (other than unsecured contingent
obligations for which no claim has been made) have been discharged or paid, in full, in immediately
available funds, including, without limitation, all Obligations under subsection 3.2.5 resulting
from such termination. Notwithstanding the foregoing or the payment in full of the Obligations,
Agent shall not be required to terminate its Liens in the Collateral unless, with respect to any
loss or damage Agent may incur as a result of dishonored checks or other items of payment received
by Agent from any Borrower or any Account Debtor and applied to the Obligations, Agent shall, at
its option, (i) have received a written agreement satisfactory to Agent, executed by any Borrower
and by any Person whose loans or other advances to Borrowers are used in whole or in part to
satisfy the Obligations, indemnifying Agent and each Lender from any such loss or damage or (ii)
have retained cash Collateral or other Collateral for such period of time as Agent, in its
reasonable discretion, may deem necessary to protect Agent and each Lender from any such loss or
damage.

SECTION 5. SECURITY INTERESTS

5.1 Security Interest in Collateral. To secure the prompt payment and performance to
Agent and each Lender of the Obligations, each Borrower hereby grants to Agent for the benefit of
itself and each Lender a continuing Lien upon the following assets of each Borrower, whether now
owned or existing or hereafter created, acquired or arising and wheresoever located:

(i) Accounts;

(ii) Certificated Securities;

(iii) Chattel Paper;

 

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(iv) Computer Hardware and Software and all rights with respect thereto, including any
and all licenses, options, warranties, service contracts, program
services, test rights, maintenance rights, support rights, improvement rights, renewal
rights and indemnifications, and any substitutions, replacements, additions or model
conversions of any of the foregoing;

(v) Contract Rights;

(vi) Deposit Accounts;

(vii) Documents;

(viii) Equipment;

(ix) Financial Assets;

(x) Fixtures;

(xi) General Intangibles, including Payment Intangibles and Software;

(xii) Goods (including all of its Equipment, Fixtures and Inventory), and all
accessions, additions, attachments, improvements, substitutions and replacements thereto and
therefor;

(xiii) Instruments;

(xiv) Intellectual Property;

(xv) Inventory;

(xvi) Investment Property;

(xvii) Cash Equivalent (of every jurisdiction whatsoever);

(xviii) Letter of Credit Rights;

(xix) Payment Intangibles;

(xx) Security Entitlements;

(xxi) Software;

(xxii) Supporting Obligations;

(xxiii) Uncertificated Securities; and

(xxiv) to the extent not included in the foregoing, all other personal property of any
kind or description;

 

21

 

together with all books, records, writings, databases, information and other property relating to,
used or useful in connection with, or evidencing, embodying, incorporating or referring to any of
the foregoing, and all Proceeds, products, offspring, rents, issues, profits and returns of and
from any of the foregoing; provided that the Collateral shall not include the Excluded
Assets. In addition, the Loan Parties shall not be required to take any actions under any laws
outside of the United States to grant, perfect or enforce any security interest or Lien.

5.2 Other Collateral.

5.2.1 Commercial Tort Claims. Borrowers shall promptly notify Agent in writing upon
any Borrower incurring or otherwise obtaining a Commercial Tort Claim (which could reasonably be
expected to generate proceeds of more than $250,000) included within the Collateral after the
Closing Date against any third party and, upon request of Agent, promptly enter into an amendment
to this Agreement and do such other acts or things deemed appropriate by Agent to give Agent a
security interest in any such Commercial Tort Claim. Borrowers represent and warrant that as of
the date of this Agreement, to their knowledge, no Loan Party possesses any Commercial Tort Claim.

5.2.2 Other Collateral. Borrowers shall promptly notify Agent in writing upon
acquiring or otherwise obtaining any ABL Priority Collateral after the date hereof consisting of
Investment Property, Letter of Credit Rights or Electronic Chattel Paper, in each case having a
value in excess of $100,000 and, upon the request of Agent, promptly execute such other documents,
and do such other acts or things deemed appropriate by Agent to deliver to Agent control with
respect to such Collateral; promptly notify Agent in writing upon acquiring or otherwise obtaining
any ABL Priority Collateral after the date hereof consisting of Documents or Instruments, in each
case having a value in excess of $100,000 and, upon the request of Agent, will promptly execute
such other documents, and do such other acts or things deemed appropriate by Agent to deliver to
Agent possession of such Documents which are negotiable and Instruments, and, with respect to
nonnegotiable Documents, to have such nonnegotiable Documents issued in the name of Agent; and with
respect to ABL Priority Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document, obtain an acknowledgment from the third party that it
is holding the Collateral for the benefit of Agent.

5.3 Lien Perfection; Further Assurances. Borrowers shall execute such UCC-1 financing
statements as are required by the UCC and such other instruments, assignments or documents as are
necessary to perfect Agent’s Lien upon any of the Collateral and shall take such other action as
may be required to perfect or to continue the perfection of Agent’s Lien upon the Collateral.
Unless prohibited by applicable law, each Borrower hereby authorizes Agent to execute and file any
such financing statement, including, without limitation, financing statements that indicate the
Collateral (i) as all assets of such Borrower or words of similar effect, or (ii) as being of an
equal or lesser scope, or with greater or lesser detail, than as set forth in Section 5.1, on such
Borrower’s behalf. Each Borrower also hereby ratifies its authorization for Agent to have filed in
any jurisdiction any like financing statements or amendments thereto if filed prior to the date
hereof. At Agent’s request and subject to the specific provisions of this Agreement, each Borrower
shall also promptly execute or cause to be executed and shall deliver to Agent any and all
documents, instruments and agreements deemed necessary by Agent, to give effect to or carry out the
terms or intent of the Loan Documents. Notwithstanding anything to the contrary contained in this
Agreement or the Loan Documents, the parties hereto
acknowledge and agree that within ninety (90) days after the Closing Date, provided
that such efforts may take longer than ninety (90) days, Borrowers shall use commercially
reasonable efforts to cause the Agent to have received evidence that documents duly executed by the
applicable Loan Party(ies) have been filed with the United States Patent and Trademark Office or
the United States Copyright Office, as applicable, as may be necessary or advisable for the purpose
of perfecting, confirming, enforcing or protecting Agent’s security interest over each Loan Party’s
patents, trademarks and copyrights registered in the United States, each of which shall be in form
reasonably satisfactory to Agent.

 

22

 

5.4 Lien on Realty. If any Loan Party shall acquire at any time or times hereafter
any fee simple interest in other real Property (other than leasehold interests in sales offices or
warehouses) having a fair market value in excess of $1,000,000, such Borrower agrees promptly to
execute and deliver or cause such Loan Party to execute and deliver to Agent, for its benefit and
the benefit of Lenders, as additional security and Collateral for the Obligations, deeds of trust,
security deeds, mortgages or other collateral assignments reasonably satisfactory in form and
substance to Agent and its counsel (herein collectively referred to as “New Mortgages”) covering
such real Property. Each New Mortgage shall be duly recorded (at Borrowers’ expense) in each
office where such recording is required to constitute a valid Lien on the real Property covered
thereby. In respect to any New Mortgage, Borrowers shall deliver to Agent, at Borrowers’ expense,
mortgagee title insurance policies issued by a title insurance company reasonably satisfactory to
Agent, which policies shall be in form and substance reasonably satisfactory to Agent and shall
insure a valid Lien in favor of Agent for the benefit of itself and each Lender on the Property
covered thereby, subject only to Permitted Liens and those other exceptions reasonably acceptable
to Agent and its counsel. Borrowers shall also deliver to Agent such other usual and customary
documents, including, without limitation, ALTA Surveys of the real Property described in any New
Mortgage, as Agent and its counsel may reasonably request relating to the real Property subject to
the New Mortgages.

SECTION 6. COLLATERAL ADMINISTRATION

6.1 General.

6.1.1 Location of Collateral. All Collateral, other than Inventory in transit, will
at all times be kept by Borrowers and their Subsidiaries at one or more of the business locations
set forth in Exhibit 6.1.1 hereto, as updated by Borrowers providing prior written notice
to Agent of any new location.

6.1.2 Insurance of Collateral. Borrowers shall maintain and pay for insurance upon
all Collateral wherever located and with respect to the business of Borrowers and each of their
Subsidiaries, covering casualty, hazard, public liability, business interruption, workers’
compensation and such other risks in such amounts and with such insurance companies as are
customary for companies conducting a Similar Business to the business of Borrowers. Borrowers
shall deliver certificates with respect to such policies to Agent as promptly as practicable, with
satisfactory lender’s loss payable endorsements, naming Agent as a loss payee, assignee or
additional insured, as appropriate, as its interest may appear, and showing only such other loss
payees, assignees and additional insureds as are satisfactory to Agent or as otherwise contemplated
by the Intercreditor Agreement. Upon request by Agent, Borrowers shall deliver

 

23

 

to Agent certified copies of such policies. Each policy of insurance or endorsement shall
contain a clause requiring the insurer to give not less than 10 days’ prior written notice to Agent
in the event of cancellation of the policy for nonpayment of premium and not less than 30 days’
prior written notice to Agent in the event of cancellation of the policy for any other reason
whatsoever and a clause specifying that the interest of Agent shall not be impaired or invalidated
by any act or neglect of any Borrower, any of its Subsidiaries or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by said policy.
Borrowers agree to deliver to Agent, promptly as rendered, true copies of all material reports made
in any reporting forms to insurance companies. All proceeds of business interruption insurance (if
any) of Borrowers and their Subsidiaries shall be remitted to Agent for application to the
outstanding balance of the Revolving Credit Loans.

Unless Borrowers provide Agent with evidence of the insurance coverage required by this
Agreement, Agent may purchase insurance at Borrowers’ expense to protect Agent’s interests in the
Properties of Borrowers and their Subsidiaries. This insurance may, but need not, protect the
interests of Borrowers and their Subsidiaries. The coverage that Agent purchases may not pay any
claim that any Borrower or any Subsidiary makes or any claim that is made against any Borrower or
any such Subsidiary in connection with said Property. Borrowers may later cancel any insurance
purchased by Agent, but only after providing Agent with evidence that Borrowers and their
Subsidiaries have obtained insurance as required by this Agreement. If Agent purchases insurance,
Borrowers will be responsible for the costs of that insurance, including interest and any other
third party out-of-pocket charges Agent may incur in connection with the placement of insurance,
until the effective date of the cancellation or expiration of the insurance. The costs of the
insurance may be added to the Obligations. The costs of the insurance may be more than the cost of
insurance that Borrowers and their Subsidiaries may be able to obtain on their own.

6.1.3 Protection of Collateral. Neither Agent nor any Lender shall be liable or
responsible in any way for the safekeeping of any of the Collateral or for any loss or damage
thereto (except for reasonable care in the custody thereof while any Collateral is in Agent’s or
any Lender’s actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency or other person whomsoever, but the same
shall be at Borrowers’ sole risk.

6.2 Administration of Accounts.

6.2.1 Records, Schedules and Assignments of Accounts. Borrowers shall keep records
that are accurate and complete, in all material respects, with respect to their Accounts and all
payments and collections thereon and shall submit to Agent, together with the Borrowing Base
Certificates required by subsection 8.1.4, a sales and collections report for the preceding period,
in form acceptable to Agent, in its reasonable credit judgment. Concurrently with the delivery of
each Borrowing Base Certificate described in subsection 8.1.4, or more frequently as requested by
Agent during the existence of an Event of Default, from and after the date hereof, Borrowers shall
deliver to Agent a detailed aged trial balance of all of their Accounts, specifying the names,
addresses, face values, dates of invoices and due dates for each Account Debtor obligated on an
Account so listed in a form consistent with reports currently prepared by Borrowers with respect to
such information (“Schedule of Accounts”), and upon Agent’s written
request therefor, copies of proof of delivery and the original copy of all documents,
including, without limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the status of the existing
Accounts as Agent shall request, in its reasonable credit judgment. If requested by Agent in
writing, upon the occurrence and during the continuation of an Event of Default, Borrowers shall
execute and deliver to Agent formal written assignments of all of its Accounts weekly or daily,
which shall include all Accounts that have been created since the date of the last assignment,
together with copies of invoices or invoice registers related thereto.

 

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6.2.2 Discounts; Allowances; Disputes. If any Borrower grants any discounts,
allowances or credits that are not shown on the face of the invoice for the Account involved,
Borrowers shall report such discounts, allowances or credits, as the case may be, to Agent as part
of the next required Schedule of Accounts.

6.2.3 Account Verification. Any of Agent’s officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Agent, any designee of Agent or any
Borrower, to verify the validity, amount or any other matter relating to any Accounts by mail,
telephone, electronic communication or otherwise. Borrowers shall cooperate fully with Agent in an
effort to facilitate and promptly conclude any such verification process.

6.2.4 Maintenance of Dominion Account. Borrowers shall maintain a Dominion Account or
Accounts pursuant to lockbox and blocked account arrangements acceptable to Agent with Bank or such
banks as may be selected by Borrowers and be acceptable to Agent. Borrowers shall issue to Bank or
any such banks an irrevocable letter of instruction directing Bank or any such banks upon notice (a
“Dominion Notice”) from Agent to deposit all payments or other remittances received in the lockbox
and blocked accounts to the Dominion Account. Agent agrees not to give such a Dominion Notice
unless a Trigger Period exists. Once an existing Trigger Period terminates, Agent shall rescind
any such Dominion Notice. All funds deposited in any Dominion Account shall, during the existence
of a Trigger Period, immediately become the property of Agent, for the ratable benefit of Lenders,
and Borrowers shall obtain the agreement by Bank or any such banks in favor of Agent to waive any
recoupment, setoff rights, and any security interest in, or against, the funds so deposited. Agent
assumes no responsibility for such lockbox and blocked account arrangements, including, without
limitation, any claim of accord and satisfaction or release with respect to deposits accepted by
any bank thereunder.

6.2.5 Collection of Accounts; Proceeds of Collateral. Each Borrower agrees that all
invoices rendered and other requests made by any Borrower for payment in respect of Accounts shall
contain a written statement directing payment in respect of such Accounts to be paid to a lockbox
established pursuant to subsection 6.2.4. To expedite collection, each Borrower shall endeavor in
the first instance to make collection of its Accounts for Agent. All remittances received by any
Borrower on account of Accounts, together with the proceeds of any other ABL Priority Collateral,
shall be held as Agent’s property, for its benefit and the benefit of Lenders, by such Borrower as
trustee of an express trust for Agent’s benefit and such Borrower shall immediately deposit same in
kind in the Dominion Account. Agent retains the right at all times after the occurrence and during
the continuance of an Event of Default to notify Account Debtors that Borrowers’ Accounts have been
assigned to Agent and to collect Borrowers’
Accounts directly in its own name, or in the name of Agent’s agent, and to charge the
collection costs and expenses, including attorneys’ fees, to Borrowers.

 

25

 

6.2.6 Taxes. If an Account includes a charge for any tax payable to any governmental
taxing authority, Agent is authorized, in its sole discretion, to pay the amount thereof to the
proper taxing authority for the account of Borrowers and to charge Borrowers therefor, except for
taxes that (i) are being actively contested in good faith and by appropriate proceedings and with
respect to which Borrowers maintain reasonable reserves on its books therefor and (ii) would not
reasonably be expected to result in any Lien other than a Permitted Lien. In no event shall Agent
or any Lender be liable for any taxes to any governmental taxing authority that may be due by any
Borrower.

6.3 Administration of Inventory. Borrowers shall keep records of their Inventory,
which records shall be complete and accurate in all material respects. Borrowers shall furnish to
Agent Inventory reports concurrently with the delivery of each Borrowing Base Certificate described
in subsection 8.1.4, which reports will be in such other format and detail as Agent shall
reasonably request and shall include a current list of all locations of Borrowers’ Inventory.
Borrowers shall conduct a physical inventory no less frequently than annually or adequate cycle
counts and if a physical inventory is performed, shall provide to Agent a report based on each such
physical inventory promptly thereafter, together with such supporting information as Agent shall
reasonably request.

6.4 Payment of Charges. All amounts chargeable to Borrowers under Section 6 hereof
shall be Obligations secured by all of the Collateral, shall be payable on demand and shall bear
interest from the date such advance was made until paid in full at the rate applicable to Base Rate
Revolving Loans from time to time.

SECTION 7. REPRESENTATIONS AND WARRANTIES

7.1 General Representations and Warranties. To induce Agent and each Lender to enter
into this Agreement and to make advances hereunder, Borrowers warrant, represent and covenant to
Agent and each Lender, on a joint and several basis, that:

7.1.1 Qualification. Each Borrower and each of its Subsidiaries is a corporation,
limited partnership or limited liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization. Each Borrower
and each of its Subsidiaries is duly qualified and is authorized to do business and is in good
standing as a foreign limited liability company, limited partnership or corporation, as applicable,
in each state or jurisdiction listed on Exhibit 7.1.1 hereto and in all other states and
jurisdictions in which the failure of any Borrower or any of its Subsidiaries to be so qualified
could reasonably be expected to have a Material Adverse Effect.

 

26

 

7.1.2 Power and Authority. Each Borrower and each of its Subsidiaries is duly
authorized and empowered to enter into, execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party. The execution, delivery and performance of this
Agreement and each of the other Loan Documents have been duly authorized by all necessary corporate
or other relevant action and do not and will not: (i) require any consent or
approval of the partners, shareholders or members of any Borrower or any of the shareholders,
partners or members, as the case may be, of any Subsidiary of any Borrower or to the extent so
required, such consent or approval has been obtained prior to execution thereof; (ii) contravene
any Borrower’s or any of its Subsidiaries’ charter, articles or certificate of incorporation,
partnership agreement, articles or certificate of formation, by-laws, limited liability agreement,
operating agreement or other organizational documents (as the case may be); (iii) violate, or cause
any Borrower or any of its Subsidiaries to be in default under, any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award in effect having
applicability to such Borrower or any of its Subsidiaries, the violation of which could reasonably
be expected to have a Material Adverse Effect; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or instrument to
which any Borrower or any of its Subsidiaries is a party or by which it or its Properties may be
bound or affected, the breach of or default under which could reasonably be expected to have a
Material Adverse Effect; or (v) result in, or require, the creation or imposition of any Lien
(other than Permitted Liens) upon or with respect to any of the Properties now owned or hereafter
acquired by any Borrower or any of its Subsidiaries.

7.1.3 Legally Enforceable Agreement. This Agreement is, and each of the other Loan
Documents when delivered under this Agreement will be, a legal, valid and binding obligation of
each Borrower and each of its Subsidiaries party thereto, enforceable against it in accordance with
its respective terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar law limiting creditors’ rights generally and by general equitable principles.

7.1.4 Capital Structure. Exhibit 7.1.4 hereto states, as of the date hereof,
(i) the correct name of each of the Subsidiaries of each Borrower, its jurisdiction of
incorporation or organization and the percentage of its Voting Stock owned by the applicable
Borrower, (ii) the name of each Borrower’s and each of its Subsidiaries’ corporate or joint venture
relationships and the nature of the relationship, (iii) the number, nature and holder of all
outstanding Securities of each Borrower and the holder of Securities of each Subsidiary of each
Borrower and (iv) the number of authorized, issued and treasury Securities of each Borrower. Each
Borrower has good title to all of the Securities it purports to own of each of such Subsidiaries,
free and clear in each case of any Lien other than Permitted Liens. All such Securities have been
duly issued and are fully paid and non-assessable. As of the date hereof, there are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any commitments or agreements
to issue or sell any Securities or obligations convertible into, or any powers of attorney relating
to any Securities of any Borrower or any of its Subsidiaries. Except as set forth on Exhibit
7.1.4, as of the date hereof, there are no outstanding agreements or instruments binding upon
any of any Borrower’s or any of its Subsidiaries’ partners, members or shareholders, as the case
may be, relating to the ownership of its Securities.

7.1.5 Names; Organization. Within the five (5) years prior to the Closing Date,
neither any Borrower nor any of its Subsidiaries has been known as or has used any legal,
fictitious or trade names except those listed on Exhibit 7.1.5 hereto. Within the five (5)
years prior to the Closing Date, except as set forth on Exhibit 7.1.5, neither any Borrower
nor any of its Subsidiaries has been the surviving entity of a merger or consolidation or has
acquired all or substantially all of the assets of any Person. Each of each Borrower’s and each of
its
Subsidiaries’ state(s) of incorporation or organization, Type of Organization and
Organizational I.D. Number is set forth on Exhibit 7.1.5. The exact legal name of each
Borrower and each of its Subsidiaries is set forth on Exhibit 7.1.5.

 

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7.1.6 Business Locations; Agent for Process. All of each Borrower’s and each of its
Subsidiaries’ chief executive office, location of books and records and other places of business
are as listed on Exhibit 6.1.1 hereto, as updated from time to time by Borrowers in
accordance with the provisions of subsection 6.1.1. During the one-year period prior to the
Closing Date, neither any Borrower nor any of its Subsidiaries has had an office, place of business
or agent for service of process, other than as listed on Exhibit 6.1.1. All tangible
Collateral is and will at all times be kept by Borrowers and their Subsidiaries in accordance with
subsection 6.1.1. Except as shown on Exhibit 6.1.1, as of the date hereof, no Inventory is
stored with a bailee, distributor, warehouseman or similar party, nor is any Inventory consigned to
any Person.

7.1.7 Title to Properties; Priority of Liens. Each Borrower and each of its
Subsidiaries has good, indefeasible and marketable title to and fee simple ownership of, or valid
and subsisting leasehold interests in, all of its real Property, and good title to all of the
Collateral and all of its other Property, in each case, free and clear of all Liens except
Permitted Liens. Each Borrower and each of its Subsidiaries has paid or discharged all lawful
claims which, if unpaid, might become a Lien against any of such Borrower’s or such Subsidiary’s
Properties that is not a Permitted Lien. The Liens granted to Agent under Section 5 hereof are
first priority Liens, subject only to Permitted Liens.

7.1.8 Accounts. Agent may rely, in determining which Accounts are Eligible Accounts,
on all statements and representations made by Borrowers with respect to any Account or Accounts.
With respect to each of Borrowers’ Accounts, whether or not such Account is an Eligible Account,
unless otherwise disclosed to Agent in writing:

(i) It is genuine and in all respects what it purports to be, and it is not evidenced
by a judgment;

(ii) It arises out of a completed, bona fide sale and delivery of goods
or rendition of services by a Borrower, in the ordinary course of its business and in
accordance with the terms and conditions of all purchase orders, contracts or other
documents relating thereto and forming a part of the contract between a Borrower and the
Account Debtor;

(iii) It is for a liquidated amount maturing as stated in the duplicate invoice
covering such sale or rendition of services, a copy of which has been furnished or is
available to Agent;

(iv) To the best of Borrowers’ knowledge, unless the applicable Account is no longer
included within Eligible Accounts, the Account Debtor thereunder (1) had the capacity to
contract at the time any contract or other document giving rise to the Account was executed
and (2) such Account Debtor is Solvent; and

 

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(v) To the best of Borrowers’ knowledge, there are no proceedings or actions which are
threatened or pending against the Account Debtor thereunder which might result in any
material adverse change in such Account Debtor’s financial condition or the collectibility
of such Account.

7.1.9 Equipment. The Equipment of each Borrower and its Subsidiaries used in the
ordinary course of business is in good operating condition and repair, and all necessary
replacements of and repairs thereto shall be made so that the operating efficiency thereof shall be
maintained and preserved, reasonable wear and tear excepted; provided that if any such
Equipment has been materially damaged or destroyed, Borrower and its Subsidiaries are using
commercially reasonable efforts to replace or repair such Equipment.

7.1.10 Financial Statements; Fiscal Year. The Consolidated and consolidating balance
sheets of Borrowers and their Subsidiaries (including the accounts of all Subsidiaries of Borrowers
and their respective Subsidiaries for the respective periods during which a Subsidiary relationship
existed) as of September 30, 2010, and the related statements of income, changes in shareholder’s
equity, and changes in financial position for the periods ended on such dates, have been prepared
in accordance with GAAP and present fairly in all material respects the financial positions of
Borrowers and such Persons, taken as a whole, at such dates and the results of Borrowers’ and such
Persons’ operations, taken as a whole, for such periods. Except as otherwise disclosed in writing
to Agent, as of the date hereof, since September 30, 2010, there has been no material adverse
change in the financial position of Borrowers and such other Persons, taken as a whole, as
reflected in the Consolidated balance sheet as of such date. As of the date hereof, the fiscal
year of Borrowers and each of their Subsidiaries ends on December 31 of each year.

7.1.11 Full Disclosure. The financial statements referred to in subsection 7.1.10
hereof do not, nor does this Agreement or any other written statement of Borrowers to Agent or any
Lender, contain any untrue statement of a material fact or omit a material fact necessary to make
the statements contained therein or herein not misleading. There is no fact which Borrowers have
failed to disclose to Agent or any Lender in writing which could reasonably be expected to have a
Material Adverse Effect.

7.1.12 Solvent Financial Condition. Each Borrower and each of its Subsidiaries is as
of the date hereof and, after giving effect to the initial Loans to be made and the initial Letters
of Credit and LC Guaranties to be issued hereunder and all related transactions, will be, Solvent.

7.1.13 Surety Obligations. Except as set forth on Exhibit 7.1.13, as of the
date hereof, neither any Borrower nor any of its Subsidiaries is obligated as surety or indemnitor
under any surety or similar bond or other contract or has issued or entered into any agreement to
assure payment, performance or completion of performance of any undertaking or obligation of any
Person.

 

29

 

7.1.14 Taxes. Borrower Representative’s federal tax identification number is
27-0587428. The federal tax identification number of each Subsidiary of Borrower Representative is
shown on Exhibit 7.1.14 hereto. Each Borrower and each of its Subsidiaries
has filed all federal, state and local tax returns and other reports relating to material
taxes it is required by law to file, and has paid, or made provision for the payment of, all
material taxes, assessments, fees, levies and other governmental charges upon it, its income and
Properties as and when such taxes, assessments, fees, levies and charges are due and payable,
unless and to the extent any thereof are being actively contested in good faith and by appropriate
proceedings, and each Borrower and each of its Subsidiaries maintains reasonable reserves on its
books therefor. The provision for taxes on the books of each Borrower and its Subsidiaries is
adequate for all years not closed by applicable statutes, and for the current fiscal year.

7.1.15 Brokers. Except as shown on Exhibit 7.1.15 hereto, there are no claims
for brokerage commissions, finder’s fees or investment banking fees in connection with the
transactions contemplated by this Agreement.

7.1.16 Patents, Trademarks, Copyrights and Licenses. Each Borrower and each of its
Subsidiaries owns, possesses or licenses or has the right to use all the patents, trademarks,
service marks, trade names, copyrights, licenses and other Intellectual Property necessary for the
present and planned future conduct of its business without any known conflict with the rights of
others, except for such conflicts as could not reasonably be expected to have a Material Adverse
Effect. All such material and registered patents, trademarks, service marks, trade names,
copyrights, licenses and other similar rights owned by a Borrower are listed on Exhibit
7.1.16 hereto. No claim has been asserted to any Borrower or any Subsidiary of any Borrower
which is currently pending that their use of their Intellectual Property or the conduct of their
business does or may infringe upon the Intellectual Property rights of any third party. To the
knowledge of Borrowers and except as set forth on Exhibit 7.1.16 hereto, as of the date
hereof, no Person is engaging in any activity that infringes in any material respect upon any
Borrower’s or any of its Subsidiaries’ material Intellectual Property. Except as set forth on
Exhibit 7.1.16, all material author agreements, material license agreements and similar
material arrangements relating to its Inventory are in effect and have not been terminated. The
consummation and performance of the transactions and actions contemplated by this Agreement and the
other Loan Documents will not result in the termination or impairment of any of such Borrower’s or
any of its Subsidiaries’ ownership or rights relating to its Intellectual Property, except for such
Intellectual Property rights the loss or impairment of which could not reasonably be expected to
have a Material Adverse Effect. Except as listed on Exhibit 7.1.16 and except as could not
reasonably be expected to have a Material Adverse Effect, (i) neither any Borrower nor any of its
Subsidiaries is in breach of, or default under, any term of any license or sublicense with respect
to any of its Intellectual Property and (ii) to the knowledge of Borrowers, no other party to such
license or sublicense is in breach thereof or default thereunder, and such license is valid and
enforceable.

7.1.17 Governmental Consents. Each Borrower and each of its Subsidiaries has, and is
in good standing with respect to, all governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its Properties as now
owned or leased by it, except where the failure to possess or so maintain such rights could not
reasonably be expected to have a Material Adverse Effect.

 

30

 

7.1.18 Compliance with Laws. Each Borrower and each of its Subsidiaries has duly
complied, and its Properties, business operations and leaseholds are in compliance with, the
provisions of all federal, state and local laws, rules and regulations applicable to such
Borrower or such Subsidiary, as applicable, its Properties or the conduct of its business, except
for such non-compliance as could not reasonably be expected to have a Material Adverse Effect, and
there have been no citations, notices or orders of non-compliance issued to any Borrower or any of
its Subsidiaries under any such law, rule or regulation, except where such noncompliance could not
reasonably be expected to have a Material Adverse Effect. Each Borrower and each of its
Subsidiaries has established and maintains an adequate monitoring system to insure that it remains
in compliance in all material respects with all federal, state and local rules, laws and
regulations applicable to it. No Inventory has been produced in violation of the Fair Labor
Standards Act (29 U.S.C. §201 et seq.), as amended.

7.1.19 Restrictions. Other than with respect to the Senior Secured Notes Documents
and with respect to documents and agreements evidencing Money Borrowed that will be repaid on the
Closing Date, neither any Borrower nor any of its Subsidiaries is a party or subject to any
contract or agreement which restricts its right or ability to incur Indebtedness, other than as set
forth on Exhibit 7.1.19 hereto, none of which prohibits the execution of or compliance with
this Agreement or the other Loan Documents by any Borrower or any of its Subsidiaries, as
applicable.

7.1.20 Litigation. Except as set forth on Exhibit 7.1.20 hereto, there are no
actions, suits, proceedings or investigations pending, or to the knowledge of Borrowers,
threatened, against or affecting any Borrower or any of its Subsidiaries, or the business,
operations, Properties, prospects, profits or condition of any Borrower or any of its Subsidiaries
which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither any Borrower nor any of its Subsidiaries is in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority or arbitration board or
tribunal, which, singly or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.

7.1.21 No Events of Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or any Borrower’s performance
hereunder, constitute an Event of Default. Neither any Borrower nor any of its Subsidiaries is in
default in (after giving effect to any applicable cure period) the payment of any Indebtedness for
Money Borrowed in excess of $10,000,000 that would allow (a) the payment or maturity of such
Indebtedness to be accelerated in consequence of such default or (b) for demand of payment of such
Indebtedness to be made in accordance with the terms thereof.

7.1.22 Leases. Exhibit 7.1.22 hereto is a complete listing of all capitalized
and operating personal property leases (with annual rentals in excess of $50,000) of Borrowers and
their Subsidiaries and all real property leases of Borrowers and their Subsidiaries. Each Borrower
and each of its Subsidiaries is in full compliance with all of the terms of each of its respective
capitalized and operating leases, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect.

 

31

 

7.1.23 Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto, neither
any Borrower nor any of its Subsidiaries has any Plan. Each Borrower and each of its Subsidiaries
is in compliance with the requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan, except where the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. No fact or situation that could reasonably be expected to
result in a material adverse change in the financial condition of Borrowers and their Subsidiaries
exists in connection with any Plan. Neither any Borrower nor any of their Subsidiaries has any
withdrawal liability in connection with a Multiemployer Plan, except any withdrawal liability that
could not reasonably be expected to have a Material Adverse Effect.

7.1.24 Trade Relations. There exists no actual or, to Borrowers’ knowledge,
threatened termination, cancellation or limitation of, or any modification or change in, the
business relationship between any Borrower or any of its Subsidiaries and any customer or any group
of customers whose purchases individually or in the aggregate are material to the business of
Borrowers and their Subsidiaries, or with any material supplier, except in each case, where the
same could not reasonably be expected to have a Material Adverse Effect, and there exists no
present condition or state of facts or circumstances which would prevent any Borrower or any of its
Subsidiaries from conducting such business after the consummation of the transactions contemplated
by this Agreement in substantially the same manner in which it has heretofore been conducted.

7.1.25 Labor Relations. Except as described on Exhibit 7.1.25 hereto, as of
the date hereof, neither any Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. There are no material grievances, disputes or controversies with any union
or any other organization of any Borrower’s or any of its Subsidiaries’ employees, or threats of
strikes, work stoppages or any asserted pending demands for collective bargaining by any union or
organization, except those that could not reasonably be expected to have a Material Adverse Effect.

7.1.26 Federal Reserve Regulations. No Loan Party is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock. No part of the proceeds of any Loan or any Letter of Credit will be used,
whether directly or indirectly, and whether immediately, incidentally or ultimately, for any
purpose that entails a violation of, or that is inconsistent with, the provisions of the
regulations of the Board, including Regulation T, U or X. The pledge of the Collateral pursuant to
the Pledge Agreement does not violate such regulations.

7.1.27 Investment Company Act. No Loan Party is an “investment company” or a company
“controlled” by an “investment company,” as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended.

7.1.28 Related Businesses. Borrowers are engaged in the businesses of developing
culturally responsive instructional materials and customized education programs for use in urban
markets as of the Closing Date, as well as in certain other businesses. These operations require
financing on a basis such that the credit supplied can be made available from time to time to
Borrowers, as required for the continued successful operation of Borrowers taken as a whole.
Borrowers have requested the Lenders to make credit available hereunder primarily for the purposes
of Section 1.1.3 and generally for the purposes of financing the operations of Borrowers. Each
Borrower and each Subsidiary of each Borrower expects to derive benefit (and the Board of Directors
of each Borrower and each Subsidiary of each Borrower has determined
that such Borrower or Subsidiary may reasonably be expected to derive benefit), directly or
indirectly, from a portion of the credit extended by Lenders hereunder, both in its separate
capacity and as a member of the group of companies, since the successful operation and condition of
each Borrower and each Subsidiary of each Borrower is dependent on the continued successful
performance of the functions of the group as a whole. Each Borrower acknowledges that, but for the
agreement of each of the other Borrowers to execute and deliver this Agreement, Agent and Lenders
would not have made available the credit facilities established hereby on the terms set forth
herein.

 

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7.2 Continuous Nature of Representations and Warranties. Each representation and
warranty contained in this Agreement and the other Loan Documents shall be continuous in nature and
shall remain accurate, complete and not misleading at all times during the term of this Agreement,
except for changes in the nature of any Borrower’s or one of any Borrower’s Subsidiary’s business
or operations that would render the information in any exhibit attached hereto or to any other Loan
Document either inaccurate, incomplete or misleading, so long as Majority Lenders have consented to
such changes, such changes are expressly permitted by this Agreement or such changes do not have or
evidence a Material Adverse Effect. Without limiting the generality of the foregoing, each Loan
request made or deemed made pursuant to subsection 3.1.1 hereof shall constitute Borrowers’
reaffirmation, as of the date of each such loan request, of each representation, warranty or other
statement (other than any representation, warranty or other statement that was made as of a
specific date) made or furnished to Agent or any Lender by or on behalf of any Borrower, any
Subsidiary of any Borrower, or any Guarantor in this Agreement, any of the other Loan Documents, or
any instrument, certificate or financial statement furnished in compliance with or in reference
thereto.

7.3 Survival of Representations and Warranties. All representations and warranties of
Borrowers contained in this Agreement or any of the other Loan Documents shall survive the
execution, delivery and acceptance thereof by Agent and each Lender and the parties thereto and the
closing of the transactions described therein or related thereto.

SECTION 8. COVENANTS AND CONTINUING AGREEMENTS

8.1 Affirmative Covenants. During the Term, and thereafter for so long as there are
any Obligations outstanding, Borrowers covenant that, unless otherwise consented to by Majority
Lenders, in writing, they shall:

8.1.1 Visits and Inspections; Lender Meeting. Permit (i) representatives of Agent,
and during the continuation of any Event of Default any Lender, from time to time, as often as may
be reasonably requested, but only during normal business hours, to visit and inspect the Properties
of each Borrower and each of its Subsidiaries, inspect, audit and make extracts from its books and
records pursuant to Section 2.6, and discuss with its officers, its employees and its independent
accountants, each Borrower’s and each of its Subsidiaries’ business, assets, liabilities, financial
condition, business prospects and results of operations and (ii) appraisers engaged pursuant to
Section 2.9 (whether or not personnel of Agent), from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and inspect the Properties of each
Borrower and each of its Subsidiaries, for the purpose of completing appraisals pursuant to Section
2.9. Agent, if no Event of Default then exists, shall give
Borrowers reasonable prior notice of any such inspection or audit. Without limiting the
foregoing, Borrowers will participate and will cause their key management personnel to participate
in a meeting with Agent and Lenders periodically during each year, which meeting(s) shall be held
at such times and such places as may be mutually agreed to by Borrower Representative and Agent.

 

33

 

8.1.2 Notices. Promptly notify Agent and Lenders in writing, after a Borrower’s
obtaining knowledge thereof, of any of the following that affects any Borrower or any Guarantor:
(a) the threat or commencement of any proceeding or investigation, whether or not covered by
insurance, if an adverse determination could have a Material Adverse Effect; (b) any pending or
threatened labor dispute, strike or walkout, or the expiration of any material labor contract that,
in any such case individually or when aggregated with related matters, could have a Material
Adverse Effect; (c) any default under or termination of an agreement or a contract that could have
a Material Adverse Effect; (d) the existence of any Default or Event of Default; (e) any judgment
in an amount exceeding $3,000,000; (f) any violation or asserted violation of any applicable law,
if an adverse resolution could have a Material Adverse Effect; (g) the occurrence of a Reportable
Event; (h) the discharge of or any withdrawal or resignation of Borrowers’ independent accountants;
(i) any change in any Borrower’s chief executive officer, chief operating officer or chief
financial officer; or (j) any event or the existence of any fact which renders any representation
or warranty in this Agreement or any of the other Loan Documents inaccurate, incomplete or
misleading in any material respect as of the date made or remade. In addition, Borrowers agree to
provide Agent with prompt written notice of any change in the information disclosed in any Exhibit
hereto, in each case after giving effect to the materiality limits and Material Adverse Effect
qualifications contained therein.

8.1.3 Financial Statements. Keep, and cause each of their Subsidiaries to keep,
adequate records and books of account with respect to its business activities in which proper
entries are made in accordance with customary accounting practices reflecting all its financial
transactions; and cause to be prepared and furnished to Agent, the following, all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrowers’ certified public accountants
concur in any change therein and such change is disclosed to Agent and is consistent with GAAP:

(i) not later than 90 days after the close of each fiscal year of Parent, unqualified
(except for a qualification for a change in accounting principles with which the accountant
concurs) audited financial statements of Parent and its Subsidiaries as of the end of such
year, on a Consolidated basis, certified by Whitley Penn LLP or such other firm of
independent certified public accountants of recognized standing selected by Parent but
acceptable to Agent and, within a reasonable time thereafter a copy of any management letter
issued in connection therewith;

(ii) not later than 90 days after the close of each fiscal year of Borrower
Representative, financial statements of Borrower Representative and its Subsidiaries as of
the end of such year, on a Consolidated basis, certified by the principal financial officer
of Borrower Representative as prepared in accordance with GAAP and fairly presenting in all
material respects the financial position and results of operations of Borrower
Representative and its Subsidiaries for such year and except that such
statements need not contain notes and that such financial statements shall only consist
of a balance sheet, income statement and statement of cash flows;

 

34

 

(iii) not later than 30 days after the end of each calendar quarter hereafter,
including the last calendar quarter of Borrower Representative’s fiscal year, unaudited
interim financial statements of Borrower Representative and its Subsidiaries as of the end
of such calendar quarter and of the portion of the fiscal year then elapsed, on a
Consolidated basis, certified by the principal financial officer of Borrower Representative
as prepared in accordance with GAAP and fairly presenting in all material respects the
financial position and results of operations of Borrower Representative and its Subsidiaries
for such calendar quarter subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes and that such financial statements shall
only consist of a balance sheet, income statement and statement of cash flows;

(iv) not later than 30 days after the end of each month, (x) a monthly report
reflecting (1) order volumes, (2) debt balances and (3) cash balances and (y) a management
discussion and analysis (1) setting forth in comparative form the corresponding figures for
the corresponding periods of the previous fiscal year and the corresponding figures from the
most recent Projections for the current fiscal year delivered pursuant to subsection 8.1.7
and (2) identifying the reasons for any significant variations and otherwise describing
monthly performances, such monthly report in the form attached hereto as Exhibit
8.1.3A. The information above shall be presented in reasonable detail and shall be
certified by the principal financial officer of Borrower Representative to the effect that
such information fairly presents in all material respects the results of operation and
financial condition of Borrower Representative and its Subsidiaries as at the dates and for
the periods indicated subject only to changes from audit and year-end and quarter end
adjustments;

(v) promptly after the sending or filing thereof, as the case may be, copies of any
proxy statements, financial statements or reports which Parent has made available to its
Securities holders and copies of any regular, periodic and special reports or registration
statements which Parent or any of its Subsidiaries files with the Securities and Exchange
Commission or any governmental authority which may be substituted therefor or any national
securities exchange;

(vi) upon request of Agent, copies of any annual report to be filed with ERISA in
connection with each Plan; and

(vii) such other data and information (financial and otherwise) as Agent or any Lender,
from time to time, may reasonably request, bearing upon or related to the Collateral or
Borrowers’ or any of their Subsidiaries’ financial condition or results of operations.
Borrowers shall have a reasonable amount of time under the circumstances to prepare and
furnish any such data and information.

 

35

 

Concurrently with the delivery of the financial statements described in clause (i) of this
subsection 8.1.3, Borrowers shall forward to Agent a copy of the accountants’ letter to
Borrower Representative’s management that is prepared in connection with such financial
statements. Concurrently with the delivery of the financial statements described in paragraph (i),
(ii) and (iii) of this subsection 8.1.3, or, during the continuance of an Event of Default, more
frequently if reasonably requested by Agent, Borrowers shall cause to be prepared and furnished to
Agent a Compliance Certificate in the form of Exhibit 8.1.3 hereto executed by the
principal financial officer of Borrower Representative (a “Compliance Certificate”).

Documents required to be delivered pursuant to Section 8.1.3 may (but shall not be required to) be
delivered electronically and if so delivered, shall be deemed to have been delivered on the date
(i) on which Borrower Representative posts such documents, or provides a link thereto on Parent’s
or Borrower Representative’s website on the Internet; or (ii) on which such documents are posted on
Parent’s or Borrower Representative’s behalf on an Internet or intranet website, if any, to which
each Lender and Agent has access (whether a commercial, third-party website or whether sponsored by
Agent); provided that: (i) Borrower Representative shall deliver paper copies of such
documents to Agent if Agent requests Borrower Representative to deliver such copies until a written
request to cease delivering paper copies is given by Agent and (ii) Borrower Representative shall
notify Agent (by telecopier or electronic mail) of the posting of any such documents and provide to
Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Agent shall
have no obligation to request the delivery or to maintain copies of the documents referred to
above. The Loan Parties hereby acknowledge that (a) Agent will make available to Lenders and
Issuing Bank materials and/or information provided by or on behalf of the Loan Parties hereunder
(collectively, “Borrower Materials”) either by posting the Borrower Materials on IntraLinks or
another similar electronic system and by direct delivery.

8.1.4 Borrowing Base Certificates. On or before the 20th day of each month from and
after the date hereof, Borrowers shall deliver to Agent, in form acceptable to Agent, a Borrowing
Base Certificate as of the last day of the immediately preceding month, with such supporting
materials as Agent shall reasonably request. If Borrowers deem it advisable, Borrowers shall
execute and deliver to Agent Borrowing Base Certificates more frequently than monthly. On or
before the 20th day of each calendar month from and after the date hereof, Borrowers shall deliver
to Agent, in the form reasonably acceptable to Agent, (i) reconciliations of Borrowers’ Accounts as
shown on the month-end Borrowing Base Certificate for the immediately preceding month to Borrowers’
accounts receivable agings, to Borrowers’ general ledger and to Borrowers’ most recent financial
statements and (ii) reconciliations of Borrowers’ Inventory as shown on Borrowers’ perpetual
inventory, to Borrowers’ general ledger and to Borrowers’ financial statements, all with supporting
materials as Agent shall reasonably request. The foregoing notwithstanding, (i) if average
Availability in any calendar month equals or exceeds $25,000,000, then such Borrowing Base
Certificates and reconciliations shall not be required to be delivered until the 30th day (or 28th
or 29th day for February) of each month and (ii) while a Trigger Period exists, such Borrowing Base
Certificates shall be required to be delivered on a weekly basis on or prior to the 4th Business
Day of each week for the prior week; provided that any such weekly Borrowing Base
Certificates shall contain weekly updates of sales, collections and credit memos with all other
items being updated monthly on the Borrowing Base Certificates to be delivered on or about the 20th
day of each month.

 

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8.1.5 Landlord, Processor and Storage Agreements. Provide Agent with copies of all
agreements between any Borrower or any of its Subsidiaries and any landlord,
warehouseman, processor, distributor or consignee which owns or is the lessee of any premises
at which any Collateral may, from time to time, be kept. With respect to any lease (other than
leases for sales offices), warehousing agreement or any processing agreement in any case entered
into after the Closing Date, Borrowers shall use commercially reasonable efforts to provide Agent
with landlord waivers, bailee letters or processor letters with respect to such premises. In the
event Borrowers do not provide Agent with any such landlord waiver, bailee letter or processor
letter with respect to any leased or warehouse location, Borrowers acknowledge that, in Agent’s
reasonable credit judgment, Inventory at such location shall not be Eligible Inventory unless
Borrower Representative requests that Agent establish a Rent and Charges Reserve for such location.
Such landlord waivers, bailee letters or processor letters shall be in a form supplied by Agent to
Borrowers with such reasonable revisions as are customarily accepted by Agent or by similar
financial institutions in similar financial transactions.

8.1.6 Guarantor Financial Statements. Deliver or cause to be delivered to Agent
financial statements, if any, for each Guarantor (to the extent not consolidated with the financial
statements delivered to Agent under subsection 8.1.3) in form reasonably satisfactory to Agent at
such intervals and covering such time periods as Agent may reasonably request; provided
that in no event shall Borrowers be obligated to deliver financial statements of any Guarantor more
frequently than it is required to deliver financial statements of Borrowers.

8.1.7 Projections. No later than 60 days after the last day of each fiscal year of
Borrower Representative deliver to Agent Projections of Borrower Representative and each of its
Subsidiaries for the forthcoming fiscal year, month by month.

8.1.8 Subsidiaries. Cause each Domestic Subsidiary of each Borrower, whether now or
hereafter in existence, promptly upon Agent’s request therefor, to execute and deliver to Agent at
Agent’s option (x) a joinder agreement in form and substance reasonably acceptable to Agent whereby
such Domestic Subsidiary would become an additional Borrower hereunder or (y) a Guaranty Agreement
and a security agreement pursuant to which such Domestic Subsidiary guaranties the payment of all
Obligations and grants to Agent a first priority Lien (subject only to Permitted Liens) on all of
its Properties of the types described in Section 5.1. Additionally, with respect to each Domestic
Subsidiary and first tier Foreign Subsidiary, the applicable Borrower shall execute and deliver to
Agent a pledge agreement pursuant to which such Borrower grants to Agent a first priority Lien
(subject only to Permitted Liens) with respect to all (65% with respect to first tier Foreign
Subsidiary) of the issued and outstanding Securities of each Subsidiary.

8.1.9 Deposit and Brokerage Accounts. For each deposit account or brokerage account
(other than (a) petty cash accounts with balances less than $100,000 individually or $200,000 in
the aggregate, (b) escrow accounts, trust accounts, merchant accounts and payroll accounts, (c)
deposit accounts maintained at City National Bank so long as the aggregate amount contained in any
such deposit accounts does not exceed $400,000 and any such deposit accounts are either closed or
in compliance with this subsection 8.1.9 within sixty (60) days after the Closing Date and (d) any
deposit account or Investment Property as to which a Loan Party is acting as a trustee or fiduciary
for another Person (other than a Loan Party), including without limitation, the “280G Escrow
Account,” the “CVR Escrow Account” and the “Excess Employee Payment Escrow Account” (as such terms
are defined in the Senior Secured Notes Indenture))
that any Borrower at any time opens or maintains, Borrowers shall pursuant to an agreement in
form and substance reasonably satisfactory to Agent, cause the depository bank or securities
intermediary, as applicable, to agree to comply with instructions from Agent to such depository
bank or securities intermediary, as applicable, directing the disposition of funds from time to
time credited to such deposit or brokerage account, without further consent of Borrowers;
provided that, except as otherwise provided in subsection 6.2.4 with respect to the
Dominion Account, Agent agrees not to issue any such instructions unless an Event of Default has
occurred and is continuing.

 

37

 

8.2 Negative Covenants. During the Term, and thereafter for so long as there are any
Obligations outstanding, Borrowers covenant that, unless otherwise consented to by Majority
Lenders, in writing, they shall not:

8.2.1 Mergers; Consolidations; Acquisitions; Structural Changes. Merge or
consolidate, or permit any Subsidiary of any Borrower to merge or consolidate, with any Person; nor
change its or any of its Subsidiaries’ state of incorporation or organization, Type of Organization
or Organizational I.D. Number; nor change its or any of its Subsidiaries’ legal name; nor acquire,
nor permit any of its Subsidiaries to acquire, all or any substantial part of the Properties of any
Person, except for:

(i) mergers of any Subsidiary of a Borrower into another Borrower or another
wholly-owned Subsidiary of a Borrower or of Parent into a Borrower;

(ii) merger of a Subsidiary of Parent that is not a Loan Party into another Loan Party
so long as such Subsidiary is in a Similar Business to the business of Borrowers and such
Subsidiary does not have a negative net worth as of the date of the proposed merger and did
not have a negative EBITDA for the most recently ended twelve month period occurring prior
to the date of the proposed merger;

(iii) acquisitions of assets consisting of fixed assets or real Property that
constitute Capital Expenditures permitted under subsection 8.2.8; and

(iv) mergers, consolidations or acquisitions that are Permitted Investments so long as
(v) such mergers, consolidations or acquisitions shall be of Persons or businesses engaged
in a Similar Business to the business of Borrowers, (w) any such merger, consolidation or
acquisition is consensual and consummated in compliance with all applicable laws, (x) after
giving effect to any such transaction, no Default or Event of Default exists and
Availability is at least $10,000,000, (y) average Availability for the sixty (60) days prior
to the consummation of the proposed transaction computed on a pro forma basis as if such
transaction occurred on the first day of such period is at least $10,000,000 and (z) the
Fixed Charge Coverage Ratio for the most recently ended twelve month period was at least
1.25 to 1.00.

 

38

 

8.2.2 Loans. Make, or permit any Subsidiary of any Borrower to make, any loans or
other advances of money to any Person, other than (i) for salary, travel advances, advances against
commissions and other similar advances to employees in the ordinary course of business, (ii)
extensions of trade credit in the ordinary course of business, including promissory
notes or other evidence of indebtedness received in connection with the collection of such
trade credit, (iii) deposits with financial institutions permitted under this Agreement, (iv)
prepaid expenses, (v) intercompany loans between Borrowers and any Subsidiary that is a Guarantor,
(vi) loans and advances to directors, employees and officers of Borrower Representative and its
Subsidiaries for bona fide business purposes and to purchase securities of Parent, in aggregate
amount not to exceed $2,500,000 at any time outstanding; (vii) loans and advances outstanding on
the Closing Date as set forth in Exhibit 8.2.2; and (viii) other loans and advances that
are Permitted Investments so long as (x) after giving effect to any such transaction, no Default or
Event of Default exists and Availability is at least $10,000,000, (y) average Availability for the
sixty (60) days prior to the consummation of the proposed transaction computed on a pro forma basis
as if such transaction occurred on the first day of such period is at least $10,000,000 and (z) the
Fixed Charge Coverage Ratio for the most recently ended twelve month period was at least 1.25 to
1.00.

8.2.3 Total Indebtedness for Money Borrowed. Create, incur, assume, or suffer to
exist, or permit any Subsidiary of any Borrower to create, incur or suffer to exist, any
Indebtedness for Money Borrowed, except:

(i) Obligations owing to Agent or any Lender under this Agreement or any of the other
Loan Documents;

(ii) Indebtedness for Money Borrowed existing on the date of this Agreement and listed
on Exhibit 8.2.3; refinancings or renewals thereof; provided that (A) any
such refinancing Indebtedness is in an aggregate principal amount not greater than the
aggregate principal amount of the Indebtedness being renewed or refinanced, plus the amount
of any premiums required to be paid thereon and reasonable fees and expenses associated
therewith, (B) such refinancing Indebtedness has a later or equal final maturity and longer
or equal weighted average life than the Indebtedness being renewed or refinanced and (C) the
covenants, event of default, subordination and other provisions thereof (including any
guarantees thereof) shall be, in the aggregate, no less favorable to the Lenders than those
contained in the Indebtedness being renewed or refinanced;

(iii) the Senior Secured Noteholder Obligations;

(iv) Permitted Purchase Money Indebtedness;

(v) Indebtedness for Money Borrowed of any Subsidiary to Borrower or any Subsidiary
Guarantor or of Borrower to any Subsidiary Guarantor;

(vi) Subordinated Debt; and

(vii) such other Indebtedness for Money Borrowed that Borrowers and their Subsidiaries
are permitted to incur pursuant to the Senior Secured Notes Indenture.

 

39

 

8.2.4 Affiliate Transactions. Enter into, or be a party to, or permit any Subsidiary
of any Borrower to enter into or be a party to, any transaction with any Affiliate of
Borrower or any holder of any Securities of any Borrower or any Subsidiary of any Borrower,
including without limitation any management, consulting or similar fees, except:

(i) in the ordinary course of and pursuant to the reasonable requirements of such
Borrower’s or such Subsidiary’s business and upon fair and reasonable terms which are fully
disclosed to Agent (to the extent such transaction is material and is or will be required to
be disclosed in Parent’s public filings with the Securities and Exchange Commission) and are
no less favorable to such Borrower or such Subsidiary than would be obtained in a comparable
arm’s-length transaction with a Person not an Affiliate or Security holder of any Borrower;

(ii) exclusively among Borrowers;

(iii) as otherwise permitted under this Agreement;

(iv) so long as immediately prior to the payment thereof and after giving effect to the
payment thereof, no Event of Default exists and is continuing, the payment of management,
consulting, monitoring, advisory and other fees and related expenses (including
indemnification and other similar amounts which may be paid even if an Event of Default
exists and is continuing) pursuant to the Management Advisory Agreement (plus any unpaid
management, consulting, monitoring, advisory and other fees and related expenses (including
indemnification and similar amounts) accrued in any prior year) and the termination fees
pursuant to the Management Advisory Agreement, or, in each case, any amendment thereto so
long as any such amendment is not materially disadvantageous in the good faith judgment of
the board of directors of Parent to Parent when taken as a whole, as compared to the
Management Advisory Agreement as in effect on the Closing Date; provided that items
permitted to be paid to Affiliates pursuant to clause (v) below may be paid, whether or not
an Event of Default exists and is continuing;

(v) the payment of reasonable and customary fees and compensation paid to, and
indemnities and reimbursements and employment and severance arrangements provided on behalf
of or for the benefit of, current or former employees, directors, officers, manager,
distributors or consultants of Parent or Loan Parties;

(vi) the issuance of Securities (other than Disqualified Stock) of Parent or any
Permitted Holder or to any employee, director, officer, manager, distributor or consultant
of Parent or any of its Loan Parties;

(vii) so long as immediately prior to the payment thereof and after giving effect to
the payment thereof, no Event of Default exists and is continuing, payments by Parent or any
Loan Party to any of the Investors made for any financial advisory, financing, underwriting
or placement services or in respect of other investment banking activities, including,
without limitation, in connection with acquisitions or divestitures which payments are
either (a) approved by a majority of the board of directors of Parent in good faith or (b)
made pursuant to an agreement existing as of the Closing Date;

 

40

 

(viii) payments and issuance of Indebtedness for Money Borrowed and Disqualified Stock
(and cancellation of any thereof) of Parent and Loan Parties and Preferred Stock (and
cancellation thereof) of any Loan Party to any future, current or former employee, director,
officer, manager or consultant (including trustees, administrators, executors, power of
attorney, heirs, assignees, estates and beneficiaries of any of the foregoing) of Parent or
any Loan Party pursuant to any management equity or other incentive plan or stock option
plan or any other management or employee benefit plan or agreement or any stock subscription
or shareholder agreement; and any employment agreements, severance agreements, stock option
plans and other compensatory agreements (and any successor plans thereto) and any
supplemental executive retirement benefit plans or arrangements with any such employees,
directors, officers, managers or consultants that are, in each case, approved by Parent in
good faith;

(ix) payments by any Loan Party pursuant to tax sharing agreements among Parent and its
Subsidiaries; provided that in each case the amount of such payments in any fiscal year does
not exceed the amount that Loan Parties would be required to pay in respect of foreign,
federal, state and local taxes for such fiscal year were the Loan Parties to pay such taxes
separately from any such other Person;

(x) any transaction with a Person that is an Affiliate of Borrower Representative
solely because the Borrower Representative directly or indirectly owns Securities in or
controls such Person entered into in the ordinary course of business;

(xi) transactions otherwise permitted pursuant to the provisions of subsections 8.2.1,
8.2.2, 8.2.3 and/or 8.2.7 of the Agreement;

(xii) any agreement as in effect on the Closing Date, or any amendment thereto (so long
as any such amendment is not disadvantageous in any material respect, in the good faith
judgment of the board of directors or the senior management of the applicable Borrower or
Subsidiary, to the Lenders when taken as a whole as compared to the applicable agreement as
in effect on the Closing Date; and

(xiii) the existence of, or performance by any Borrower or Subsidiary of, its
obligations under the terms of any stockholders agreement to which it is a party as of the
Closing Date and any similar agreements which it may enter into thereafter; provided
that the existence of, or the performance by such Borrower or Subsidiary of obligations
under any future amendment to any such existing agreement or under any similar agreement
entered into after the Closing Date shall only be permitted by this paragraph to the extent
that the terms of any such amendment or new agreement are not otherwise disadvantageous in
any material respect, in the good faith judgment of the board of directors or the senior
management of such Borrower or Subsidiary and Agent, to Agent and Lenders when taken as a
whole.

 

41

 

8.2.5 Limitation on Liens. Create or suffer to exist, or permit any Subsidiary of any
Borrower to create or suffer to exist, any Lien upon any of its Property, income or profits,
whether now owned or hereafter acquired, except:

(i) Liens at any time granted in favor of Agent for the benefit of Lenders;

(ii) Liens for Taxes, assessments or governmental charges (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due, or being contested in the manner
described in subsection 7.1.14 hereto, but only if in Agent’s judgment such Lien would not
reasonably be expected to adversely affect Agent’s rights or the priority of Agent’s Lien on
any Collateral;

(iii) Liens arising in the ordinary course of the business of any Borrower or any of
its Subsidiaries by operation of law or regulation, but only if payment in respect of any
such Lien is not at the time required and such Liens do not, in the aggregate, materially
detract from the value of the Property of such Borrower or any of its Subsidiaries or
materially impair the use thereof in the operation of the business of such Borrower or any
of its Subsidiaries;

(iv) Purchase Money Liens securing Permitted Purchase Money Indebtedness;

(v) such other Liens as appear on Exhibit 8.2.5 hereto and any Lien granted as
a replacement or substitute therefor so long as such Lien does not encumber additional
assets or the principal amount (exclusive of capitalized interest or fees) of Indebtedness
secured thereby is not increased;

(vi) Liens (x) incurred or deposits made in the ordinary course of business in
connection with (1) worker’s compensation, social security, unemployment insurance and other
like laws or (2) performance of tenders, statutory obligations (other than excise taxes),
surety, stay, customs and appeal bonds, statutory bonds, bids sales, contracts, leases,
statutory obligations, work-in-progress advances and other similar obligations not incurred
in connection with the borrowing of money or the payment of the deferred purchase price of
property, but only if payment in respect of any such Lien is not at the time required or (y)
arising by virtue of deposits made in the ordinary course of business to secure liability
for premiums to insurance carriers;

(vii) reservations, covenants, zoning and other land use regulations, title exceptions
or encumbrances granted in the ordinary course of business, affecting real Property owned or
leased by a Borrower or one of its Subsidiaries; provided that such exceptions do
not in the aggregate materially interfere with the use of such Property in the ordinary
course of any Borrower’s or such Subsidiary’s business;

(viii) judgment Liens that do not give rise to an Event of Default under subsection
10.1.15;

(ix) Liens arising under the Senior Secured Notes Security Documents and/or securing
Additional Parity Debt, so long as any such Liens are subject to the Intercreditor
Agreement;

 

42

 

(x) leases of the Properties of any Loan Party, in each case entered into in the
ordinary course of such Loan Party’s business so long as such leases do not, individually or
in the aggregate, (i) interfere in any material respect with the ordinary conduct of the
business of any Loan Party, or (ii) materially impair the use (for its intended purposes) or
the value of the property subject thereto;

(xi) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for the sale of goods entered into by any Loan Party in the ordinary course of
business in accordance with the past practices of such Loan Party;

(xii) bankers’ Liens, rights of setoff and other similar Liens existing solely with
respect to cash and Cash Equivalents on deposit in one or more accounts maintained by any
company, in each case granted in the ordinary course of business in favor of the bank or
banks with which such accounts are maintained, securing amounts owing to such bank with
respect to cash management and operating account arrangements, including those involving
pooled accounts and netting arrangements; provided that, unless such Liens are non
consensual and arise by operation of law, in no case shall any such Lien secure (either
directly or indirectly) the repayment of any Indebtedness;

(xiii) licenses of Intellectual Property granted by any Loan Party in the ordinary
course of business and not interfering in any material respect with the ordinary conduct of
business of the Loan Parties;

(xiv) the filing of UCC financing statements solely as a precautionary measure in
connection with operating leases or consignment of goods;

(xv) such other Liens on any assets of any Loan Party consisting of Senior Secured
Notes Priority Collateral as permitted by the Senior Secured Note Indenture so long as after
giving effect to any such transaction, no Default or Event of Default exists; and

(xvi) such other Liens as Majority Lenders may hereafter approve in writing.

8.2.6 Payments and Amendments of Certain Debt.

(i) make or permit any Subsidiary of any Borrower to make any payment of any part or
all of any Subordinated Debt or take any other action or omit to take any other action in
respect of any Subordinated Debt, except in accordance with the subordination agreement
relative thereto or the subordination provisions thereof;

(ii) amend or modify any agreement, instrument or document evidencing or relating to
any Subordinated Debt in a manner that is adverse to the interests of Agent or Lenders;

(iii) amend or modify any of the Senior Secured Notes Documents, except as otherwise
provided in the Intercreditor Agreement; or

 

43

 

(iv) make or permit any Subsidiary of any Borrower to make any non-mandatory prepayment
or repurchase of any of the Senior Secured Notes Obligations unless (x) after giving effect
to any such transaction, no Default or Event of Default exists and Availability is at least
$10,000,000, (y) average Availability for the sixty (60) days prior to the consummation of
the proposed transaction computed on a pro forma basis as if such transaction occurred on
the first day of such period is at least $10,000,000 and (z) the Fixed Charge Coverage Ratio
for the most recently ended twelve month period was at least 1.25 to 1.00.

8.2.7 Distributions. Declare or make, or permit any Subsidiary of any Borrower to
declare or make, any Distributions, except for:

(i) Distributions by any Subsidiary of a Borrower to a Borrower;

(ii) Distributions paid solely in Securities of a Borrower or any of its Subsidiaries;

(iii) Distributions, directly or indirectly, to Parent to permit Parent to pay for the
repurchase, retirement or other acquisition or retirement for value of any Securities of
Parent (other than Disqualified Stock) held by any future, present or former employee,
director, officer, manager or consultant (including trustees, administrators, executors,
powers of attorney, heirs, assignees, estates and beneficiaries of any of the foregoing) of
Parent, any of its Subsidiaries pursuant to any management equity plan or stock option plan
or any other management or employee benefit plan or agreement, or any stock subscription or
shareholder agreement (including, for the avoidance of doubt, any principal and interest
payable on any notes issued by Parent in connection with such repurchase, retirement or
other acquisition); provided that the aggregate amount of Distributions made under
this clause does not exceed $2,500,000 in the first fiscal year following the Closing Date
(with unused amounts in any fiscal year being carried over to succeeding fiscal years);
provided, further, that each of the amounts in any fiscal year under this
clause may be increased by an amount not to exceed:

(a) the cash proceeds from the sale of Securities (other than Disqualified Stock) of a
Loan Party to any future, present or former employees, directors, officers, managers or
consultants of Parent or any of its Subsidiaries that occurs after the Closing Date, to the
extent the cash proceeds from the sale of such Securities have not otherwise been applied to
the payment of Distributions to defease, redeem, repurchase, exchange, acquire or retire
Disqualified Stock or Subordinated Debt; plus

(b) the cash proceeds of key man life insurance policies received by a Loan Party after
the Closing Date; less

(c) the amount of any Distributions previously made with the cash proceeds described in
clauses (a) and (b) of this clause (iii);

and provided, further, that cancellation of Indebtedness of Money Borrowed owing to
any Loan Party from any future, present or former employees, directors, officers, managers, or
consultants (and the successors listed above) of Parent or such Loan Party in connection with a
repurchase of
Securities of Parent or any Loan Party will not be deemed to constitute a Distribution for purposes
of this covenant or any other provision of the Agreement.

 

44

 

(iv) Distributions to fund payments made or expected to be made by Parent or any Loan
Party in respect of withholding or similar taxes payable upon exercise of Securities by any
future, present or former employee, director, officer, manager or consultant and any
repurchases of Securities deemed to occur upon exercise of stock options, warrants or other
convertible, exchangeable or exercisable instruments if such Securities represent a portion
of the exercise price of such instruments or required withholding or similar taxes;

(v) the declaration and payment of Distributions by any Loan Party to Parent or any of
its Subsidiaries to, or the making of loans to, Parent or such Subsidiary in amounts
required for Parent to pay, in each case without duplication,

(a) franchise and excise taxes and other fees, taxes and expenses required to maintain
its corporate existence;

(b) foreign, federal, state and local income and similar taxes, to the extent such
income taxes are attributable to the income of Parent and its Restricted Subsidiaries (as
defined in the Senior Secured Notes Indenture) and, to the extent of the amount actually
received from its Unrestricted Subsidiaries (as defined in the Senior Secured Notes
Indenture), in amount required to pay such taxes to the extent attributable to the income of
such Unrestricted Subsidiaries; provided that in each case the amount of such
payments in any fiscal year does not exceed the amount that the Loan Parties would be
required to pay in respect of foreign, federal, state and local taxes for such fiscal year
were Loan Parties (to the extent described above) to pay such taxes separately from Parent
and its Subsidiaries who are not Loan Parties; and

(c) general corporate operating and overhead costs and expenses (including customary
salary, bonus and other benefits payable to employees, directors, officers and manager) of
Parent (or any intermediate holding company between Parent and Borrower Representative) to
the extent such costs and expenses are attributable to the ownership or operation of Loan
Parties, including Loan Parties’ proportionate share of such amounts relating to Parent
being a public company; not to exceed $5,000,000 in the aggregate in any fiscal year.

(vi) Distributions by Borrowers in an amount sufficient to permit Parent to pay
regularly scheduled Senior Secured Noteholder Obligations or mandatory prepayments thereof;

(vii) Distributions by Borrowers to effectuate the transactions permitted in
subsections 8.2.4 and 8.2.6;

(viii) Distributions by Borrowers to enable Parent to make repurchases of Securities
deemed to occur upon exercise of stock options or warrants if such Securities represent a
portion of the exercise price of such options or warrants;

 

45

 

(ix) Distributions by Borrowers to Parent so that Parent may make cash payments in lieu
of the issuance of fractional shares in connection with the exercise of warrants, options or
other securities convertible into or exchangeable for Securities of Parent or such Loan
Party, as the case may be; and

(x) other Distributions that Borrowers are permitted to make pursuant to the terms of
the Senior Secured Notes Indenture, if (x) after giving effect to any such Distribution, no
Default or Event of Default exists and Availability is at least $10,000,000, (y) average
Availability for the sixty (60) days prior to the consummation of the proposed transaction
computed on a pro forma basis as if such transaction occurred on the first day of such
period is at least $10,000,000 and (z) the Fixed Charge Coverage Ratio for the most recently
ended twelve month period was at least 1.25 to 1.00.

8.2.8 Disposition of Assets. Sell, lease or otherwise dispose of any of, or permit
any Subsidiary of any Borrower to sell, lease or otherwise dispose of any of, its Properties,
including any disposition of Property as part of a sale-and-leaseback transaction, to or in favor
of any Person, except for:

(i) sales of Inventory in the ordinary course of business;

(ii) transfers of Property to a Borrower by a Subsidiary of a Borrower;

(iii) dispositions of Property that is substantially worn, damaged, uneconomic or
obsolete;

(iv) dispositions of investments described in paragraphs (iv), (v), (vi) and (vii) of
the definition of the term “Restricted Investments”; and

(v) other dispositions expressly authorized by this Agreement;

(vi) so long as no Event of Default has occurred and is continuing, sales or other
dispositions of Accounts or Inventory in connection with the sale of a Subsidiary of a
Borrower or business division or unit of a Borrower so long as the aggregate value of all
such Accounts or Inventory so sold shall not exceed $7,500,000 with respect to any one such
transaction and, if at the time any such sale or other disposition if consummated,
Availability is less than $15,000,000 or Availability for the thirty days immediately prior
to the date of such sale of other disposition was less than $15,000,000, the proceeds
received from any such sale or other disposition of Accounts or Inventory are paid in cash;
and

(vii) sales, leases and other disposition of assets constituting Senior Secured Note
Priority Collateral to the extent permitted by the Senior Secured Notes Indenture.

8.2.9 Securities of Subsidiaries. Permit any of their Subsidiaries to issue any
additional Securities except to a Borrower and except for director’s qualifying Securities.

 

46

 

8.2.10 Guaranteed Sales, Etc. Make, or permit any Subsidiary of any Borrower to make,
a sale to any customer on a guaranteed sale, sale and return, sale on approval, repurchase or
return or consignment basis, provided that the covenants contained in this subsection
8.2.10 shall not be deemed to prevent Borrowers from issuing credit memos or accepting returns of
Inventory in the ordinary course of business consistent with Borrowers’ historical business
practices.

8.2.11 Restricted Investment. Except as otherwise permitted by this Section 8.2, make
or have, or permit any Subsidiary of any Borrower to make or have, any Restricted Investment.

8.2.12 Subsidiaries and Joint Ventures. Create, acquire or otherwise suffer to exist,
or permit any Subsidiary of any Borrower to create, acquire or otherwise suffer to exist, any
Subsidiary or joint venture arrangement not in existence as of the date hereof, except for the
creation of Subsidiaries or joint ventures that are Permitted Investments so long as (v)
subsidiaries or joint ventures shall be engaged in a Similar Business to the business of Borrowers
engaged in by Borrowers as of the date hereof, (w) the creation of such Subsidiaries or joint
ventures is consensual and consummated in compliance with all applicable laws, (x) after giving
effect to any such transaction, no Default or Event of Default exists and Availability is at least
$10,000,000 (y) average Availability for the sixty (60) days prior to the consummation of the
proposed transaction computed on a pro forma basis as if such transaction occurred on the first day
of such period is at least $10,000,000 and (z) the Fixed Charge Coverage Ratio for the most
recently ended twelve month period was at least 1.25 to 1.00; provided that the conditions
contained in clauses (x), (y) and (z) above shall not apply to the creation of wholly owned
Subsidiaries that are in compliance with subsection 8.1.8.

8.2.13 Tax Consolidation. File or consent to the filing of any consolidated income
tax return with any Person, other than Parent and its Subsidiaries.

8.2.14 Organizational Documents. Agree to, or suffer to occur, any amendment,
supplement or addition to its or any of their Subsidiaries’ charter, articles or certificate of
incorporation, certificate of formation, limited partnership agreement, bylaws, limited liability
agreement, operating agreement or other organizational documents (as the case may be), that would
reasonably be expected to have a Material Adverse Effect.

8.2.15 Fiscal Year End. Change, or permit any Subsidiary of any Borrower to change,
its fiscal year end unless Borrower Representative has given Agent at least 30 days’ prior written
notice of any such change.

8.2.16 Negative Pledges. Except as otherwise provided in or permitted by this
Agreement or the Senior Secured Notes Security Documents or were permitted to be incurred on the
date the Senior Secured Notes Indenture terminated, enter into any agreement limiting the ability
of any Borrower or any of its Subsidiaries to voluntarily create Liens upon any of its Property.

 

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In the event the Senior Secured Notes Indenture is terminated upon payment in full of the
Senior Secured Notes Obligations as permitted by the terms hereof or as otherwise consented to
by Majority Lenders, then Subsections 8.2.3, 8.2.5, 8.2.7 and 8.2.8 shall be appropriately
amended to continue to permit Borrowers and their Subsidiaries to engage in the transactions of the
types permitted by such subsections immediately prior to such termination of the Senior Secured
Notes Indenture.

8.3 Specific Financial Covenants. During the Term, and thereafter for so long as
there are any Obligations outstanding, Borrowers covenant that, unless otherwise consented to by
Majority Lenders, in writing, they shall comply with all of the financial covenants set forth in
Exhibit 8.3 hereto.

SECTION 9. CONDITIONS PRECEDENT

9.1 Initial Loans. Notwithstanding any other provision of this Agreement or any of
the other Loan Documents, and without affecting in any manner the rights of Agent or any Lender
under the other sections of this Agreement, no Lender shall be required to make the Loans, nor
shall Agent be required to issue or procure any Letter of Credit or LC Guaranty to be made or
issued on the Closing Date unless and until each of the following conditions has been and continues
to be satisfied or waived by Majority Lenders:

9.1.1 Documentation. Agent shall have received, in form and substance satisfactory to
Agent and its counsel, a duly executed copy of this Agreement and the other Loan Documents,
together with such additional documents, instruments, opinions and certificates as Agent and its
counsel shall require in connection therewith from time to time, all in form and substance
satisfactory to Agent and its counsel.

9.1.2 No Default. No Default or Event of Default shall exist.

9.1.3 Availability. Agent shall have determined that immediately after Lenders have
made the initial Loans and after Agent has issued or procured the initial Letters of Credit and LC
Guaranties contemplated hereby, and Borrowers have paid (or, if accrued, treated as paid), all
closing costs incurred in connection with the transactions contemplated hereby, and has reserved an
amount sufficient to pay all trade payables aged in excess of historical practice, Availability
shall not be less than $15,000,000.

9.1.4 No Litigation. No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, or which is
related to or arises out of, this Agreement or the consummation of the transactions contemplated
hereby.

9.1.5 Material Adverse Effect. As of the Closing Date, since September 30, 2010,
there has not been any material adverse change in the business, assets, financial condition, income
or prospects of Borrowers taken as a whole and no Material Adverse Effect has occurred.

9.1.6 Proceeds of Senior Secured Notes. Agent shall have determined that Cambium
shall have issued at least $175,000,000 of the Senior Secured Notes. The terms and conditions of
the Senior Secured Notes Documents and the Intercreditor Agreement (which shall have been executed
and delivered to Agent) shall be acceptable to Agent and Lenders.

 

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9.1.7 Patriot Act. Agent shall have received all documentation and other information
required by regulatory authorities under applicable “know your customer” and anti-money laundering
rules and regulations, including without limitation the Patriot Act.

9.2 Conditions Precedent to All Loans and Credit Accommodations. No Lender shall be
required to make any Loan, nor shall Agent be required to issue or procure, any Letter of Credit or
LC Guaranty unless and until the following conditions are satisfied:

9.2.1 No Default or Event of Default. No Default or Event of Default shall exist at
the time of, or result from, such funding, issuance or grant; and

9.2.2 Representations and Warranties. The representations and warranties of each
Borrower and its Subsidiaries in the Loan Documents shall be true and correct in all material
respects on the date of, and upon giving effect to, such funding, issuance or grant (except for
representations and warranties that expressly relate to an earlier date or for such changes as
provided in Section 7.2).

SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

10.1 Events of Default. The occurrence of one or more of the following events shall
constitute an “Event of Default”:

10.1.1 Payment of Obligations. Borrowers shall fail to pay any of the Obligations
hereunder or under any Note on the due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise).

10.1.2 Misrepresentations. Any representation, warranty or other statement made or
furnished to Agent or any Lender by or on behalf of any Borrower, any Subsidiary of any Borrower or
any Guarantor in this Agreement, any of the other Loan Documents or any instrument, certificate or
financial statement furnished in compliance with or in reference thereto proves to have been false
or misleading in any material respect when made, furnished or reaffirmed pursuant to Section 7.2
hereof.

10.1.3 Breach of Specific Covenants. Any Borrower shall fail or neglect to perform,
keep or observe any covenant contained in Section or subsection 6.1.1 (Location of Collateral),
6.1.2 (Insurance of Collateral), 6.2.4 (Maintenance of Dominion Account), 6.2.5 (Collection of
Accounts; Proceeds of Collateral), 8.1.1 (Visits and Inspections; Lender Meeting), 8.1.2 (Notices),
8.1.4 (Borrowing Base Certificates), 8.1.9 (Deposit and Brokerage Accounts), 8.2 (Negative
Covenants) or 8.3 (Specific Financial Covenants) hereof on the date that Borrowers are required to
perform, keep or observe such covenant or shall fail or neglect to perform, keep or observe any
covenant contained in subsection 8.1.3 (Financial Statements) or 8.1.7 (Projections) hereof within
5 days following the date on which Borrowers are required to perform, keep or observe such
covenant.

10.1.4 Breach of Other Covenants. Borrowers shall fail or neglect to perform, keep or
observe any covenant contained in this Agreement (other than a covenant which is dealt with
specifically elsewhere in Section 10.1 hereof) and the breach of such other covenant is not cured
to Agent’s satisfaction within 30 days (or within 5 days with respect to Sections 5.2 (Other
Collateral) or 5.3 (Lien Perfection; Further Assurances)) after the sooner to occur of any
Borrower’s receipt of notice of such breach from Agent or the date on which such failure or neglect
first becomes known to any executive officer of any Borrower.

 

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10.1.5 Default Under Security Documents Other Agreements. Any event of default shall
occur under, or any Borrower, any of its Subsidiaries or any other Guarantor shall default in the
performance or observance of any term, covenant, condition or agreement contained in, any of the
Security Documents or the Other Agreements and such default shall continue beyond any applicable
grace period.

10.1.6 Other Defaults. There shall occur any default or event of default on the part
of any Borrower, any Subsidiary of any Borrower or any other Guarantor under any agreement,
document or instrument to which such Borrower, such Subsidiary of such Borrower or such Guarantor
is a party or by which such Borrower, such Subsidiary of such Borrower or such Guarantor or any of
its Property is bound, evidencing or relating to (a) any Indebtedness (other than the Obligations)
with an outstanding principal balance in excess of $10,000,000, if the payment or maturity of such
Indebtedness is or could be accelerated in consequence of such event of default or demand for
payment of such Indebtedness is made or could be made in accordance with the terms thereof or (b)
the Senior Secured Notes Obligations and/or the Senior Secured Notes Documents.

10.1.7 Uninsured Losses. Any material loss, theft, damage or destruction of any
portion of the Collateral, the uninsured portion of which exceeds $2,000,000 plus the amount of
deductibles and self-insurance retentions permitted by Agent.

10.1.8 Insolvency and Related Proceedings. Any Borrower, any Subsidiary of Borrower
or any other Guarantor shall cease to be Solvent or shall suffer the appointment of a receiver,
trustee, custodian or similar fiduciary, or shall make an assignment for the benefit of creditors,
or any petition for an order for relief shall be filed by or against any Borrower, any Subsidiary
of any Borrower or any other Guarantor under U.S. federal bankruptcy laws (if against any Borrower,
any Subsidiary of any Borrower or any other Guarantor the continuation of such proceeding for more
than 60 days), or any Borrower, any Subsidiary of any Borrower or any other Guarantor shall make
any offer of settlement, extension or composition to their respective unsecured creditors
generally.

10.1.9 Business Disruption; Condemnation. There shall occur any of the following, and
the occurrence thereof could reasonably be expected to have a Material Adverse Effect: (i) a
cessation of a substantial part of the business of any Borrower, any Subsidiary of any Borrower or
any other Guarantor; (ii) any Borrower, any Subsidiary of any Borrower or any other Guarantor shall
suffer the loss or revocation of any material license or permit now held or hereafter acquired by
any Borrower, any Subsidiary of any Borrower or any other Guarantor which is necessary to the
continued or lawful operation of its business; (iii) any Borrower, any Subsidiary of any Borrower
or any other Guarantor shall be enjoined, restrained or in any way prevented by court, governmental
or administrative order from conducting all or any material part of its business affairs; (iv) any
material lease or agreement pursuant to which any Borrower, any Subsidiary of any Borrower or any
other Guarantor leases, uses or occupies any Property shall be canceled or terminated prior to the
expiration of its stated term; or (v) any substantial
portion of the Collateral shall be taken through condemnation or the value of such Property
shall be impaired through condemnation.

 

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10.1.10 Change of Ownership. A Change of Control shall have occurred.

10.1.11 ERISA. A Reportable Event shall occur which, in Agent’s determination,
constitutes grounds for the termination by the Pension Benefit Guaranty Corporation of any Plan or
for the appointment by the appropriate United States district court of a trustee for any Plan, or
any Plan shall be terminated or any such trustee shall be requested or appointed, or if any
Borrower, any Subsidiary of any Borrower or any other Guarantor is in “default” (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from such
Borrower’s, such Subsidiary’s or such Guarantor’s complete or partial withdrawal from such Plan and
any such event could reasonably be expected to have a Material Adverse Effect.

10.1.12 Challenge to Agreement. Any Borrower, any Subsidiary of Borrower or any other
Guarantor, or any Affiliate of any of them, shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement or any of the other Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or priority of any Lien
granted to Agent.

10.1.13 Repudiation of or Default Under Guaranty Agreement. Any Guarantor shall
revoke or attempt to revoke the Guaranty Agreement signed by such Guarantor, shall repudiate such
Guarantor’s liability thereunder or shall be in default under the terms thereof.

10.1.14 Criminal Forfeiture. Any Borrower, any Subsidiary of Borrower or any other
Guarantor shall be criminally indicted or convicted under any law that could lead to a forfeiture
of any Property of any Borrower, any Subsidiary of Borrower or any other Guarantor.

10.1.15 Judgments. Any money judgment, writ of attachment or similar processes
(collectively, “Judgments”) are issued or rendered against any Borrower, any Subsidiary of any
Borrower or any other Guarantor, or any of their respective Property (i) in the case of money
judgments, in an amount of $3,000,000 or more for all such judgments, attachments or processes in
the aggregate, in each case in excess of any applicable insurance with respect to which the insurer
has admitted liability, and (ii) in the case of non-monetary Judgments, such Judgment or Judgments
(in the aggregate) could reasonably be expected to have a Material Adverse Effect, in each case
which Judgment is not stayed, bonded over, released or discharged within 30 days.

10.2 Acceleration of the Obligations. Upon or at any time after the occurrence and
during the continuance of an Event of Default, (i) the Revolving Loan Commitments shall, at the
option of Agent or Majority Lenders, be terminated and/or (ii) Agent may (or shall, upon direction
from Majority Lenders) upon notice to Borrower Representative (which notice shall not be required
with respect to Events of Default under subsection 10.1.8) declare all or any portion of the
Obligations at once due and payable without presentment, demand protest or further notice by Agent
or any Lender, and Borrowers shall forthwith pay to Agent the full amount of such Obligations,
provided that, upon the occurrence of an Event of Default specified in subsection 10.1.8
hereof, the Revolving Loan Commitments shall automatically be terminated and all of the
Obligations shall become automatically due and payable, in each case without declaration,
notice or demand by Agent or any Lender.

 

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10.3 Other Remedies. Upon the occurrence and during the continuance of an Event of
Default, Agent shall have and may exercise from time to time the following other rights and
remedies:

10.3.1 All of the rights and remedies of a secured party under the UCC or under other
applicable law, and all other legal and equitable rights to which Agent or Lenders may be entitled,
all of which rights and remedies shall be cumulative and shall be in addition to any other rights
or remedies contained in this Agreement or any of the other Loan Documents, and none of which shall
be exclusive.

10.3.2 Subject to the terms of the Intercreditor Agreement, the right to take immediate
possession of the Collateral, and to (i) require each Borrower and each of its Subsidiaries to
assemble the Collateral, at Borrowers’ expense, and make it available to Agent at a place
designated by Agent which is reasonably convenient to both parties, and (ii) enter any premises
where any of the Collateral shall be located and to keep and store the Collateral on said premises
until sold (and if said premises be the Property of any Borrower or any Subsidiary of any Borrower,
Borrowers agree not to charge, or permit any of its Subsidiaries to charge, Agent for storage
thereof).

10.3.3 Subject to the terms of the Intercreditor Agreement, the right to sell or otherwise
dispose of all or any Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Agent, in its sole discretion, may deem
advisable. Agent may, at Agent’s option, disclaim any and all warranties regarding the Collateral
in connection with any such sale. Borrowers agree that 10 days’ written notice to Borrowers or any
of their Subsidiaries of any public or private sale or other disposition of Collateral shall be
reasonable notice thereof, and such sale shall be at such locations as Agent may designate in said
notice. Agent shall have the right to conduct such sales on any Borrower’s or any of its
Subsidiaries’ premises, without charge therefor, and such sales may be adjourned from time to time
in accordance with applicable law. Agent shall have the right to sell, lease or otherwise dispose
of the Collateral, or any part thereof, for cash, credit or any combination thereof, and Agent, on
behalf of Lenders, may purchase all or any part of the Collateral at public or, if permitted by
law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of
such price against the Obligations. The proceeds realized from the sale of any Collateral may be
applied, after allowing 2 Business Days for collection, first, to the costs, expenses and
attorneys’ fees incurred by Agent in collecting the Obligations, in enforcing the rights of Agent
and Lenders under the Loan Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any Collateral, second, to the interest due
upon any of the Obligations; and third, to the principal of the Obligations. If any deficiency
shall arise, each Borrower and each Guarantor shall remain jointly and severally liable to Agent
and Lenders therefor.

 

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10.3.4 Agent is hereby granted a license or other right to use, without charge, each
Borrower’s and each of its Subsidiaries’ labels, patents, copyrights, licenses, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in completing, advertising for sale and selling
any Collateral and each Borrower’s and each of its Subsidiaries’ rights under all licenses and all
franchise agreements shall inure to Agent’s benefit.

10.3.5 Agent may, at its option, require Borrowers to deposit with Agent funds equal to 105%
of the LC Amount and, if Borrowers fail to promptly make such deposit, Agent may advance such
amount as a Revolving Credit Loan (whether or not an Overadvance is created thereby). Each such
Revolving Credit Loan shall be secured by all of the Collateral and shall constitute a Base Rate
Revolving Loan. Any such deposit or advance shall be held by Agent as a reserve to fund future
payments on such LC Guaranties and future drawings against such Letters of Credit. At such time as
all LC Guaranties have been paid or terminated and all Letters of Credit have been drawn upon or
expired, any amounts remaining in such reserve shall be applied against any outstanding
Obligations, or, if all Obligations have been indefeasibly paid in full, returned to Borrowers.

10.4 Setoff and Sharing of Payments. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default, each Lender is hereby authorized by Borrowers at any time or
from time to time, with prior written consent of Agent and with reasonably prompt subsequent notice
to Borrowers (any prior or contemporaneous notice to Borrowers being hereby expressly waived) to
setoff and to appropriate and to apply any and all (i) balances held by such Lender at any of its
offices for the account of any Borrower or any of its Subsidiaries (regardless of whether such
balances are then due to a Borrower or its Subsidiaries), and (ii) other property at any time held
or owing by such Lender to or for the credit or for the account of any Borrower or any of its
Subsidiaries, against and on account of any of the Obligations. Any Lender exercising a right to
setoff shall, to the extent the amount of any such setoff exceeds its Revolving Loan Percentage of
the amount set off, purchase for cash (and the other Lenders shall sell) interests in each such
other Lender’s pro rata share of the Obligations as would be necessary to cause such Lender to
share such excess with each other Lender in accordance with their respective Revolving Loan
Percentages. Each Borrower agrees, to the fullest extent permitted by law, that any Lender may
exercise its right to set off with respect to amounts in excess of its pro rata share of the
Obligations and upon doing so shall deliver such excess to Agent for the benefit of all Lenders in
accordance with the Revolving Loan Percentages.

10.5 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrowers contained in this
Agreement and the other Loan Documents, or in any document referred to herein or contained in any
agreement supplementary hereto or in any schedule or in any Guaranty Agreement given to Agent or
any Lender or contained in any other agreement between any Lender and Borrowers or between Agent
and Borrowers heretofore, concurrently, or hereafter entered into, shall be deemed cumulative to
and not in derogation or substitution of any of the terms, covenants, conditions, or agreements of
Borrowers herein contained. The failure or delay of Agent or any Lender to require strict
performance by Borrowers of any provision of this Agreement or to exercise or enforce any rights,
Liens, powers, or remedies hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance, Liens, rights,

 

53

 

powers
and remedies, but all such requirements, Liens, rights, powers, and remedies shall continue in full force and effect until all Loans and other
Obligations owing or to become owing from Borrowers to Agent and each Lender have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and representations of
Borrowers contained in this Agreement or any of the other Loan Documents and no Default or Event of
Default by Borrowers under this Agreement or any other Loan Documents shall be deemed to have been
suspended or waived by Lenders, unless such suspension or waiver is by an instrument in writing
specifying such suspension or waiver and is signed by a duly authorized representative of Agent and
directed to Borrowers.

SECTION 11. AGENT

11.1 Authorization and Action. Each Lender hereby appoints and authorizes Agent to
take such action on its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto. Each Lender hereby acknowledges that Agent shall not have by
reason of this Agreement assumed a fiduciary relationship in respect of any Lender. In performing
its functions and duties under this Agreement, Agent shall act solely as agent of Lenders and shall
not assume, or be deemed to have assumed, any obligation toward, or relationship of agency or trust
with or for, Borrowers. As to any matters not expressly provided for by this Agreement and the
other Loan Documents (including without limitation enforcement and collection of the Notes), Agent
may, but shall not be required to, exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Lenders, whenever such instruction shall be
requested by Agent or required hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders; provided, that Agent
shall be fully justified in failing or refusing to take any action which exposes Agent to any
liability or which is contrary to this Agreement, the other Loan Documents or applicable law,
unless Agent is indemnified to its satisfaction by the other Lenders against any and all liability
and expense which it may incur by reason of taking or continuing to take any such action. If Agent
seeks the consent or approval of the Majority Lenders (or a greater or lesser number of Lenders as
required in this Agreement), with respect to any action hereunder, Agent shall send notice thereof
to each Lender and shall notify each Lender at any time that the Majority Lenders (or such greater
or lesser number of Lenders) have instructed Agent to act or refrain from acting pursuant hereto.

11.2 Agent’s Reliance, Etc. Neither Agent, any Affiliate of Agent, nor any of their
respective directors, officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement or the other Loan Documents,
except for its or their own gross negligence or willful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction. Without limitation of the
generality of the foregoing, Agent: (i) may treat each Lender party hereto as the holder of
Obligations until Agent receives written notice of the assignment or transfer of such lender’s
portion of the Obligations signed by such Lender and in form reasonably satisfactory to Agent; (ii)
may consult with legal counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts; (iii) makes no warranties or
representations to

 

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any
Lender and shall not be responsible to any Lender for any recitals, statements, warranties or representations made in or in connection with this Agreement or any
other Loan Documents; (iv) shall not have any duty beyond Agent’s customary practices in respect of
loans in which Agent is the only lender, to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of Borrowers, to inspect the property (including the books and records) of
Borrowers, to monitor the financial condition of Borrowers or to ascertain the existence or
possible existence or continuation of any Default or Event of Default; (v) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (vi) shall not be liable to any Lender for any action taken,
or inaction, by Agent upon the instructions of Majority Lenders pursuant to Section 11.1 hereof or
refraining to take any action pending such instructions; (vii) shall not be liable for any
apportionment or distributions of payments made by it in good faith pursuant to Section 3 hereof;
(viii) shall incur no liability under or in respect of this Agreement or the other Loan Documents
by acting upon any notice, consent, certificate, message or other instrument or writing (which may
be by telephone, facsimile, telegram, cable or telex) believed in good faith by it to be genuine
and signed or sent by the proper party or parties; and (ix) may assume that no Event of Default has
occurred and is continuing, unless Agent has actual knowledge of the Event of Default, has received
notice from Borrowers or Borrowers’ independent certified public accountants stating the nature of
the Event of Default, or has received notice from a Lender stating the nature of the Event of
Default and that such Lender considers the Event of Default to have occurred and to be continuing.
In the event any apportionment or distribution described in clause (vii) above is determined to
have been made in error, the sole recourse of any Person to whom payment was due but not made shall
be to recover from the recipients of such payments any payment in excess of the amount to which
they are determined to have been entitled.

11.3 Harris and Affiliates. With respect to its commitment hereunder to make Loans,
Harris shall have the same rights and powers under this Agreement and the other Loan Documents as
any other Lender and may exercise the same as though it were not Agent; and the terms “Lender,”
“Lenders” or “Majority Lenders” shall, unless otherwise expressly indicated, include Harris in its
individual capacity as a Lender. Harris and its Affiliates may lend money to, and generally engage
in any kind of business with, Borrowers, and any Person who may do business with or own Securities
of any Borrower, all as if Harris were not Agent and without any duty to account therefor to any
other Lender.

11.4 Lender Credit Decision. Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based on the financial statements referred to
herein and such other documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement. Agent shall not have any duty or responsibility,
either initially or on an ongoing basis, to provide any Lender with any credit or other similar
information regarding Borrowers.

 

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11.5 Indemnification. Lenders agree to indemnify Agent, its Affiliates and each of
such Person’s employees, officers, directors and agents (individually and collectively, an “Agent
Indemnified Person(s)”) (to the extent not reimbursed by Borrowers), in accordance with their
respective Aggregate Percentages, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any Agent Indemnified
Person in any way relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted by Agent under this Agreement; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent’s or such other Agent
Indemnified Person’s gross negligence or willful misconduct as determined by a final non-appealable
order of a court of competent jurisdiction. Without limitation of the foregoing, each Lender
agrees to reimburse Agent promptly upon demand for its ratable share, as set forth above, of any
out-of-pocket expenses (including attorneys’ fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or enforcement (whether
through negotiation, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the extent that Agent is
not reimbursed for such expenses by Borrowers. The obligations of Lenders under this Section 11.5
shall survive the payment in full of all Obligations and the termination of this Agreement. If
after payment and distribution of any amount by Agent to Lenders, any Lender or any other Person,
including Borrowers, any creditor of any Borrower, a liquidator, administrator or trustee in
bankruptcy, recovers from Agent any amount found to have been wrongfully paid to Agent or disbursed
by Agent to Lenders, then Lenders, in accordance with their respective Aggregate Percentages, shall
reimburse Agent for all such amounts.

11.6 Rights and Remedies to Be Exercised by Agent Only. Each Lender agrees that,
except as set forth in Section 10.4, no Lender shall have any right individually (i) to realize
upon the security created by this Agreement or any other Loan Document, (ii) to enforce any
provision of this Agreement or any other Loan Document, or (iii) to make demand under this
Agreement or any other Loan Document.

11.7 Agency Provisions Relating to Collateral. Each Lender authorizes and ratifies
Agent’s entry into this Agreement and the Security Documents for the benefit of Lenders. Each
Lender agrees that any action taken by Agent with respect to the Collateral in accordance with the
provisions of this Agreement or the Security Documents, and the exercise by Agent of the powers set
forth herein or therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all Lenders. Agent is hereby authorized on behalf of all
Lenders, without the necessity of any notice to or further consent from any Lender to take any
action with respect to any Collateral or the Loan Documents which may be necessary to perfect and
maintain perfected Agent’s Liens upon the Collateral, for its benefit and the ratable benefit of
Lenders. Lenders hereby irrevocably authorize Agent, at its option and in its discretion, to
release any Lien granted to or held by Agent upon any Collateral (i) upon termination of the
Agreement and payment and satisfaction of all Obligations; or (ii) constituting property being sold
or disposed of if Borrowers certify to Agent that the sale or disposition is made in compliance
with subsection 8.2.8 hereof (and Agent may rely conclusively on any such certificate, without
further inquiry); provided that no such certification shall be required if such sale or
disposition is in the ordinary course of

 

56

 

business; or (iii) constituting property in which no Borrower owned any interest at the time the Lien was granted or at any time thereafter; or
(iv) in connection with any foreclosure sale or other disposition of Collateral (1) after the
occurrence and during the continuation of an Event of Default or (2) otherwise in accordance with
the terms of the Intercreditor Agreement; or (v) if approved, authorized or ratified in writing by
Agent at the direction of all Lenders. Upon request by Agent at any time, Lenders will confirm in
writing Agent’s authority to release particular types or items of Collateral pursuant hereto.
Agent shall have no obligation whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is owned by any Borrower or is cared for, protected or insured or has been
encumbered or that the Liens granted to Agent herein or pursuant to the Security Documents have
been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled
to any particular priority, or to exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of its rights, authorities and powers
granted or available to Agent in this Section 11.7 or in any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or event related
thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, but
consistent with the provisions of this Agreement, including given Agent’s own interest in the
Collateral as a Lender and that Agent shall have no duty or liability whatsoever to any Lender.

11.8 Agent’s Right to Purchase Commitments. Agent shall have the right, but shall not
be obligated, at any time upon written notice to any Lender and with the consent of such Lender,
and so long as no Event of Default has occurred and is continuing, Borrower Representative, which
may be granted or withheld in such Lender’s sole discretion, to purchase for Agent’s own account
all of such Lender’s interests in this Agreement, the other Loan Documents and the Obligations, for
the face amount of the outstanding Obligations owed to such Lender, including without limitation
all accrued and unpaid interest and fees.

11.9 Right of Sale; Assignment; Participations. Borrowers hereby consent to any
Lender’s participation, sale, assignment, transfer or other disposition, at any time or times
hereafter, of this Agreement and any of the other Loan Documents, or of any portion hereof or
thereof, including, without limitation, such Lender’s rights, title, interests, remedies, powers
and duties hereunder or thereunder subject to the terms and conditions set forth below:

11.9.1 Sales; Assignments. Each Lender hereby agrees that, with respect to any sale
or assignment (i) no such sale or assignment shall be for an amount of less than the lesser of (1)
$5,000,000 and (2) the amount of such Lender’s Revolving Loan Commitment, (ii) each such sale or
assignment shall be made on terms and conditions which are customary in the industry at the time of
the transaction, (iii) Agent and, in the absence of an Event of Default, Borrowers, must consent,
such consent not to be unreasonably withheld, to each such assignment to a Person that is not a
Lender or an Affiliate thereof, (iv) the assigning Lender shall pay to Agent a processing and
recordation fee of $3,500 and any out-of-pocket attorneys’ fees and expenses incurred by Agent in
connection with any such sale or assignment and (v) Agent, the assigning Lender and the assignee
Lender shall each have executed and delivered an Assignment and Acceptance Agreement. After such
sale or assignment has been consummated (x) the assignee Lender thereupon shall become a “Lender”
for all purposes of this Agreement and (y) the assigning Lender shall have no further liability for
funding the portion of Revolving Loan Commitments assumed by such other Lender. The foregoing
notwithstanding, no assignment or
grant of participation pursuant to subsection 11.9.2 below may be made to a Lender who is a
direct competitor or an Affiliate under common control of a direct competitor of Parent.

 

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11.9.2 Participations. Any Lender may grant participations in its extensions of
credit hereunder to any other Lender or other lending institution (a “Participant”),
provided that (i) no such participation shall be for an amount of less than $5,000,000,
(ii) no Participant shall thereby acquire any direct rights under this Agreement, (iii) no
Participant shall be granted any right to consent to any amendment, except to the extent any of the
same pertain to (1) reducing the aggregate principal amount of, or interest rate on, or fees
applicable to, any Loan or (2) extending the final stated maturity of any Loan or the stated
maturity of any portion of any payment of principal of, or interest or fees applicable to, any of
the Loans; provided that the rights described in this subclause (2) shall not be deemed to
include the right to consent to any amendment with respect to or which has the effect of requiring
any mandatory prepayment of any portion of any Loan or any amendment or waiver of any Default or
Event of Default, (iv) no sale of a participation in extensions of credit shall in any manner
relieve the originating Lender of its obligations hereunder, (v) the originating Lender shall
remain solely responsible for the performance of such obligations, (vi) Borrowers and Agent shall
continue to deal solely and directly with the originating Lender in connection with the originating
Lender’s rights and obligations under this Agreement and the other Loan Documents, (vii) in no
event shall any financial institution purchasing the participation grant a participation in its
participation interest in the Loans without the prior written consent of Agent, and, in the absence
of an Event of Default, Borrowers, which consents shall not unreasonably be withheld and (viii) all
amounts payable by Borrowers hereunder shall be determined as if the originating Lender had not
sold any such participation.

11.9.3 Certain Agreements of Borrowers. Borrowers agree that subject to the
provisions of Section 12.15 hereof, such Lender may disclose credit information regarding Borrowers
to any potential Participant or assignee.

11.10 Amendment.

(a) No amendment or waiver of any provision of this Agreement or any other Loan
Document (including without limitation any Note), nor consent to any departure by Borrowers
therefrom, shall in any event be effective unless the same shall be in writing and signed by
the Majority Lenders and Borrowers, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
that no amendment, waiver or consent shall be effective, unless (i) in writing and signed by
each Lender directly affected by such amendment, waiver or consent, to do any of the
following: (1) increase or decrease the aggregate Loan Commitments or such Lender’s
Revolving Loan Commitment (except, for the avoidance of doubt, in each case, pursuant to
Section 1.3); (2) reduce the principal of, or interest on, any amount payable hereunder or
under any Note held by such Lender; (3) decrease any interest rate payable to such Lender
hereunder; (4) postpone any date fixed for any payment of principal of, or interest on, any
amounts payable to such Lender hereunder or under any Note; (5) increase any advance
percentage contained in the definition of the term Borrowing Base; (6) reduce the
number of Lenders

 

58

 

that shall be required for Lenders or any of them to take any action
hereunder; (7) release or discharge any Person
 liable for the performance of any obligations of any Borrower hereunder or under any of
the Loan Documents except pursuant to the terms hereof or thereof; (8) amend any provision
of this Agreement that requires the consent of all Lenders or consent to or waive any breach
thereof; (9) amend the definition of the term Majority Lenders; (10) amend this
Section 11.10; or (11) release any substantial portion of the Collateral, unless otherwise
permitted pursuant to Section 11.7 hereof; or (ii) in writing and signed by Agent in
addition to the Lenders required above to affect the rights or duties of Agent under this
Agreement, any Note or any other Loan Document. If a fee is to be paid by Borrowers in
connection with any waiver or amendment hereunder, the agreement evidencing such amendment
or waiver may, at the discretion of Agent (but shall not be required to), provide that only
Lenders executing such agreement by a specified date may share in such fee (and in such
case, such fee shall be divided among the applicable Lenders on a pro rata basis without
including the interests of, any Lenders who have not timely executed such agreement).

(b) If, in connection with any proposed change, waiver, discharge or termination of the
provisions of this Agreement as contemplated by Section 11.10, the consent of Majority
Lenders is obtained but the consent of one or more of such other Lenders whose consent is
required is not obtained (each such Lender, a “Dissenting Lender”), then Borrower
Representative shall have the right to replace all, but not less than all, of such
Dissenting Lenders (so long as all Dissenting Lenders are so replaced) with one or more
persons pursuant to Section 2.11(e) so long as at the time of such replacement each such new
Lender consents to the proposed change, waiver, discharge or termination. Each Lender
agrees that, if Borrower Representative elects to replace such Lender in accordance with
this Section 11.10(b) and Section 2.11(e), it shall promptly execute and deliver to Agent an
Assignment and Acceptance Agreement to evidence such sale and purchase and shall deliver to
Agent any Note (if Notes have been issued in respect of such Lender’s Loans) subject to such
Assignment and Acceptance Agreement; provided that the failure of any such
Dissenting Lender to execute an Assignment and Acceptance Agreement shall not render such
sale and purchase (and the corresponding assignment) invalid.

11.11 Resignation of Agent; Appointment of Successor. Agent may resign as Agent by
giving not less than thirty (30) days’ prior written notice to Lenders and Borrowers. If Agent
shall resign under this Agreement, then, (i) subject to the consent of Borrower Representative
(which consent shall not be unreasonably withheld and which consent shall not be required during
any period in which an Event of Default exists), Majority Lenders shall appoint from among Lenders
a successor agent for Lenders or (ii) if a successor agent shall not be so appointed and approved
within the thirty (30) day period following Agent’s notice to Lenders and Borrowers of its
resignation, then Agent shall appoint a successor agent who shall serve as Agent until such time as
Majority Lenders appoint a successor agent, subject to Borrowers’ consent as set forth above. Upon
its appointment, such successor agent shall succeed to the rights, powers and duties of Agent and
the term “Agent” shall mean such successor effective upon its appointment, and the former Agent’s
rights, powers and duties as Agent shall be terminated without any other or further act or deed on
the part of such former Agent or any of the parties to this Agreement. After the resignation of
any Agent hereunder, the provisions of this Section 11 shall inure to the benefit of such former
Agent and such former Agent shall not by
reason of such resignation be deemed to be released from liability for any actions taken or
not taken by it while it was an Agent under this Agreement.

 

59

 

11.12 Audit, Appraisal and Examination Reports; Disclaimer by Lenders. By signing
this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after it
becomes available, a copy of each audit, appraisal or examination report (each a “Report”
and collectively, “Reports”) prepared by or on behalf of Agent;

(b) expressly agrees and acknowledges that Agent (i) does not make any representation
or warranty as to the accuracy of any Report and (ii) shall not be liable for any
information contained in any Report;

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits,
appraisals or examinations, that Agent or other party performing any audit or examination
will inspect only specific information regarding Borrowers and will rely significantly upon
Borrowers’ books and records as well as on representations of Borrowers’ personnel;

(d) agrees to keep all Reports confidential and strictly for its internal use, and not
to distribute except to its participants, or use any Report in any other manner, in
accordance with the provisions of Section 12.15; and

(e) without limiting the generality of any other indemnification provision contained in
this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a Report
harmless from any action the indemnifying Lender may take or conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent and
any such other Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including attorneys’ fees and
expenses) incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report through the
indemnifying Lender.

11.13 Collateral Agent. The Collateral Agent identified in the introductory paragraph
of this Agreement, in its capacity as such, shall have only those rights, powers, duties or
responsibilities specifically identified in this Agreement and no other rights, powers, duties or
responsibilities shall be read into this Agreement or any other Loan Document or otherwise exist on
behalf of or against such entity, in its capacity as such. If the Collateral Agent resigns, as
such agent, no successor Collateral Agent shall be appointed.

 

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SECTION 12. MISCELLANEOUS

12.1 Power of Attorney. Each Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as such Borrower’s true
and lawful attorney (and agent-in-fact), solely with respect to the matters set forth in this
Section 12.1, and Agent, or Agent’s agent, may, without notice to any Borrower and in any
Borrower’s or Agent’s name, but at the cost and expense of Borrowers:

12.1.1 During the continuance of a Trigger Period, at such time or times as Agent or said
agent, in its sole discretion, may determine, endorse any Borrower’s name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds of the Collateral
which come into the possession of Agent or under Agent’s control.

12.1.2 At such time or times upon or after the occurrence and during the continuance of an
Event of Default and a Trigger Period (provided that the occurrence and continuance of an
Event of Default shall not be required with respect to clauses (iv) and (viii) and that the
occurrence and continuance of an Event of Default and/or a Trigger Period shall not be required for
clause (ix) below), as Agent or its agent in its sole discretion may determine: (i) demand payment
of the Accounts from the Account Debtors, enforce payment of the Accounts by legal proceedings or
otherwise, and generally exercise all of any Borrower’s rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or release any of the
Accounts or other Collateral or any legal proceedings brought to collect any of the Accounts or
other Collateral; (iii) sell or assign any of the Accounts and other Collateral upon such terms,
for such amounts and at such time or times as Agent deems advisable, and at Agent’s option, with
all warranties regarding the Collateral disclaimed; (iv) take control, in any manner, of any item
of payment or proceeds relating to any Collateral; (v) prepare, file and sign any Borrower’s name
to a proof of claim in bankruptcy or similar document against any Account Debtor or to any notice
of lien, assignment or satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to any Borrower and notify postal
authorities to change the address for delivery thereof to such address as Agent may designate;
(vii) endorse the name of any Borrower upon any of the items of payment or proceeds relating to any
Collateral and deposit the same to the account of Agent on account of the Obligations; (viii)
endorse the name of any Borrower upon any chattel paper, document, instrument, invoice, freight
bill, bill of lading or similar document or agreement relating to the Accounts, Inventory and any
other Collateral; (ix) use any Borrower’s stationery and sign the name of any Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and Computer Hardware and Software
relating to the Accounts, Inventory, Equipment and any other Collateral; (xi) make and adjust
claims under policies of insurance; and (xii) do all other acts and things necessary, in Agent’s
determination, to fulfill any Borrower’s obligations under this Agreement.

The power of attorney granted hereby shall constitute a power coupled with an interest and
shall be irrevocable.

 

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12.2 Indemnity. Each Borrower hereby agrees to indemnify Agent, each Lender, each of
their Affiliates and each of any such Person’s employees, officers, directors and agents
(individually and collectively, “Indemnified Person(s)”) and hold each Indemnified Person harmless
from and against any liability, loss, damage, suit, action or proceeding ever suffered or incurred
by any such Indemnified Person (including reasonable attorneys’ fees and legal expenses) as the
result of (i) the execution or delivery of this Agreement, any other Loan
Document, or any amendment, amendment and restatement, modification or waiver of the
provisions hereof or thereof, or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto or their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by Agent or Bank to
honor a demand for payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or
alleged violation of any Environmental Law by any Loan Party, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on
contact, tort or any other theory, whether brought by a third party or by a Borrower or any other
Loan Party, and regardless of whether any Indemnified Person is a party thereto; except, that,
Borrowers shall not have any obligation under this Section to indemnify an Indemnified Person with
respect to a matter covered hereby resulting from the gross negligence or willful misconduct of
such Indemnified Person (but without limiting the obligations of Borrowers as to any other
Indemnified Person) as determined by a final non-appealable judgment of a court of competent
jurisdiction. In addition, each Borrower shall defend each Indemnified Person against and save it
harmless from all claims of any Person with respect to the Collateral (except those resulting from
the gross negligence or willful misconduct of Agent, any Lender or any Affiliate of Agent or any
Lender, as applicable, in each case as determined by a final non-appealable judgment of a court of
competent jurisdiction). Without limiting the generality of the foregoing, these indemnities shall
extend to any claims asserted against any Indemnified Person by any Person under any Environmental
Laws by reason of any Borrower’s or any other Person’s failure to comply with laws applicable to
solid or hazardous waste materials or other toxic substances. Notwithstanding any contrary
provision in this Agreement, the obligation of Borrowers under this Section 12.2 shall survive the
payment in full of the Obligations and the termination of this Agreement.

12.3 Sale of Interest. No Borrower may sell, assign or transfer any interest in this
Agreement, any of the other Loan Documents, or any of the Obligations, or any portion thereof,
including, without limitation, such Borrower’s rights, title, interests, remedies, powers and
duties hereunder or thereunder.

12.4 Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.

12.5 Successors and Assigns. This Agreement, the Other Agreements and the Security
Documents shall be binding upon and inure to the benefit of the successors and assigns of each
Borrower, Agent and each Lender permitted under Section 11.9 hereof.

12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other Agreements and
the Security Documents are hereby made cumulative with the provisions of this Agreement. Except as
otherwise provided in any of the other Loan Documents by specific reference to the applicable
provision of this Agreement, if any provision contained in this Agreement is in direct
conflict with, or inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.

 

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12.7 Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.

12.8 Notice. Except as otherwise provided herein, all notices, requests and demands
to or upon a party hereto, to be effective, shall be in writing, and shall be sent by certified or
registered mail, return receipt requested, by personal delivery against receipt, by overnight
courier or by facsimile and, unless otherwise expressly provided herein, shall be deemed to have
been validly served, given, delivered or received immediately when delivered against receipt, three
(3) Business Days after deposit in the mail, postage prepaid, one (1) Business Day after deposit
with an overnight courier or, in the case of facsimile notice, when sent with respect to machine
confirmed, addressed as follows:

	 	 	 
	(A) If to Agent:

	 	Harris N.A.
	 

	 	111 West Monroe
	 

	 	Chicago, Illinois 60603
	 

	 	Attention: Craig Thistlethwaite
	 

	 	Facsimile No.: (312) 765-1641
	 
	 	 
	With a copy to:

	 	Vedder Price P.C.
	 

	 	222 North LaSalle Street
	 

	 	Suite 2600
	 

	 	Chicago, Illinois 60601
	 

	 	Attention: John T. McEnroe
	 

	 	Facsimile No.: (312) 609-5005
	 
	 	 
	If to Borrowers:

	 	Cambium Learning, Inc.
	 

	 	17855 N. Dallas Pkwy,
	 

	 	Suite 400
	 

	 	Dallas, Texas 75287
	 

	 	Attention: Chief Financial Officer
	 

	 	Facsimile No.: (214) 424-6425
	 
	 	 
	With a copy to:

	 	Lowenstein Sandler PC
	 

	 	1251 Avenue of the Americas
	 

	 	18th Floor
	 

	 	New York, NY 10020
	 

	 	Attention: Lowell A. Citron
	 

	 	Facsimile No.: (973) 422-6809

(C) If to any Lender, at its address indicated on the
signature pages hereof or in an Assignment and
Acceptance Agreement,

 

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or to such other address as each party may designate for itself by notice given in accordance with
this Section 12.8; provided, however, that any notice, request or demand to or upon
Agent or a Lender pursuant to subsection 3.1.1 or 4.2.2 hereof shall not be effective until
received by Agent or such Lender.

12.9 Consent. Whenever Agent’s, Majority Lenders’ or all Lenders’ consent is required
to be obtained under this Agreement, any of the Other Agreements or any of the Security Documents
as a condition to any action, inaction, condition or event, except as otherwise specifically
provided herein, Agent, Majority Lenders or all Lenders, as applicable, shall be authorized to give
or withhold such consent in its or their sole and absolute discretion and to condition its or their
consent upon the giving of additional Collateral security for the Obligations, the payment of money
or any other matter.

12.10 Reserved.

12.11 Time of Essence. Time is of the essence of this Agreement, the Other Agreements
and the Security Documents.

12.12 Entire Agreement. This Agreement and the other Loan Documents, together with
all other instruments, agreements and certificates executed by the parties in connection therewith
or with reference thereto, embody the entire understanding and agreement between the parties hereto
and thereto with respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements, whether express or implied, oral or written.

12.13 No Control; No Advisory or Fiduciary Responsibility. Nothing in any Loan
Document and no action of Agent or any Lender pursuant to any Loan Document shall be deemed to
constitute control of any Loan Party by Agent or any Lender. In connection with all aspects of
each transaction contemplated by any Loan Document, Borrowers acknowledge and agree that (a)(i)
this credit facility and all related services by Agent, Lenders or their Affiliates are
arm’s-length commercial transactions between Borrowers and such Person; (ii) Borrowers have
consulted its own legal, accounting, regulatory and tax advisors to the extent they have deemed
appropriate; and (iii) Borrowers are capable of evaluating and understanding, and do understand and
accept, the terms, risks and conditions of the transactions contemplated by the Loan Documents; (b)
each of Agent, Lenders and their Affiliates are and have been acting solely as a principal in
connection with this credit facility, is not the financial advisor, agent or fiduciary for
Borrowers, any of their Affiliates or any other Person, and has no obligation with respect to the
transactions contemplated by the Loan Documents except as expressly set forth therein; and (c)
Agent, Lenders and their Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of Borrowers and its Affiliates, and have no obligation to
disclose any of such interests to Borrowers or its Affiliates. To the fullest extent permitted by
applicable law, Borrowers hereby waive and release any claims that it may have against Agent,
Lenders and their Affiliates with respect to any breach or alleged breach of agency or fiduciary
duty in connection with any aspect of any transaction contemplated by a Loan Document.

 

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12.14 Interpretation. No provision of this Agreement or any of the other Loan
Documents shall be construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having or being deemed to
have structured or dictated such provision.

12.15 Confidentiality. Agent and each Lender shall hold all nonpublic information
obtained pursuant to the requirements of this Agreement in accordance with Agent’s and such
Lender’s customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make disclosure reasonably
required by a prospective participant or assignee in connection with the contemplated participation
or assignment or as required or requested by any governmental authority or representative thereof
or pursuant to legal process and shall require any such participant or assignee to agree to comply
with this Section 12.15.

12.16 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER,
THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF AGENT’S LIEN
UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT’S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO
THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
NEW YORK. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR
FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER, AGENT OR ANY LENDER, EACH BORROWER
HEREBY CONSENTS AND AGREES THAT THE SUPREME COURT OF NEW YORK COUNTY, NEW YORK, OR, AT AGENT’S
OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS ON THE ONE
HAND AND AGENT OR ANY LENDER ON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER
HEREBY WAIVES ANY OBJECTION WHICH ANY BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING
OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWERS’ ACTUAL RECEIPT THEREOF OR
5 DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO
PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR
THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.

 

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12.17 WAIVERS BY BORROWERS. EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL;
(ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD
BY AGENT OR ANY LENDER ON WHICH BORROWERS MAY IN ANY WAY BE LIABLE HEREUNDER AND HEREBY RATIFIES
AND CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO AGENT’S
TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY
ANY COURT PRIOR TO ALLOWING AGENT TO EXERCISE ANY OF AGENT’S REMEDIES; (iv) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF; AND (vi) EXCEPT AS
PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH BORROWER ACKNOWLEDGES
THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT’S AND EACH LENDER’S ENTERING INTO
THIS AGREEMENT AND THAT AGENT AND EACH LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWERS. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING
WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

12.18 Advertisement. Borrowers hereby authorize Agent to publish the name of any
Borrower and the amount of the credit facility provided hereunder in any “tombstone” or comparable
advertisement which Agent elects to publish.

 

66

 

12.19 Reimbursement. The undertaking by Borrowers to repay the Obligations and each
representation, warranty or covenant of each Borrower are and shall be joint and several. To the
extent that any Borrower shall be required to pay a portion of the Obligations which shall exceed
the amount of loans, advances or other extensions of credit received by such Borrower and all
interest, costs, fees and expenses attributable to such loans, advances or other extensions
of credit, then such Borrower shall be reimbursed by the other Borrowers for the amount of
such excess. This Section 12.19 is intended only to define the relative rights of Borrowers, and
nothing set forth in this Section 12.19 is intended or shall impair the obligations of each
Borrower, jointly and severally, to pay to Agent and Lenders the Obligations as and when the same
shall become due and payable in accordance with the terms hereof. Notwithstanding anything to the
contrary set forth in this Section 12.19 or any other provisions of this Agreement, it is the
intent of the parties hereto that the liability incurred by each Borrower in respect of the
Obligations of the other Borrowers (and any Lien granted by each Borrower to secure such
Obligations), not constitute a fraudulent conveyance or fraudulent transfer under the provisions of
any applicable law of any state or other governmental unit (“Fraudulent Conveyance”).
Consequently, each Borrower, Agent and each Lender hereby agree that if a court of competent
jurisdiction determines that the incurrence of liability by any Borrower in respect of the
Obligations of any other Borrower (or any Liens granted by such Borrower to secure such
Obligations) would, but for the application of this sentence, constitute a Fraudulent Conveyance,
such liability (and such Liens) shall be valid and enforceable only to the maximum extent that
would not cause the same to constitute a Fraudulent Conveyance, and this Agreement and the other
Loan Documents shall automatically be deemed to have been amended accordingly, nunc
pro tunc.

12.20 Patriot Act Notice. Agent and Lenders hereby notify Borrowers that pursuant to
the requirements of the Patriot Act, Agent and Lenders are required to obtain, verify and record
information that identifies each Borrower, including its legal name, address, tax ID number and
other information that will allow Agent and Lenders to identify it in accordance with the Patriot
Act. Agent and Lenders will also require information regarding each personal guarantor, if any,
and may require information regarding any Borrower’s management and owners, such as legal name,
address, social security number and date of birth.

 

67

 

12.21 OTHER LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENT; ETC. (a) EACH
LENDER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT LIENS SHALL BE CREATED ON THE COLLATERAL PURSUANT
TO THE SENIOR SECURED NOTES DOCUMENTS, WHICH LIENS SHALL BE SUBJECT TO TERMS AND CONDITIONS OF THE
INTERCREDITOR AGREEMENT. PURSUANT TO THE EXPRESS TERMS OF THE INTERCREDITOR AGREEMENT, IN THE EVENT
OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND ANY OF THE CREDIT DOCUMENTS,
THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.

(b) EACH LENDER AUTHORIZES AND INSTRUCTS THE AGENT TO ENTER INTO THE INTERCREDITOR AGREEMENT
ON BEHALF OF THE LENDERS IN ACCORDANCE WITH THIS AGREEMENT, AND TO TAKE ALL ACTIONS (AND EXECUTE
ALL DOCUMENTS) REQUIRED (OR DEEMED ADVISABLE) BY IT IN ACCORDANCE WITH THE TERMS OF THE
INTERCREDITOR AGREEMENT.

(c) THE PROVISIONS OF THIS SECTION 12.21 ARE NOT INTENDED TO SUMMARIZE ALL RELEVANT
PROVISIONS OF THE INTERCREDITOR AGREEMENT. REFERENCE MUST BE MADE TO THE INTERCREDITOR AGREEMENT
ITSELF TO UNDERSTAND ALL TERMS AND CONDITIONS THEREOF. EACH LENDER IS
RESPONSIBLE FOR MAKING ITS OWN ANALYSIS AND REVIEW OF THE INTERCREDITOR AGREEMENT AND THE
TERMS AND PROVISIONS THEREOF, AND AGENT MAKES NO REPRESENTATION TO ANY LENDER AS TO THE SUFFICIENCY
OR ADVISABILITY OF THE PROVISIONS CONTAINED IN THE INTERCREDITOR AGREEMENT.

(Signature Page Follows)

 

68

 

(Signature Page to Loan and Security Agreement)

IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year specified at the
beginning of this Agreement.

	 				
	BORROWERS:	 CAMBIUM LEARNING, INC., a Delaware corporation

 	 
	 	By:  	/s/ Ronald Klausner
 	 
	 	 	Ronald Klausner 	 
	 	 	Chief Executive Officer 	 
	 

					
	 	CAMBIUM EDUCATION, INC., a Colorado corporation

 	 
	 	By:  	/s/ Ronald Klausner
 	 
	 	 	Ronald Klausner 	 
	 	 	Chief Executive Officer 	 
	 

					
	 	KURZWEIL/INTELLITOOLS, INC., a Delaware corporation

 	 
	 	By:  	/s/ Ronald Klausner
 	 
	 	 	Ronald Klausner 	 
	 	 	Chief Executive Officer 	 
	 

					
	 	LAZEL, INC., a Delaware corporation

 	 
	 	By:  	/s/ Ronald Klausner
 	 
	 	 	Ronald Klausner 	 
	 	 	Chief Executive Officer 	 

 

 

 

	 	 	 	 	 
	HARRIS:	 HARRIS N.A.,

as Agent and as a Lender

 	 
	 	By:  	/s/ Craig Thistlethwaite
 	 
	 	 	Craig Thistlethwaite 	 
	 	 	Director

	 
	 	
Revolving Loan Commitment: $30,000,000 	 

 

 

 

	 	 	 	 	 

(Signature Page to Loan and Security Agreement)

	 	 	 	 	 
	BARCLAYS BANK PLC:	 BARCLAYS BANK PLC, as Collateral 

Agent and as a Lender

 	 
	 	By:  	/s/ David Barton
 	 
	 	 	Name:  	David Barton 	 
	 	 	Title:  	Director

	 
	 	
Revolving Loan Commitment: $10,000,000 	 

 

 

 

APPENDIX A

GENERAL DEFINITIONS

When used in the Loan and Security Agreement dated as of February 17, 2011, by and among
Harris N.A., individually and as Agent, Barclays Bank PLC, individually and as Collateral Agent,
the other financial institutions which are or become lender parties thereto and Cambium Group,
Inc., and each of its Subsidiaries which are or become borrower parties thereto (a) the terms
Account, Certificated Security, Chattel Paper, Commercial Tort
Claims, Deposit Account, Document, Electronic Chattel Paper,
Equipment, Financial Asset, Fixture, General Intangibles,
Goods, Instruments, Inventory, Investment Property, Letter of
Credit Rights, Payment Intangibles, Proceeds, Security, Security
Entitlement, Software, Supporting Obligations, Tangible Chattel Paper
and Uncertificated Security have the respective meanings assigned thereto under the UCC;
(b) all terms reflecting Collateral having the meanings assigned thereto under the UCC shall be
deemed to mean such Property, whether now owned or hereafter created or acquired by any Borrower or
in which such Borrower now has or hereafter acquires any interest; (c) capitalized terms which are
not otherwise defined have the respective meanings assigned thereto in said Loan and Security
Agreement; and (d) the following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):

ABL Priority Collateral — as defined in the Intercreditor Agreement.

Account Debtor — any Person who is or may become obligated under or on account of any
Account, Contract Right, Chattel Paper or General Intangible constituting Collateral.

Affiliate — a Person (other than a Subsidiary): (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under common control with,
a Person; (ii) which beneficially owns or holds 10% or more of any class of the Voting Stock of a
Person; or (iii) 10% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of which is beneficially owned or held by a Person
or a Subsidiary of a Person. The foregoing notwithstanding, the term Affiliate shall be deemed not
to include portfolio companies of Investors.

Agent — Harris N.A., in its capacity as agent for the Lenders under the Agreement and
any successor in that capacity appointed pursuant to subsection 11.11 of the Agreement.

Agent Loans — as defined in subsection 1.1.5 of the Agreement.

Aggregate Percentage — with respect to each Lender, the percentage equal to the
quotient of (i) such Lender’s Loan Commitment divided by (ii) the aggregate of all Loan
Commitments.

Agreement — the Loan and Security Agreement referred to in the first sentence of this
Appendix A, all Exhibits and Schedules thereto and this Appendix A, as each of the same may be
amended from time to time.

 

 

 

ALTA Survey — a survey prepared in accordance with the standards adopted by the
American Land Title Association and the American Congress on Surveying and Mapping in
1997, known as the “Minimum Standard Detail Requirements of Land Title Surveys”. The ALTA
Survey shall be in sufficient form to satisfy the requirements of (name of applicable) Title
Insurance Company to provide extended coverage over survey defects and shall also show the location
of all easements, utilities, and covenants of record, dimensions of all improvements, encroachments
from any adjoining property, and certify as to the location of any flood plain area affecting the
subject real estate. The ALTA Survey shall contain the following certification: “To (name of
applicable Borrower), Harris N.A., as Agent, and (name of applicable) Title Insurance Company.
This is to certify that this map of plat and the survey on which it is based were made in
accordance with the “Minimum Standard Detail Requirements for Land Title Surveys” jointly
established and adopted by ALTA and ACSM in 1997. (signed (SEAL) License No.                     ”.

Applicable Margin — from the Closing Date to, but not including, the first Adjustment
Date (as hereinafter defined) the percentages set forth below with respect to each Base Rate
Revolving Loan, each LIBOR Revolving Loan and the Unused Line Fee:

	 	 	 	 	 
	Base Rate Revolving Loans
	 	 	2.00	%
	LIBOR Revolving Loans
	 	 	3.00	%
	Unused Line Fee
	 	 	0.50	%

The percentages set forth above will be adjusted on the first day of the month following
delivery by Borrowers to Agent of the financial statements required to be delivered pursuant to
subsection 8.1.3(ii) of the Agreement for each June 30, September 30, December 31 and March 31
during the Term, commencing with the month ending June 30, 2011 (each such date an “Adjustment
Date”), effective prospectively, by reference to the applicable “Financial Measurement” (as defined
below) for the four quarters most recently ending in accordance with the following:

	 	 	 	 	 	   	 	 	 	 	 	 	 	 	 	 	 
	 	 	Financial	 	 	Base Rate Revolving	 	 	LIBOR Revolving	 	 	 	 
	Level 1	 	Measurement	 	 	Loans	 	 	Loans	 	 	Unused Line Fee	 
	I
	 	>2.00 to 1	 	 	1.75	%	 	 	2.75	%	 	 	0.375	%
	II
	 	≤2.00 to 1, but >1.25 to 1	 	 	 	2.00	%	 	 	3.00	%	 	 	0.50	%
	III
	 	≤1.25 to 1	 	 	2.25	%	 	 	3.25	%	 	 	0.50	%

provided that, (i) if Cambium’s audited financial statements for any fiscal year delivered
pursuant to subsection 8.1.3(i) of the Agreement reflect a Financial Measurement that yields a
higher Applicable Margin than that yielded by the quarterly financial statements previously
delivered pursuant to subsection 8.1.3(ii) of the Agreement for the last month of such fiscal year,
the Applicable Margin shall be readjusted retroactively for the period that was incorrectly
calculated and (ii) if Borrowers fail to deliver the financial statements required to be delivered
pursuant to subsection 8.1.3(i) or subsection 8.1.3(ii) of the Agreement on or before the due date
thereof, the interest rate shall automatically adjust to the highest interest rate set forth above,
effective prospectively from such due date until such statements are delivered, at which time the
interest rate shall retroactively adjust to the applicable rate for such period. For purposes
hereof, “Financial Measurement” shall mean the Fixed Charge Coverage Ratio.

 

 

 

Assignment and Acceptance Agreement — an assignment and acceptance agreement in form
and content reasonably acceptable to Agent pursuant to which a Lender assigns to another Lender all
or any portion of any of such Lender’s Revolving Loan Commitments, as permitted pursuant to the
terms of this Agreement.

Availability — the amount of additional money which Borrowers are entitled to borrow
from time to time as Revolving Credit Loans, such amount being the difference derived when the sum
of the principal amount of Revolving Credit Loans then outstanding (including any amounts which
Agent or any Lender may have paid for the account of any Borrower pursuant to any of the Loan
Documents and which have not been reimbursed by Borrowers), the LC Amount and any Reserves is
subtracted from the Borrowing Base. If the amount outstanding is equal to or greater than the
Borrowing Base, Availability is 0.

Bank — Harris N.A.

Base Rate — for any day the greatest of: (i) the rate of interest announced or
otherwise established by Agent from time to time as its prime commercial rate, or its equivalent,
for U.S. Dollar loans to borrowers located in the United States as in effect on such day, with any
change in the Base Rate resulting from a change in said prime commercial rate to be effective as of
the date of the relevant change in said prime commercial rate (it being acknowledged and agreed
that such rate may not be Agent’s best or lowest rate), (ii) the sum of (x) the rate determined by
Agent to be the average (rounded upward, if necessary, to the next higher of 1/100 of 1%) of the
rates per annum quoted to Agent at approximately 10:00 a.m. (Chicago time) (or as soon thereafter
as is practicable) on such day (or, if such day is not a Business Day, on the immediately preceding
Business Day) by two or more Federal funds brokers reasonably selected by Agent for sale to Agent
at face value of Federal funds in the secondary market in an amount equal or comparable to the
principal amount owed to Agent for which such rate is being determined, plus (y) 1/2 of 1%
and (iii) the then applicable LIBOR Lending Rate for one month interest periods plus 1%.

Base Rate Loan(s) — Base Rate Revolving Loan(s).

Base Rate Revolving Loan — any Revolving Loan for the periods when the rate of
interest applicable to such Revolving Loan is calculated by reference to the Base Rate.

Board — the Board of Governors of the Federal Reserve System of the United States.

Borrower Representative — Cambium Learning, Inc.

 

 

 

Borrowing Base — as at any date of determination thereof, an amount equal to the
lesser of:

(i) the Revolving Credit Maximum Amount; or

(ii) an amount equal to the sum of:

(a) the excess of (x) 85% of the net amount of Eligible Accounts (other than Extended Accounts
that are Eligible Accounts) and Deferred Revenue Eligible Accounts over (y) the Deferred Revenue
Reserve outstanding at such date; plus

(b) The lesser of (1) $2,000,000 and (2) 85% of the net amount of Eligible Accounts that are
Extended Accounts outstanding on such Date;

(c) the lesser of (1) the BV Inventory Advance Percentage of the value of Eligible Inventory
at such date and (e) the NOLV Inventory Advance Percentage of the NOLV of Eligible Inventory at
such date;

(d) the least of (1) $3,000,000, (2) 65% of the value of Slow Moving Eligible Inventory at
such date and (3) 85% of the NOLV of Slow Moving Eligible Inventory at such date.

For purposes hereof, (1) the net amount of Eligible Accounts and Deferred Revenue Eligible
Accounts at any time shall be the face amount of such Eligible Accounts and Deferred Revenue
Eligible Accounts less any and all returns, rebates, discounts (which may, at Agent’s option, be
calculated on shortest terms), credits, allowances or excise taxes of any nature at any time
issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such
Accounts at such time and (2) the amount of Eligible Inventory and Slow Moving Eligible Inventory
shall be determined on a first-in, first-out, lower of cost or market basis in accordance with
GAAP.

Borrowing Base Certificate — a certificate by a responsible officer of Borrower
Representative, on its own behalf and on behalf of all other Borrowers, substantially in the form
of Exhibit 8.1.4 setting forth the calculation of the Borrowing Base, including a
calculation of each component thereof, all in such detail as shall be previously approved by or
otherwise satisfactory to Agent. All calculations of the Borrowing Base in connection with the
preparation of any Borrowing Base Certificate shall originally be made by Borrowers and certified
to Agent; provided, that Agent shall have the right to review and adjust, in the exercise
of its reasonable credit judgment, any such calculation after giving notice thereof to Borrowers,
to the extent that Agent determines that such calculation is not in accordance with this Agreement.

Business Day — any day excluding Saturday, Sunday and any day which is a legal holiday
under the laws the State of Illinois or the State of Texas or is a day on which banking
institutions located in either of such states are closed.

BV Inventory Advance Percentage — 65%; provided that, so long as no Event of
Default exists from February 1 to April 30 of each calendar year, the BV Inventory Advance
Percentage shall be increased to 72.5%.

Capital Expenditures — expenditures made or liabilities incurred for the acquisition
of any fixed assets or improvements, replacements, substitutions or additions thereto which have a
useful life of more than one year, including the total principal portion of Capitalized Lease
Obligations.

 

 

 

Capitalized Lease Obligation — any Indebtedness represented by obligations under a
lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

Cash Equivalents.

(1) United States dollars;

(2) securities issued or directly and fully and unconditionally guaranteed or insured by the
U.S. government or any agency or instrumentality thereof the securities of which are
unconditionally guaranteed as a full faith and credit obligation of such government with maturities
of 12 months or less from the date of acquisition;

(3) certificates of deposit, time deposits and eurodollar time deposits with maturities of 12
months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any domestic or foreign commercial bank having
capital and surplus of not less than $500.0 million in the case of U.S. banks and $100.0 million
(or the United States dollar equivalent as of the date of determination) in the case of non-U.S.
banks;

(4) repurchase obligations for underlying securities of the types described in clauses (2),
(3) and (7) entered into with any financial institution or recognized securities dealer meeting the
qualifications specified in clause (3) above;

(5) commercial paper rated at least P-2 by Moody’s or at least A-2 by S&P (or, if at any time
neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating
Agency) and in each case maturing within 12 months after the date of creation thereof and
Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher from S&P or “A-2”
or higher from Moody’s with maturities of 12 months or less from the date of acquisition;

(6) marketable short-term money market and similar funds having a rating of at least P-2 or
A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be
rating such obligations, an equivalent rating from another Rating Agency);

(7) readily marketable direct obligations issued by any state, commonwealth or territory of
the United States or any political subdivision or taxing authority thereof having an Investment
Grade Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating
such obligations, an equivalent rating from another Rating Agency) with maturities of 12 months or
less from the date of acquisition;

(8) readily marketable direct obligations issued by any foreign government or any political
subdivision or public instrumentality thereof, in each case having an Investment Grade Rating from
either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations,
an equivalent rating from another Rating Agency) with maturities of 12 months or less from the date
of acquisition;

(9) Investments with average maturities of 12 months or less from the date of acquisition in
money market funds rated AAA- (or the equivalent thereof) or better by S&P or
Aaa3 (or the equivalent thereof) or better by Moody’s (or, if at any time neither Moody’s nor
S&P shall be rating such obligations, an equivalent rating from another Rating Agency); and

 

 

 

(10) investment funds investing at least 95% of their assets in securities of the types
described in clauses (1) through (9 above.

In the case of investments made in a country outside the United States of America, Cash
Equivalents shall also include investments of the type and maturity described in clauses (1)
through (7) and clauses (9) and (10) above of foreign obligors, which Investments or obligors (or
the parents of such obligors) have ratings described in such clauses or equivalent ratings from
comparable foreign rating agencies.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in
currencies other than those set forth in clauses (1) and (2) above, provided that such
amounts are converted into any currency listed in clauses (1) and (2) as promptly as practicable
and in any event within ten Business Days following the receipt of such amounts.

Change in Law — the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.

Change of Control — the occurrence of any of the following after the Closing Date:

(1) the sale, lease or transfer, in one or a series of related transactions, of all or
substantially all of the assets of Parent and its Subsidiaries or Borrower Representative and its
Subsidiaries, in each case taken as a whole; or

(2) Parent becomes aware of (by way of a report or any other filing pursuant to Section 13(d)
of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or
group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of acquiring, holding or disposing
of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than one or
more Permitted Holders, in a single transaction or in a related series of transactions, by way of
merger, amalgamation, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of
(i) 50% or more of the total voting power of the Voting Stock of Cambium and (ii) a greater
percentage of the voting power of the Voting Stock of Parent than that of the Investors and as a
result of such group so acquiring a greater percentage of the voting power of the Voting Stock of
Parent, such group is able to control the Board of Directors of Parent; or

(3) Cambium liquidates or dissolves or the stockholders of Cambium adopt a plan of liquidation
or dissolution; or

(4) Parent no longer owns, directly or indirectly, all of the issued and outstanding
Securities of Cambium.

 

 

 

Closing Date — the date on which all of the conditions precedent in Section 9 of the
Agreement are satisfied or waived.

Code — the Internal Revenue Code of 1986.

Collateral — all of the Property and interests in Property described in Section 5 of
the Agreement, and all other Property and interests in Property that now or hereafter secure the
payment and performance of any of the Obligations.

Compliance Certificate — as defined in subsection 8.1.3 of the Agreement.

Computer Hardware and Software — all of any Borrower’s rights (including rights as
licensee and lessee) with respect to (i) computer and other electronic data processing hardware,
including all integrated computer systems, central processing units, memory units, display
terminals, printers, computer elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers, accessories, peripheral devices
and other related computer hardware; (ii) all Software and all software programs designed for use
on the computers and electronic data processing hardware described in clause (i) above, including
all operating system software, utilities and application programs in any form (source code and
object code in magnetic tape, disk or hard copy format or any other listings whatsoever); (iii) any
firmware associated with any of the foregoing; and (iv) any documentation for hardware, Software
and firmware described in clauses (i), (ii) and (iii) above, including flow charts, logic diagrams,
manuals, specifications, training materials, charts and pseudo codes.

Consolidated — the consolidation in accordance with GAAP of the accounts or other
items as to which such term applies.

Consolidated Total Assets — as at any date of determination, the total assets of
Borrower Representative and its Subsidiaries which may properly be classified as assets on a
consolidated balance sheet of Borrower Representative and its Subsidiaries in accordance with GAAP.

Contract Right — any right of any Borrower to payment under a contract for the sale or
lease of goods or the rendering of services, which right is at the time not yet earned by
performance.

Current Assets — at any date means the amount at which all of the current assets of a
Person would be properly classified as current assets shown on a balance sheet at such date in
accordance with GAAP.

Default — an event or condition the occurrence of which would, with the lapse of time
or the giving of notice, or both, become an Event of Default.

Default Rate — as defined in subsection 2.1.2 of the Agreement.

Defaulting Lender — any Lender that (a) fails to make any payment or provide funds to
Agent or any Borrower as required hereunder and such failure is not cured within three (3) Business
Days, unless such failure is the result of a bona fide dispute or (b) is the subject of any
Insolvency Proceeding.

 

 

 

Deferred Revenue Eligible Account — an Account that arises from a billing for on-line
subscriptions or embedded services and technology in advance of the performance of such services
and would be an Eligible Account but for the fact that such account fails to satisfy to criterion
contained in clause (xi) of the definition of Eligible Accounts.

Deferred Revenue Reserve — a reserve established by Agent from time to time in such
amount as Agent shall deem necessary or appropriate from time to time in its reasonable credit
judgment with respect to Deferred Revenue Eligible Accounts for (i) the costs of maintaining
web-site or similar support functions for prepaid warranty, support and/or technical services for
at least twelve months and (ii) such other matters as determined by Agent in its reasonable credit
judgment that could reasonably be expected to affect the collection of such Deferred Revenue
Eligible Accounts. The Deferred Revenue Reserve shall, as of the Closing Date, be $450,000 and
shall be updated and revised on a periodic basis as determined by Agent in its reasonable credit
judgment.

Derivative Obligations — every obligation of a Person under any forward contract,
futures contract, exchange contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar agreement), the value of which is
dependent upon interest rates, currency exchange rates, commodities or other indices.

Disqualified Stock — with respect to any Person, any Securities of such Person which,
by its terms, or by the terms of any security into which it is convertible or for which it is
putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable
(other than solely as a result of a change of control or asset sale) pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely as
a result of a change of control or asset sale), in whole or in part, in each case prior to the date
91 days after the earlier of the maturity date of the Senior Secured Notes or the date the
Obligations are no longer outstanding and this Agreement is terminated; provided that any
Securities held by any future, current or former employee, director, officer, manager or consultant
(excluding Veronis Suhler Stevenson (but not excluding any future, current or former employee,
director, officer, manager or consultant)), of Borrower Representative, any of its Subsidiaries,
any of its direct or indirect parent companies or any other entity in which Parent or a Subsidiary
has an investment and is designated in good faith as an “affiliate” by the board of directors of
Parent (or the compensation committee thereof), in each case pursuant to any stock subscription or
shareholders’ agreement, management equity plan or stock option plan or any other management or
employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be
required to be repurchased by Parent, Borrower Representative or their Subsidiaries or in order to
satisfy applicable statutory or regulatory obligations.

Dissenting Lender — as defined in Section 2.11(e) of the Agreement.

Distribution — in respect of any Person means and includes: (i) the payment of any
dividends or other distributions on Securities (except distributions in such Securities) and (ii)
the redemption or acquisition of Securities of such Person, as the case may be, unless made
contemporaneously from the net proceeds of the sale of Securities.

 

 

 

Domestic Subsidiary — any Subsidiary of Cambium that is organized under the laws of a
jurisdiction located in the United States of America.

Dominion Account — a special bank account or accounts of Agent established by
Borrowers or any one of them pursuant to subsection 6.2.4 of the Agreement at banks selected by
Borrower Representative, but acceptable to Agent in its reasonable discretion, and over which Agent
shall have access and control for withdrawal purposes.

Eligible Account — an Account arising in the ordinary course of the business of any
Borrower from the sale of goods or rendition of services; provided that no Account shall be
an Eligible Account if:

(i) it arises out of a sale made or services rendered by a Borrower to a Subsidiary of a
Borrower or an Affiliate of a Borrower or to a Person controlled by an Affiliate of a Borrower
(other than portfolio companies of Investors); or

(ii) it remains unpaid more than 60 (90 days with respect to Extended Accounts) days after the
original due date shown on the invoice or 90 days (120 days with respect to Extended Accounts)
after the original invoice date shown on the invoice; or

(iii) the total unpaid Accounts of the Account Debtor exceed 15% of the net amount of all
Eligible Accounts, but only to the extent of such excess; or

(iv) any covenant, representation or warranty contained in the Agreement with respect to such
Account has been breached; or

(v) the Account Debtor is also a creditor or supplier of a Borrower or any Subsidiary of a
Borrower, or the Account Debtor has disputed liability with respect to such Account, or the Account
Debtor has made any claim with respect to any other Account due from such Account Debtor to a
Borrower or any Subsidiary of a Borrower, or the Account otherwise is or may become subject to
right of setoff by the Account Debtor, provided, that any such Account shall be eligible to
the extent such amount thereof exceeds such contract, dispute, claim, setoff or similar right; or

(vi) the Account Debtor has commenced a voluntary case under the federal bankruptcy laws, as
now constituted or hereafter amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having jurisdiction in the premises in
respect of the Account Debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other application for relief under the
federal bankruptcy laws, as now constituted or hereafter amended, has been filed against the
Account Debtor, or if the Account Debtor has failed, suspended business, ceased to be Solvent, or
consented to or suffered a receiver, trustee, liquidator or custodian to be appointed for it or for
all or a significant portion of its assets or affairs; or

(vii) it arises from a sale made or services rendered to an Account Debtor outside the United
States, unless the sale is either (1) to an Account Debtor located in Ontario or any other province
of Canada in which the Personal Property Security Act has been adopted in substantially the same
form as currently in effect in Ontario or (2) on letter of credit, credit
insurance, guaranty or acceptance terms, in each case acceptable to Agent in its reasonable
credit judgment; or

 

 

 

(viii) (1) it arises from a sale to the Account Debtor on a bill-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment, or any other repurchase or return basis; or (2) it
is subject to a reserve established by a Borrower for potential returns or refunds, to the extent
of such reserve; or

(ix) the Account Debtor is the United States of America or any department, agency or
instrumentality thereof, unless the applicable Borrower assigns its right to payment of such
Account to Agent, in a manner satisfactory to Agent, in its reasonable credit judgment, so as to
comply with the Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq., as
amended); or

(x) it is not at all times subject to Agent’s duly perfected, first priority security interest
or is subject to a Lien that is not a Permitted Lien; or

(xi) the goods giving rise to such Account have not been delivered to and accepted by the
Account Debtor or the services giving rise to such Account have not been performed by the
applicable Borrower and accepted by the Account Debtor or the Account otherwise does not represent
a final sale; or

(xii) the Account is evidenced by chattel paper or an instrument of any kind, or has been
reduced to judgment; or

(xiii) any Borrower or a Subsidiary of any Borrower has made any agreement with the Account
Debtor for any extension, compromise, settlement or modification of the Account or deduction
therefrom, except for discounts or allowances which are made in the ordinary course of business for
prompt payment and which discounts or allowances are reflected in the calculation of the face value
of each invoice related to such Account; or

(xiv) 50% or more of the Accounts owing from the Account Debtor are not Eligible Accounts
hereunder because of clause (ii) of this definition; or

(xv) it represents service charges, late fees or similar charges; or

(xvi) Accounts with respect to which the respective Account Debtor is on “Cash on Delivery;”
or

(xvii) it is not otherwise acceptable to Agent in its reasonable credit judgment because of
concerns regarding the collectibility of such Account; in the event that any Account is excluded
from Eligible Accounts by reason of this clause (xvii), Agent, upon request by Borrower, shall
specify and discuss with Borrower Representative its concerns regarding the collectibility of such
Account.

 

 

 

Eligible Inventory — Inventory of any Borrower (other than packaging materials and
supplies, tooling, samples, literature and marketing materials); provided that no Inventory
shall be Eligible Inventory if:

(i) it is not raw materials or finished goods which meet the specifications of the purchase
order or contract for such Inventory, if any; or

(ii) it is not in good, new and saleable condition; or

(iii) it is slow-moving; or

(iv) it is obsolete or unmerchantable; or

(v) it does not meet all standards imposed by any governmental agency or authority; or

(vi) it does not conform in all respects to any covenants, warranties and representations set
forth in the Agreement; or

(vii) it is not at all times subject to Agent’s duly perfected, first priority security
interest or is subject to a Lien that is not a Permitted Lien; or

(viii) it is not situated at a location in compliance with the Agreement, provided
that Inventory situated at a location not owned by such Borrower will be Eligible Inventory only if
Agent has received a satisfactory landlord’s agreement or bailee letter, as applicable, with
respect to such location or if Agent has established an applicable Rent and Charges Reserve; or

(ix) it is in transit unless it is in transit to an Account Debtor and the corresponding
Account is not included within Eligible Accounts; or

(x) it contains or bears any intellectual property rights licensed to a Borrower unless Agent
is reasonably satisfied that it may sell or otherwise dispose of such Inventory without (i)
infringing the rights of such licensor, (ii) violating any contract with such licensor, or (iii)
incurring any liability with respect to payment of royalties other than royalties incurred pursuant
to sale of such Inventory under the current licensing agreement; or

(xi) it is not otherwise acceptable to Agent in its reasonable judgment because of Agent’s
concerns regarding salability of such Inventory; in the event that any Inventory (or category of
Inventory) is excluded from Eligible Inventory by reason of this clause (xi), Agent, upon request
by Borrower, shall specify and discuss with Borrower Representative its concerns regarding the
salability of such Inventory; or

Environmental Laws — all federal, state and local laws, rules, regulations,
ordinances, orders and consent decrees relating to health, safety and environmental matters.

ERISA — the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute, and all rules and regulations from time to time promulgated thereunder.

Event of Default — as defined in Section 10.1 of the Agreement.

Exchange Act — the Securities Exchange Act of 1934, as amended.

 

 

 

Excluded Assets —

(a) Reserved;

(b) Excluded Contracts;

(c) any asset that is subject to a Lien securing Permitted Purchase Money Indebtedness to the
extent and so long as the documents governing such obligations do not permit the pledge of such
assets to Agent;

(d) Excluded Capital Stock;

(e) any interest in fee-owned real Property of any Loan Party if the greater of its cost and
book value is less than $1,000,000;

(f) any interest in leased real Property of any Loan Party;

(g) motor vehicles and other assets subject to certificate of title;

(h) funds as of the Closing Date in the “280G Escrow Account,” the “CVR Escrow Account” or the
“Excess Employee Payment Escrow Account,” the collateral securing the “CVR Obligations” pursuant to
any of the “CVR Security Documents,” the proceeds from each action, suit or other proceeding
relating to any tax refunds or tax payments in respect of the “CVR Obligations” and any other
proceeds also in respect thereof, the proceeds, if any, from the proceeding in the Michigan Court
of Claims referred to in the “Amendment No. 1 to the Merger Agreement” and any cash amount realized
from refunds, credits or reductions in taxes resulting from the payment of certain agreed
contingencies in each case in accordance with the terms of the “CVR Documents” and the “Merger
Agreement” (as applicable), as all such terms are defined in the Senior Secured Notes Indenture as
of the Closing Date.

(i) any intellectual property, including any United States intent-to-use trademark
applications, in relation to which any applicable law or regulation prohibits the creation of a
security interest therein or would otherwise invalidate the applicable Loan Party’s right, title or
interest therein; and

(j) any Property to the extent that such grant of a security interest is prohibited by any
requirement of law of a Governmental Authority or requires a consent not obtained of any
Governmental Authority pursuant to such requirement of law, except to the extent that such
requirement of law providing for such prohibition or requiring such consent is ineffective under
applicable law (provided that this clause shall not exclude any Account for which the
federal government of the United States is the Account Debtor as a result of the Federal Assignment
of Claims Act, 31 U.S.C. Sec. 203 (1976), amended by 31 U.S.C.A. Sec. 3727 (West 1983), except to
the extent that such grant shall constitute or result in the termination or annulment of such
Account);

provided, however, Excluded Assets shall not include any asset or property which
secures obligations with respect to Senior Secured Noteholder Obligations and Excluded Assets shall
not include any Proceeds, substitutions or replacements of any Excluded Assets referred to in
clauses
(a) through (j) (unless such Proceeds, substitutions or replacements would constitute Excluded
Assets referred to in clauses (a) through (j).

 

 

 

Excluded Capital Stock — (a) any Securities with respect to which Borrower
Representative has reasonably determined in good faith in writing to Agent that the costs
(including any costs resulting from material adverse tax consequences) of pledging such Securities
shall be excessive in view of the benefits to be obtained by Lenders therefrom, (b) solely in the
case of any pledge of Securities of any Foreign Subsidiary to secure the Obligations, any
Securities that are Voting Stock of such Foreign Subsidiary in excess of 65% of the outstanding
Voting Stock of such class, (c) any Securities to the extent the pledge thereof would be prohibited
by any applicable law, rule or regulation, (d) the Securities of any Subsidiary that are not wholly
owned by a Loan Party at the time such Subsidiary becomes a Subsidiary (for so long as such
Subsidiary remains a non-wholly owned Subsidiary to the extent that the governing documents of such
non-wholly owned Subsidiary prevents the grant of a security interest therein), (e) the Securities
of any Subsidiary whose assets, as reflected on its most recent balance sheet prepared in
accordance with GAAP, and revenues for the twelve-month period ending on the last day of the most
recent fiscal quarter for which financial statements are available, do not exceed $1,000,000, and
(f) the Securities of any Subsidiary of a Foreign Subsidiary.

Excluded Contract — at any date any rights of interest of any Loan Party under any
agreement, contract, license, lease, instrument, documents or other general intangible (referred to
solely for purposes of this definition as a “Contract”) to the extent that such Contract by the
terms of a restriction in favor of a Person who is not a Loan Party, or any requirement of law,
prohibits, or requires any consent or establishes any other condition for or could or would be
terminated, abandoned, invalidated, rendered unenforceable, or would be breached or defaulted under
because of an assignment thereof or a grant of a security interest therein by a Loan Party (after
giving effect to Section 9-406, 9-407, 9-408 or 9-409 of the UCC or principles of equity);
provided that: (i) rights to payment under any such Contract otherwise constituting an
Excluded Contract by virtue of this definition shall be included in the Collateral to the extent
permitted thereby or by Section 9.406 or Section 9-408 of the UCC and (ii) all proceeds paid or
payable to any Loan Party from any sale, transfer or assignment of such contract and all rights to
receive such proceeds shall be included in the Collateral.

Excluded Taxes — with respect to Agent, any Lender or any other recipient of any
payment to be made by or on account of any obligation of any Borrower or Loan Party hereunder, (a)
Taxes imposed on or measured by its net income, profits or gains (however denominated), and
franchise Taxes imposed on it (in lieu of net income Taxes), by the United States, the jurisdiction
(or any political subdivision thereof) under the laws of which such recipient is organized, in
which its principal office is or was located, or in which it is otherwise doing business or, in the
case of any Lender, in which its applicable lending office is located, (b) any branch profits Taxes
imposed by the United States of America or any similar Tax imposed by any other jurisdiction in
which any Borrower or Loan Party is organized or located and (c) in the case of a Non-US
Participant, any withholding Tax that is imposed on amounts payable to or beneficially owned by
such Non-US Participant (or any partner, member, beneficiary or settler of any Non-US Participant)
at the time such Non-US Participant becomes a party hereto (or designates a new lending office) or
is attributable to such Non-US Participant’s failure or inability (other than as a result of a
Change in Law) to comply with Section 2.11.

 

 

 

Extended Accounts — Accounts that remain unpaid more than 60 days after the original
due date shown on the invoice but not more than 90 days after such date or remain unpaid more than
90 days after the original invoice date shown on the invoice but not more than 120 days after such
date.

Fee Letter — as defined in Section 2.3 of the Agreement.

Foreign Subsidiary — a Subsidiary that is a “controlled foreign corporation” under
Section 957 of the Code, such that a guaranty by such Subsidiary of the Obligations or a Lien on
the assets of such Subsidiary to secure the Obligations would result in material tax liability to
Borrowers.

GAAP — generally accepted accounting principles in the United States of America in
effect from time to time.

Governmental Authority — the government of the United States, Canada or any political
subdivision thereof, whether state, provincial or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government.

Guarantors — each Person, if any, who now or hereafter guarantees payment or
performance of the whole or any part of the Obligations.

Guaranty Agreements — each guaranty hereafter executed by any Guarantor.

Indebtedness — as applied to a Person means, without duplication:

(i) all items which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without limitation, Capitalized Lease Obligations;

(ii) all obligations of other Persons which such Person has guaranteed;

(iii) all reimbursement obligations in connection with letters of credit or letter of credit
guaranties issued for the account of such Person;

(iv) Derivative Obligations; and

(v) in the case of Borrowers (without duplication), the Obligations.

Insolvency Proceeding — any case or proceeding commenced by or against a Person under
any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an
order for relief under the United States federal bankruptcy laws, or any other insolvency, debtor
relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator,
administrator, conservator or other custodian for such Person or any part of its Property; or (c)
an assignment or trust mortgage for the benefit of creditors.

 

 

 

Intellectual Property — all past, present and future: trade secrets, know-how and
other proprietary information; trademarks, internet domain names, service marks, trade dress, trade
names, business names, designs, logos, slogans (and all translations, adaptations, derivations and
combinations of the foregoing) indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications for registrations
which have heretofore been or may hereafter be issued thereon throughout the world; copyrights
(including copyrights for computer programs) and copyright registrations or applications for
registrations which have heretofore been or may hereafter be issued throughout the world and all
tangible property embodying the copyrights, unpatented inventions (whether or not patentable);
patent applications and patents; industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical manifestations, embodiments or
incorporations of any of the foregoing; the right to sue for all past, present and future
infringements of any of the foregoing; all other intellectual property; and all common law and
other rights throughout the world in and to all of the foregoing.

Interest Payment Date — (a) as to any Base Rate Loan, the first Business Day of each
calendar quarter and (b) as to any LIBOR Loan, the last day of each Interest Period for such LIBOR
Loan, and in addition, where the applicable Interest Period exceeds three months, the date every
three months after the beginning of such Interest Period. If an Interest Payment Date falls on a
date that is not a Business Day, such Interest Payment Date shall be deemed to be the immediately
succeeding Business Day.

Interest Period — relative to any LIBOR Loans:

(a) initially, the period beginning on (and including) the date on which such LIBOR Loan is
made or continued as, or converted into, a LIBOR Loan pursuant to Section 3.1 and ending on (but
excluding) the day which numerically corresponds to such date one, two, three or six months
thereafter (or, if such month has no numerically corresponding day, on the last Business Day of
such month), in each case as Borrower Representative may select in its notice pursuant to Section
3.1; and

(b) thereafter, each period commencing on the last day of the next preceding Interest Period
applicable to such LIBOR Loan and ending one, two, three or six months thereafter, as selected by
the Borrower by irrevocable notice to Agent not less than two Business Days prior to the last day
of the then current Interest Period with respect thereto;

provided, however, that

(i) all Interest Periods of the same duration which commence on the same date shall end on the
same date;

(ii) Interest Periods commencing on the same date for LIBOR Loans comprising part of the same
advance under this agreement shall be of the same duration;

 

 

 

(iii) Interest Periods for LIBOR Loans in connection with which Borrowers have or may incur
Derivative Obligations with Agent shall be of the same duration as the relevant periods set under
the applicable agreements relating to such Derivative Obligations;

(iv) if such Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next following Business Day unless such day falls in the next
calendar month, in which case such Interest Period shall end on the first preceding Business Day;
and

(v) no Interest Period may end later than the termination of this Agreement.

Investment Grade Rating — a rating equal to or higher than Baa3 (or the equivalent)
by Moody’s and BBB — (or the equivalent) by S&P, or if the Senior Secured Notes are not then rated
by Moody’s or S&P, an equivalent rating by any other Rating Agency.

Investment Grade Securities —

(1) securities issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (other than Cash Equivalents);

(2) debt securities or debt instruments with an Investment Grade Rating, but excluding
any debt securities or instruments constituting loans or advances among Borrower
Representative and its Subsidiaries;

(3) investments in any fund that invests exclusively in investments of the type
described in clauses (1) and (2) which fund may also hold immaterial amounts of cash pending
investment or distribution; and

(4) corresponding instruments in countries other than the United States customarily
utilized for high quality investments.

Investments — with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including guarantees), advances or capital
contributions (excluding accounts receivable, trade credit, advances to customers and distributors,
commission, travel and similar advances to employees, directors, officers, managers, distributors
and consultants in each case made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness for Money Borrowed, Equity Securities or other
securities issued by any other Person and investments that are required by GAAP to be classified on
the balance sheet (excluding the footnotes) of Parent or Borrower Representative in the same manner
as the other investments included in this definition to the extent such transactions involve the
transfer of cash or other property.

The amount of any Investment outstanding at any time shall be the original cost of such
Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment
or other amount received in cash by the applicable Loan Party in respect of such Investment.

 

 

 

Investors — Veronis Suhler Stevenson and, if applicable, each of its Affiliates and
funds or partnerships managed by it or its Affiliates but not including, however, any portfolio
companies of any of the foregoing.

Issuing Bank — Barclays Bank PLC or Bank.

LC Amount — at any time, the aggregate undrawn available amount of all Letters of
Credit and LC Guaranties then outstanding.

LC Guaranty — any guaranty pursuant to which Agent or any Affiliate of Agent shall
guaranty pursuant to this Agreement the payment or performance by Borrowers of their reimbursement
obligation under any letter of credit.

LC Obligations — any Obligations that arise from any draw against any Letter of Credit
or against any Letter of Credit supported by an LC Guaranty.

Letter of Credit — any standby or documentary letter of credit issued by Agent or any
Affiliate of Agent for the account of any Borrower.

LIBOR — relative to any Interest Period for LIBOR Loans, the offered rate for
deposits of U.S. Dollars in an amount approximately equal to the amount of the requested LIBOR
Loans for a term coextensive with the designated Interest Period which the British Bankers’
Association fixes as its LIBOR rate as of 11:00 a.m. London time on the day which is two London
Banking Days prior to the beginning of such Interest Period.

LIBOR Lending Rate — relative to any LIBOR Loan to be made, continued or maintained
as, or converted into, a LIBOR Loan for any Interest Period, a rate per annum determined pursuant
to the following formula:

LIBOR
Lending
Rate               
      =           
            LIBOR

(1.00 - LIBOR Reserve Percentage)

LIBOR Loans — the LIBOR Revolving Loans.

LIBOR Option — the option granted pursuant to Section 3.1 of the Agreement to have
the interest on all or any portion of the principal amount of the Revolving Credit Loans based on
the LIBOR.

LIBOR Reserve Percentage — relative to any day of any Interest Period for LIBOR
Loans, the maximum aggregate (without duplication) of the rates (expressed as a decimal fraction)
of reserve requirements (including all basic, emergency, supplemental, marginal and other reserves
and taking into account any transitional adjustments or other scheduled changes in reserve
requirements) under any regulations of the Board of Governors of the Federal Reserve System (the
“Board”) or other governmental authority having jurisdiction with respect thereto as issued from
time to time and then applicable to assets or liabilities consisting of “Eurocurrency Liabilities,”
as currently defined in Regulation D of the Board, having a term approximately equal or comparable
to such Interest Period.

 

 

 

LIBOR Revolving Loan — any Revolving Loan for the periods when the rate of interest
applicable to such Revolving Loan is calculated by reference to the LIBOR Lending Rate.

Lien — any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on common law, statute
or contract. The term “Lien” shall also include rights of seller under conditional sales contracts
or title retention agreements, reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting
Property. For the purpose of the Agreement, a Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or vested in some other
Person for security purposes.

Loan Account — the loan account established on the books of Agent pursuant to Section
3.6 of the Agreement.

Loan Commitment — with respect to any Lender, the amount of such Lender’s Revolving
Loan Commitment.

Loan Documents — the Agreement, the Other Agreements and the Security Documents.

Loan Party(ies) — the individual and collective reference to Borrowers and
Guarantors.

Loans — all loans and advances of any kind made by Agent, any Lender, or any Affiliate
of Agent or any Lender, pursuant to the Agreement.

London Banking Day — any date on which commercial banks are open for business in
London, England.

Majority Lenders — as of any date, Lenders holding 50.1% or more of the Revolving Loan
Commitments determined on a combined basis and following the termination of the Revolving Loan
Commitments, Lenders holding 50.1% or more of the outstanding Loans, LC Amounts and LC Obligations
not yet reimbursed by Borrower or funded with a Revolving Credit Loan; provided, that (i)
in each case, if there are 2 or more Lenders with outstanding Loans, LC Amounts, unfunded and
unreimbursed LC Obligations or Revolving Loan Commitments, at least 2 Lenders (that are not
Affiliates unless all Lenders are Affiliates) shall be required to constitute Majority Lenders; and
(ii) prior to termination of the Revolving Loan Commitments, if any Lender is a Defaulting Lender,
for so long as such breach exists, its voting rights hereunder shall be calculated with reference
to its outstanding Loans, LC Amounts and unfunded and unreimbursed LC Obligations, rather than its
Revolving Loan Commitment.

Management Advisory Agreement — the agreement made in respect of certain advisory
services between certain of one or more of the management companies associated with the Investors
or their advisors, if applicable, and Parent, in effect on the Closing Date.

Management Stockholders — the members of management of Parent who are holders of
Securities of Parent on the Closing Date.

 

 

 

Margin Stock — as defined in Regulation U.

Material Adverse Effect — Any event, change, effect, development, circumstance or
conditions that has caused or could be reasonably expected to cause (i) a material adverse effect
on the business, condition (financial or otherwise), operation, performance or properties of
Borrowers or any of their Subsidiaries/and their Subsidiaries taken as a whole, (ii) a material
adverse effect on the rights and remedies of Agent or Lenders under the Loan Documents, or (iii)
the material impairment of the ability of Borrowers or any of their Subsidiaries, taken as a whole,
to perform their obligations hereunder or under any Loan Document.

Money Borrowed — (i) Indebtedness arising from the lending of money by any Person to
any Borrower or any of its Subsidiaries; (ii) Indebtedness, whether or not in any such case arising
from the lending by any Person of money to any Borrower or any of its Subsidiaries, (1) which is
represented by notes payable or drafts accepted that evidence extensions of credit, (2) which
constitutes obligations evidenced by bonds, debentures, notes or similar instruments, or (3) upon
which interest charges are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Indebtedness that constitutes a Capitalized
Lease Obligation; (iv) reimbursement obligations with respect to letters of credit or guaranties of
letters of credit and (v) Indebtedness of any Borrower or any of its Subsidiaries under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed under clauses (i)
through (iii) hereof, if owed directly by Borrower or any of its Subsidiaries. Money Borrowed
shall not include trade payables or accrued expenses.

Moody’s — Moody’s Investors Service, Inc. and any successor to its rating agency
business.

Multiemployer Plan — has the meaning set forth in Section 4001(a)(3) of ERISA.

NOLV — the net orderly liquidation value of Inventory, determined as a percentage of
book value, to be realized at an orderly, negotiated sale held within a reasonable period of time,
net of all liquidation expenses, as determined from the most recent appraisal of Loan Parties’
Inventory performed by an appraiser and on terms satisfactory to Agent in its reasonable
discretion.

NOLV Inventory Advance Percentage — 85%; provide that, so long as no Event of Default
exists from February 1 to April 30 of each calendar year, the NOLV Inventory Advance Percentage
shall be increased to 92.5%.

Non-US Participant — as defined in Section 2.11(f) of the Agreement.

Notes — the Revolving Notes.

 

 

 

Obligations — all Loans, all LC Obligations, all reimbursement and other obligations
with respect to Letters of Credit and all other advances, debts, liabilities, obligations,
covenants and duties, together with all interest, fees and other charges thereon, owing, arising,
due or payable from any Borrower to Agent, for its own benefit, from any Borrower to Agent for the
benefit of any Lender, from any Borrower to any Lender or from any Borrower to Bank or any other
Affiliate of Agent, of any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under the Agreement or any of the other Loan Documents,
whether direct or indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising and however acquired,
including without limitation any Product Obligations owing to Agent, any Lender, Bank or any
Affiliate of Bank or Agent or any Lender.

Organizational I.D. Number — with respect to any Person, the organizational
identification number assigned to such Person by the applicable governmental unit or agency of the
jurisdiction of organization of such Person.

Other Agreements — any and all agreements, instruments and documents (other than the
Agreement and the Security Documents), heretofore, now or hereafter executed by Borrower, any
Subsidiary of Borrower or any other third party and delivered to Agent, any Lender or any Affiliate
of any Agent or any Lender in respect of the transactions contemplated by the Agreement.

Overadvance — as defined in subsection 1.1.3 of the Agreement.

Parent — Cambium Learning Group, Inc., a Delaware corporation or any Person that
becomes the direct or indirect holding company for Cambium Learning Group, Inc., without causing a
Change in Control.

Patent Security Agreement — any patent collateral assignment agreement pursuant to
which any Loan Party assigns to Agent, for the benefit of Lenders, such Loan Party’s interests in
its patents, as security for the Obligations.

Patriot Act — the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).

Permitted Holders — each of (i) the Investors, (ii) Management Stockholders and (iii)
any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any
successor provision) of which any of the foregoing are members (a “Permitted Holder Group”);
provided that, in the case of such group (x) each member of such Permitted Holder Group has
voting rights proportional to the percentage of ownership interest held or acquired by such member
and (y) no Person or other “group” (other than Permitted Holders specified in clauses (i) and (ii)
above) beneficially owns a greater percentage (on a fully diluted basis) of the total voting power
of the Voting Stock of Parent than is held, in the aggregate, by the Permitted Holders specified in
clauses (i) and (ii) above in such Permitted Holder Group.

Permitted Investments —

(1) any Investment in Borrower Representative or any of its Subsidiaries;

(2) any Investment in Cash Equivalents or Investment Grade Securities;

 

 

 

(3) any Investment by Borrower Representative or any of its Subsidiaries in a Person
(including, to the extent constituting an Investment, in assets of a person that
represent substantially all of its assets or a division, business unit or product line,
including research and development and related assets in respect of any product) that is
engaged directly or through entities that will be Loan Parties in a Similar Business if as a
result of such Investment:

(a) such person becomes a Loan Party; or

(b) such Person, in one transaction or a series of related transactions, is
amalgamated, merged or consolidated with or into, or transfers or conveys
substantially all of its assets (or a division, business unit or product line,
including any research and development and related assets in respect of any
product), or is liquidated into, a Loan Party,

and, in each case, any Investment held by such Person; provided that such Investment
was not acquired by such Person in contemplation of such acquisition, merger, amalgamation,
consolidation or transfer;

(4) any Investment in securities or other assets not constituting Cash Equivalents or
Investment Grade Securities and received in connection with a disposition of any asset
permitted by subsection 8.2.8 of the Agreement;

(5) any Investment existing on the Closing Date or made pursuant to binding commitments
in effect on the Closing Date or an Investment consisting of any extension, modification or
renewal of any such Investment or binding commitment existing on the Closing Date;
provided that the amount of any such Investment may be increased in such extension,
modification or renewal only (a) as required by the terms of such Investment or binding
commitment as in existence on the Closing Date (including as a result of the accrual or
accretion of interest or original issue discount or the issuance of pay-in-kind securities)
or (b) as otherwise permitted under the Agreement;

(6) any Investment acquired by any Loan Party;

(a) consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course of
business;

(b) in exchange for any other Investment or accounts receivable held by such
Loan Party in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other Investment or
accounts receivable (including any trade creditor or customer); or

(c) in satisfaction of judgments against other Persons; or

(d) as a result of a foreclosure by such Loan Party with respect to any secured
Investment or other transfer of title with respect to any secured Investment in
default;

(7) Derivative Obligations;

 

 

 

(8) any Investment in a Similar Business taken together with all other Investments made
pursuant to this clause (8) that are at that time outstanding, not to exceed the greater of
(a) $30,000,000 and (b) 5.0% of Consolidated Total Assets;

(9) Reserved;

(10) guarantees of Indebtedness for Money Borrowed permitted pursuant to subsection
8.2.3 (Total Indebtedness for Money Borrowed) of the Agreement;

(11) any transaction to the extent it constitutes an Investment that is permitted by
and made in accordance with the provisions of subsection 8.2.4 (Affiliate Transactions) or
subsection 8.2.6 (Payments and Amendments of Certain Debt) of the Agreement;

(12) Investment consisting of purchases or other acquisitions of inventory, supplies,
material or equipment or the licensing or contribution of intellectual property pursuant to
joint marketing arrangements with other Persons;

(13) additional Investments, taken together with all other Investments made pursuant to
this clause (13) that are at that time outstanding, not to exceed the greater of (a)
$10,000,000 and (b) 5.0% of Consolidated Total Assets;

(14) Reserved;

(15) advances to, or guarantees of Indebtedness for Money Borrowed of, employees not in
excess of $1,500,000 outstanding at any one time, in the aggregate;

(16) loans and advances to employees, directors, officers, managers, distributors and
consultants for business-related travel expenses, moving expenses and other similar expenses
or payroll advances, in each case incurred in the ordinary course of business or consistent
with past practices or to fund such Person’s purchase of Parent;

(17) advances, loans or extensions of trade credit in the ordinary course of business
by any Loan Party;

(18) any Investment in any Loan Party or any joint venture in connection with
intercompany cash management arrangements or related activities arising in the ordinary
course of business;

(19) Investments consisting of purchases and acquisitions of assets or services in the
ordinary course of business;

(20) Investments made in the ordinary course of business in connection with obtaining,
maintaining or renewing client contacts and loans or advances made to distributors in the
ordinary course of business;

(21) Investments in prepaid expenses, negotiable instruments held for collection and
lease, utility and workers compensation, performance and similar deposits
entered into as a result of the operations of the business in the ordinary course of
business;

 

 

 

(22) Reserved;

(23) Investments in the ordinary course of business consisting of UCC Article 3
endorsements for collection of deposit and Article 4 customary trade arrangements with
customers consistent with past practices; and

(24) Investments in securities of trade creditors or customers in the ordinary course
of business received upon foreclosure or pursuant to any plan of reorganization or
liquidation or similar arrangement upon the bankruptcy or insolvency of such trade creditors
or customers.

Permitted Liens — any Lien of a kind specified in subsection 8.2.5 of the Agreement.

Permitted Purchase Money Indebtedness — Purchase Money Indebtedness of any Borrower
incurred after the date hereof which is secured by a Purchase Money Lien and the principal amount
of which, when aggregated with the principal amount of all other such Indebtedness and Capitalized
Lease Obligations of Borrowers and their Subsidiaries at the time outstanding, does not exceed the
amount that is permitted to be incurred with respect to Purchase Money Indebtedness in the Senior
Secured Notes Indenture. For the purposes of this definition, the principal amount of any Purchase
Money Indebtedness consisting of capitalized leases (as opposed to operating leases) shall be
computed as a Capitalized Lease Obligation.

Person — an individual, partnership, corporation, limited liability company, joint
stock company, land trust, business trust, or unincorporated organization, or a government or
agency or political subdivision thereof.

Plan — an employee benefit plan now or hereafter maintained for employees of any
Borrower or any of their Subsidiaries that is covered by Title IV of ERISA.

Pledge Agreement — the Pledge Agreement executed by Loan Parties or any one of them
as applicable on or about the Closing Date in favor of Agent for the benefit of itself and Lenders
pursuant to the priorities set forth in the Agreement and the Intercreditor Agreement, as such
Pledge Agreement shall be amended from time to time after the Closing Date.

Preferred Stock — any Security with preferential rights of payment of dividends or
upon liquidation, dissolution, or winding up.

Product Obligations — every obligation of any Borrower under and in respect of any one
or more of the following types of services or facilities extended to such Borrower by Bank, Agent,
any Lender or any Affiliate of Bank or Agent or any Lender: (i) credit cards, (ii) cash management
or related services including the automatic clearing house transfer of funds for the account of
such Borrower pursuant to agreement or overdraft, (iii) treasury management, including controlled
disbursement services and (iv) Derivative Obligations.

 

 

 

Projections — Borrowers’ forecasted Consolidated (i) balance sheets, (ii) profit and
loss statements, (iii) cash flow statements, and (iv) capitalization statements, all prepared on a
consistent basis with the historical financial statements of Borrowers and their Subsidiaries,
together with appropriate supporting details and a statement of underlying assumptions.

Property — any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.

Purchase Money Indebtedness — includes (i) Indebtedness (other than the Obligations)
for the payment of all or any part of the purchase price of any fixed assets, (ii) any Indebtedness
(other than the Obligations) incurred at the time of or within 180 days prior to or after the
acquisition of any fixed assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any increases in the
principal amounts thereof outstanding at the time.

Purchase Money Lien — a Lien upon fixed assets which secures Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the fixed assets and
additions and accessions thereto the purchase price of which was financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.

Rating Agencies — Moody’s and S&P or if Moody’s or S&P or both shall not make a rating
on the Senior Secured Notes publicly available, a nationally recognized statistical rating agency
or agencies, as the case may be, selected by the Borrower Representative which shall be substituted
for Moody’s or S&P or both, as the case may be.

Regulation D — Regulation D of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.

Regulation T — Regulation T of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.

Regulation U — Regulation U of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.

Regulation X — Regulation X of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.

Rent and Charges Reserve — the aggregate of (a) all past due rent and other amounts
owing by a Borrower to any landlord, warehouseman or processor who possesses Inventory and could
assert a Lien on such Inventory; and (b) a reserve equal to two months’ rent and other charges that
are likely to be payable in the ordinary course of business to any such Person during any two-month
period pursuant to the applicable lease, warehouse agreement or processor agreement, unless it has
executed and delivered to Agent a landlord waiver or bailee or processor letter pursuant to
subsection 8.1.5; provided that with respect to any leased or warehouse location at which
only Eligible Inventory is stored, the applicable component of the Rent and Charges Reserve shall
not exceed the value attributed to such Eligible Inventory in the Borrowing Base.

Replacement Lender — as defined in Section 2.11(e) of the Agreement.

 

 

 

Reportable Event — any of the events set forth in Section 4043(c) of ERISA.

Reserve Percentage — the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed on member banks of the Federal Reserve
System against “Euro-currency Liabilities” as defined in Regulation D.

Reserves — such reserves as established by Agent from time to time, in its reasonable
credit judgment in such amounts, and with respect to such matters, as Agent shall deem necessary or
appropriate in its reasonable credit judgment, against the amount of Revolving Credit Loans which
Borrowers may otherwise request under subsection 1.1.1(a) or (b), as applicable, including without
limitation with respect to (i) price adjustments, damages, unearned discounts, returned products or
other matters for which credit memoranda are issued in the ordinary course of any Borrower’s
business; (ii) potential dilution related to Accounts; (iii) shrinkage, spoilage and obsolescence
of any Borrower’s Inventory, including, without limitation, Inventory within two months of its
expiry date; (iv) slow moving Inventory (determined in accordance with clause (iii) of the
definition of Eligible Inventory); (v) other sums chargeable against Borrowers’ Loan Accounts as
Revolving Credit Loans under any section of this Agreement; (vi) amounts owing by any Borrower to
any Person to the extent secured by a Lien on, or trust over, any ABL Priority Collateral of any
Borrower (other than subordinate Liens in favor of the Senior Secured Noteholder Secured Parties as
provided for in the Intercreditor Agreement); (vii) amounts owing by any Borrower in connection
with Product Obligations; (viii) the Rent and Charges Reserves; (ix) unissued credit memoranda
which, based on Borrowers’ historical performance, are anticipated to be issued against current
Accounts; (x) amounts owing by any Borrower to any Person for royalties, copyright or license fees,
the reserve for which shall be in an amount equal to the estimated accruals for such royalty,
copyright or license fees for the elapsed portion of any calendar quarter, which estimated accrued
amount shall be calculated based on the accruals for such items as shown on the balance sheet for
the most recent fiscal quarter; and (xi) such other specific events, conditions or contingencies as
to which Agent, in its reasonable credit judgment, determines reserves should be established from
time to time hereunder. Notwithstanding the foregoing, Agents shall not establish any reserves in
respect of any matters relating to any items of Collateral that have been taken into account in
determining Eligible Inventory, Slow Moving Eligible Inventory, Eligible Accounts, deferred Revenue
Eligible Accounts or to the Deferred Revenue Reserve, as applicable.

Restricted Investment — any investment made in cash or by delivery of Property to any
Person, whether by acquisition of stock, Indebtedness or other obligation or Security, or by loan,
advance or capital contribution, or otherwise, or in any Property except the following:

(i) investments by a Borrower, to the extent existing on the Closing Date, in one or more
Subsidiaries of such Borrower;

(ii) Property to be used in the ordinary course of business;

(iii) Current Assets arising from the sale of goods and services in the ordinary course of
business of any Borrower or any of its Subsidiaries;

 

 

 

(iv) investments in direct obligations of the United States of America, or any agency thereof
or obligations guaranteed by the United States of America; provided that such obligations
mature within one year from the date of acquisition thereof;

(v) investments in certificates of deposit maturing within one year from the date of
acquisition and fully insured by the Federal Deposit Insurance Corporation;

(vi) investments in commercial paper given the highest rating by a national credit rating
agency and maturing not more than 270 days from the date of creation thereof;

(vii) investments in money market, mutual or similar funds having assets in excess of
$100,000,000 and the investments of which are limited to Investment Grade Securities;

(viii) intercompany loans permitted under subsection 8.2.2(v) of the Agreement;

(ix) investments existing on the date hereof and listed on Exhibit 8.2.12 hereto;

(x) investments in Securities of Account Debtors received in the ordinary course of business
upon foreclosure or pursuant to any plan of reorganization or liquidation or similar arrangement
upon the bankruptcy or insolvency of such Account Debtor;

(xi) investments made by any Borrower or any Subsidiary as a result of consideration received
in connection with the sale, lease or other disposition of an asset (not constituting collateral)
made in compliance with the terms of this Agreement;

(xii) other Permitted Investments otherwise expressly permitted pursuant to the Agreement
pursuant to subsection 8.2.1 (Mergers; Consolidations; Acquisitions; Structural Changes),
subsection 8.2.2 (Loans) and subsection 8.2.12 (Subsidiaries and Joint Ventures); and

(xiii) other Permitted Investments of a kind not governed by the provisions of subsections
8.2.1, 8.2.2 or 8.2.12.

Revolving Credit Loan — a Loan made by any Lender pursuant to Section 1.1 of the
Agreement.

Revolving Credit Maximum Amount — $40,000,000, as such amount may be reduced or
increased from time to time pursuant to the terms of the Agreement.

Revolving Loan Commitment — with respect to any Lender, initially the amount of such
Lender’s Revolving Loan Commitment pursuant to subsection 1.1.1 of the Agreement, as set forth
below such Lender’s name on the signature page hereof or any Assignment and Acceptance Agreement
executed by such Lender, as such amount may be reduced or increased from time to time pursuant to
the terms of the Agreement.

Revolving Loan Percentage — with respect to each Lender, the percentage equal to the
quotient of such Lender’s Revolving Loan Commitment divided by the aggregate of all
Revolving Loan Commitments.

 

 

 

Revolving Notes — the secured promissory notes to be executed by Borrowers on or about
the Closing Date in favor of each Lender to evidence the Revolving Credit Loans, which shall be in
the form of Exhibit 1.1 to the Agreement, together with any replacement or successor notes
therefor.

S&P — Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any
successor to its rating agency business.

Security — all shares of stock, partnership interests, membership interests,
membership units or other ownership interests in any other Person and all warrants, options or
other rights to acquire the same.

Security Documents — this Agreement, the Guaranty Agreements (if any), the New
Mortgages (if any), the Patent Security Agreement, the Pledge Agreement, and Trademark Security
Agreement and all other instruments and agreements now or at any time hereafter securing the whole
or any part of the Obligations.

Senior Secured Noteholder Obligations — as defined in the Intercreditor Agreement
(which, for the avoidance of doubt, shall in any event include any Permitted Additional Parity Debt
as defined in the Senior Secured Notes Indenture).

Senior Secured Noteholder Secured Parties — as defined in the Intercreditor
Agreement.

Senior Secured Noteholders — the holders of the Senior Secured Notes.

Senior Secured Notes — the 9.75% Senior Secured Notes due
 _________, 2017, issued
pursuant to the Senior Secured Note Indenture, as in effect on the Closing Date and as the same may
be amended, modified and/or supplemented from time to time in accordance with the terms hereof and
thereof.

Senior Secured Notes Documents — the Senior Secured Notes, the Senior Secured Notes
Indenture, the Senior Secured Notes Security Documents and all other documents executed and
delivered with respect to the Senior Secured Notes or Senior Secured Notes Indenture, as in effect
on the Closing Date and as the same may be amended, modified and/or supplemented from time to time
in accordance with the terms hereof and thereof.

Senior Secured Notes Indenture — the Indenture, dated as of February 17, 2011, among
Cambium Learning Group, Inc., as issuer, the Subsidiaries of Cambium Learning Group, Inc. party
thereto, as Guarantors and Wells Fargo Bank, N.A., as trustee, as in effect on the Closing Date.

Senior Secured Notes Priority Collateral — as defined in the Intercreditor Agreement.

Senior Secured Notes Security Documents — the “Security Documents” as defined in the
Senior Secured Notes Indenture.

Similar Business — (1) any business engaged in by any Loan Party on the Closing Date,
and (2) any business or other activities that are reasonably similar, ancillary, complementary or
related to, or a reasonable extension, development or expansion of, the businesses in which
the Loan Parties are engaged on the Closing Date.

 

 

 

Slow Moving Eligible Inventory — Inventory of any Borrower that would be Eligible
Inventory except for the fact that such Inventory is slow moving.

Solvent — as to any Person, that such Person (i) owns Property whose fair saleable
value is greater than the amount required to pay all of such Person’s Indebtedness (including
contingent debts), (ii) is able to pay all of its Indebtedness as such Indebtedness matures and
(iii) has capital sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.

Subordinated Debt — Indebtedness of any Borrower or any Subsidiary of any Borrower
that is subordinated to the Obligations in a manner satisfactory to Agent and contains terms,
including without limitation, payment terms, satisfactory to Agent.

Subsidiary — any Person of which another Person owns, directly or indirectly through
one or more intermediaries, more than 50% of the voting stock or other equities at the time of
determination.

Swingline Loans — as defined in subsection 1.1.4 of the Agreement.

Tax and Taxes — all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable thereto.

Term — as defined in Section 4.1 of the Agreement.

Total Credit Facility — $40,000,000, as such amount increased or reduced from time to
time pursuant to the terms of the Agreement.

Trademark Security Agreement — any trademark collateral assignment pursuant to which
any Loan Party assigns to Agent, for the benefit of Lenders, such Loan Party’s interest in its
trademarks as security for the Obligations.

Trigger Period — the period (a) commencing on the (i) day that an Event of Default
occurs, or (ii) Availability is less than the greater of (x) $8,000,000 and (y) 15% of the Total
Credit Facility for five consecutive days and (b) continuing until (i) in the case of clause (a)(i)
above, such Event of Default no longer exists and (ii) in the case of clause (a)(ii) above, during
the preceding ninety (90) consecutive days Availability has been greater than (x) $8,000,000 and
(y) 15% of the Total Credit Facility at all times and no Event of Default exists.

Type of Organization — with respect to any Person, the kind or type of entity by which
such Person is organized, such as a corporation or limited liability company.

UCC — the Uniform Commercial Code as in effect in the State of New York on the date of
this Agreement, as it may be amended or otherwise modified.

 

 

 

Unused Line Fee — as defined in Section 2.5 of the Agreement.

Voting Stock — Securities of any class or classes of a corporation, limited
partnership or limited liability company or any other entity the holders of which are ordinarily,
in the absence of contingencies, entitled to vote with respect to the election of corporate
directors (or Persons performing similar functions).

Other Terms. All other terms contained in the Agreement shall have, when the context
so indicates, the meanings provided for by the UCC to the extent the same are used or defined
therein.

Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder” and
other words of similar import refer to the Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. The section
titles, table of contents and list of exhibits appear as a matter of convenience only and shall not
affect the interpretation of the Agreement. All references to statutes and related regulations
shall include any amendments of same and any successor statutes and regulations. All references to
any of the Loan Documents shall include any and all modifications thereto and any and all
extensions or renewals thereof.

 

 

 

EXHIBITS

to the

LOAN AND SECURITY AGREEMENT

DATED AS OF FEBRUARY 17, 2011

by and among

HARRIS N.A.,

BARCLAYS BANK PLC,

and

CAMBIUM LEARNING, INC.

and certain of its Subsidiaries

 

 

 

These exhibits (collectively, the “Exhibits”) are being delivered by Cambium
Learning, Inc., a Delaware company (“the Company”) and certain subsidiaries of the Company
(together with the Company, the “Borrowers”), pursuant to the terms of that certain Loan
and Security Agreement (the “Agreement”), by and among the Borrowers, Harris N.A. and
Barclays Bank PLC.

Capitalized terms used and not otherwise defined herein shall have their respective meanings
as set forth in the Agreement. Any summary of or reference to any document herein is qualified in
its entirety by the terms of such document (and all agreements, transactions and arrangements
referenced in or contemplated thereby), and the terms and provisions of each such document (and all
agreements, transactions and arrangements referenced in or contemplated thereby) are incorporated
herein by reference.

Headings in these Exhibits are for convenience and reference only and shall not affect the
disclosures contained herein. These Exhibits may contain items that are not required by the
Agreement to be listed herein. Such additional items are set forth for informational purposes
only.

In disclosing the information set forth in these Exhibits, the Borrowers expressly reserve and do
not waive any attorney-client privilege associated with such information or any protection afforded
by the work-product doctrine with respect to any of the matters disclosed or discussed herein to
the extent permitted by applicable law.

List of Exhibits and Schedules

 

 

 

LIST OF EXHIBITS AND SCHEDULES

	 	 	 

	Exhibit 1.1
	 	Form of Revolving Note

	Exhibit 6.1.1
	 	Business Locations

	Exhibit 7.1.1
	 	Jurisdictions in which any Borrower and its Subsidiaries are Authorized to do Business

	Exhibit 7.1.4
	 	Capital Structure

	Exhibit 7.1.5
	 	Names; Organization

	Exhibit 7.1.13
	 	Surety Obligations

	Exhibit 7.1.14
	 	Tax Identification Numbers of Subsidiaries

	Exhibit 7.1.15
	 	Brokers’ Fees

	Exhibit 7.1.16
	 	Patents, Trademarks, Copyrights and Licenses

	Exhibit 7.1.19
	 	Contracts Restricting Right to Incur Debts

	Exhibit 7.1.20
	 	Litigation

	Exhibit 7.1.22
	 	Capitalized and Operating Leases

	Exhibit 7.1.23
	 	Pension Plans

	Exhibit 7.1.25
	 	Labor Relations

	Exhibit 8.1.3A
	 	Form of Monthly Report

	Exhibit 8.1.3
	 	Form of Compliance Certificate

	Exhibit 8.1.4
	 	Form of Borrowing Base Certificate

	Exhibit 8.2.2
	 	Loans and Advances Outstanding as of the Closing Date

	Exhibit 8.2.3
	 	Existing Indebtedness

	Exhibit 8.2.5
	 	Permitted Liens

	Exhibit 8.2.12
	 	Permitted Investments

	Exhibit 8.3
	 	Financial Covenants

List of Exhibits and Schedules

 

 

 

EXHIBIT 1.1

FORM OF REVOLVING NOTE

			
	 	 	 
	$                    
	 	                    , 20_____
	 
	 	Chicago, Illinois

FOR VALUE RECEIVED, the undersigned (hereinafter “Borrowers”), hereby, jointly and severally,
PROMISE TO PAY to the order of                                         , a                      corporation (“Lender”),
or its registered assigns, at the principal office of Harris N.A., as agent for such Lender, or at
such other place in the United States of America as the holder of this Note may designate from time
to time in writing, in lawful money of the United States of America and in immediately available
funds, the principal amount of                      ($                    ), or such lesser principal amount as
may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the
Revolving Credit Loan, together with interest on the unpaid principal amount of this Note
outstanding from time to time.

This Note is one of the Revolving Credit Notes referred to in, and issued pursuant to, that
certain Loan and Security Agreement dated as of February 17, 2011, by and among Borrowers, the
lender signatories thereto (including Lender), Harris N.A., as agent for such Lenders (Harris N.A.
in such capacity “Agent”) and Barclays Bank PLC, as Collateral Agent (hereinafter amended from time
to time, the “Loan Agreement”), and is entitled to the benefit and security of the Loan Agreement.
All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are
hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms
herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.

The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and
on the dates specified in the Loan Agreement and, if not sooner paid in full, on February 16, 2015,
unless the term hereof is extended in accordance with the Loan Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and at such times as are
specified in the Loan Agreement.

Upon and after the occurrence, and during the continuation, of an Event of Default, this Note
shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred
in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by
Borrowers.

 

Exhibit 1.1 - Page 1

 

This Note shall be interpreted, governed by, and construed in accordance with, the internal
laws of the State of New York.

	 	 	 	 	 
	 	CAMBIUM LEARNING, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CAMBIUM EDUCATION, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KURZWEIL/INTELLITOOLS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	LAZEL, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

Exhibit 1.1 - Page 2

 

Exhibit 6.1.1

Location of Collateral and Offices

	 	 	 	 	 	 	 
	 	 	 	 	Location of Books and	 	Other Locations Used
	Entity	 	Chief Executive Office	 	Records	 	Within Past 12 Months
	Cambium Learning, Inc.

	 	17855 N. Dallas Pkwy,

Suite 400

Dallas, TX 75287
	 	17855 N. Dallas Pkwy,

Suite 400

Dallas, TX 75287
	 	24 Prime Parkway

Suite 303

Natick, MA 01760

(active office location)

3767 Ranchero Drive

Suite 200

Ann Arbor, MI 48108

(active office location)

4093 Specialty Place

Longmont, CO 805804

(active collateral location)

4185 Salazar Way

Frederick, CO 80504

(active collateral location)

One Hickory Centre

1800 Valley View Lane

Suite 400

Dallas, TX 75234

(inactive office location)

789 E. Eisenhower Pkwy.

Ann Arbor, MI 48108

(inactive office location)
	 
	 	 	 	 	 	 
	Cambium Education, Inc.

	 	17855 N. Dallas Pkwy,

Suite 400

Dallas, TX 75287
	 	17855 N. Dallas Pkwy,

Suite 400

Dallas, TX 75287
	 	24 Prime Parkway

Suite 303

Natick, MA 01760

(active office location)

4093 Specialty Place

Longmont, CO 805804

(active collateral location)

4185 Salazar Way

Frederick, CO 80504

(active collateral location)

One Hickory Centre

1800 Valley View Lane

Suite 400

Dallas, TX 75234

(inactive office location)

 

-3-

 

	 	 	 	 	 	 	 
	 	 	 	 	Location of Books and	 	Other Locations Used
	Entity	 	Chief Executive Office	 	Records	 	Within Past 12 Months
	Kurzweil/Intellitools, Inc.

	 	24 Prime Parkway

Suite 303

Natick, MA 01760
	 	24 Prime Parkway

Suite 303

Natick, MA 01760
	 	4093 Specialty Place

Longmont, CO 805804

(active collateral location)

4185 Salazar Way

Frederick, CO 80504

(active collateral location)

One Hickory Centre

1800 Valley View Lane

Suite 400

Dallas, TX 75234

(inactive office location)
	 
	 	 	 	 	 	 
	LAZEL, Inc.

	 	17855 N. Dallas Pkwy,

Suite 400

Dallas, TX 75287
	 	17855 N. Dallas Pkwy,

Suite 400

Dallas, TX 75287
	 	3767 Ranchero Drive

Suite 200

Ann Arbor, MI 48108

(active office location)

1840 East River Road

Suite 320

Tucson, AZ 85718

(active office location)

P.O. Box 2185

Charlottesville, VA 22902

(active office location)

One Hickory Centre

1800 Valley View Lane

Suite 400

Dallas, TX 75234

(inactive office location)

789 E. Eisenhower Pkwy.

Ann Arbor, MI 48108

(inactive office location)

 

-4-

 

Cambium Learning, Inc. and Cambium Education, Inc. maintain an aggregate of approximately
$800,000 of collateral in the following third party depositories:

Publishers Warehouse (a/k/a EBSCO)

P.O. Box 101927

2700 Crestwood Blvd

Irondale, AL 35210

Florida School Book Depository (a/k/a FSBD)

1125 North Ellis Road

Jacksonville, FL 32254

Archway (f/k/a Resolve)

1600 1st Street

Albuquerque, NM 87102

Tennessee Book Company

1550 Heil Quaker Blvd

La Vergne, TN 37086

Archway (f/k/a Resolve/DDs)

600 Freeport Parkway

Coppell, TX 75019

Educators Book Depository

6700 Sloane Drive

Little Rock, AR 72206

Thompson School Book Depository

39 N.E. 24th Street

Oklahoma City, OK 73105

Mountain State Schoolbook Depository

Freeport Center Bldg N-7

Clearfield, UT 84016

 

-5-

 

Exhibit 7.1.1

Qualification

	 	 	 	 	 
	 	 	State of	 	 
	Name	 	Incorporation/Formation	 	States of Qualification
	 
	 	 	 	 
	Cambium Learning, Inc.

	 	Delaware
	 	California

Massachusetts

Ohio

Tennessee
	 
	 	 	 	 
	Kurzweil/Intellitools, Inc.

(f/k/a and qualified as
Kurzweil Education
Systems, Inc.)

	 	Delaware
	 	California

Colorado

Florida

Illinois

Kentucky

Massachusetts

Ohio

Pennsylvania
	 
	 	 	 	 
	LAZEL, Inc.

	 	Delaware
	 	None
	 
	 	 	 	 
	Cambium Education, Inc.

(f/k/a and qualified as
Sopris West Educational
Services, Inc.)

	 	Colorado
	 	California

Indiana

Louisiana

North Carolina

Ohio

Tennessee

Texas

Washington

West Virginia

 

-6-

 

Exhibit 7.1.4

Capital Structure

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Legal Entities	 	 	 	 	 	 	 	 	 	 	 	 	 
	Owned	 	Type of Entity	 	State of Formation	 	Record Owner	 	Equity Ownership	 	 	 	 	 
	Cambium Learning, Inc.
	 	Corporation	 	Delaware	 	VSS-Cambium Holdings IV, LLC	 	 	100	%	 	 	 	 
	LAZEL, Inc.
	 	Corporation	 	Delaware	 	Cambium Learning, Inc.	 	 	100	%	 	 	 	 
	Kurzweil/Intellitools, Inc.
	 	Corporation	 	Delaware	 	Cambium Learning, Inc.	 	 	100	%	 	 	 	 
	Cambium Education, Inc.
	 	Corporation	 	Colorado	 	Cambium Learning, Inc.	 	 	100	%	 	 	 	 

 

-7-

 

Exhibit 7.1.5

Names; Organization

	 	 	 	 	 
	 	 	 	 	List of All Other Names Used During Past
	Company/Subsidiary	 	Corporate Transactions	 	Five Years
	Cambium Learning, Inc.

	 	Surviving Entity of a
Merger with
VSS-Cambium Merger
Corp. on April 12,
2007
	 	None
	 
	 	 	 	 
	Cambium Education, Inc.

	 	Surviving Entity of a
Merger with Cambium
Learning (New York),
Inc. and Voyager
Expanded Learning,
Inc. on December 31,
2010
	 	Sopris West Educational Services, Inc.
	 
	 	 	 	 
	Kurzweil/Intellitools, Inc.

	 	Surviving Entity of a
Merger with
IntelliTools, Inc. on
December 31, 2010
	 	Kurzweil Education Systems, Inc.

	 	 	 	 	 	 	 	 	 
	Legal Name	 	Type of Entity	 	Organizational Number	 	 	State of Formation
	Cambium Learning, Inc.

	 	Corporation
	 	3714617	 	 	 	Delaware
	LAZEL, Inc.

	 	Corporation
	 	4736288	 	 	 	Delaware
	Kurzweil/Intellitools, Inc.

	 	Corporation
	 	3370285	 	 	 	Delaware
	Cambium Education, Inc.

	 	Corporation
	 	19971008216	 	 	 	Colorado

 

-8-

 

Exhibit 7.1.13

Surety Obligations

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Type of	 	 	 	 	 	 	 	 	 	 	 	Effective	 	 	Expiration	 
	Bond Number	 	Issuing Carrier	 	Principal	 	Obligee	 	Bond	 	Description	 	Bond Amount	 	 	Premium	 	 	Date	 	 	Date	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	510843
	 	International Fidelity Insurance Company	 	Cambium Education, Inc.	 	State of Oklahoma	 	Supply - All Others - NOC - Public	 	Contract #10023 for delivery contract Term 7/1/2010 - 6/30/2016	 	$	5,000.00	 	 	$	250.00	 	 	 	7/1/2010	 	 	 	6/30/2011	 
	CMS101913
	 	RLI Insurance Company	 	Cambium Learning Group, Inc./Cambium Education, Inc.	 	State of Oklahoma	 	Schools-All	 	Oklahoma Textbook Contract Bond - Contract Term 7/1/2005 - 6/30/2011	 	$	5,000.00	 	 	$	600.00	 	 	 	6/28/2005	 	 	 	6/30/2011	 
	CMS101925
	 	RLI Insurance Company	 	Cambium Education, Inc.	 	Illinois State Board of Education - Textbook Loan Program	 	Schools-All	 	School Instructional Materials Bond - Contract Term 10/25/2005 - 10/25/2010	 	$	10,000.00	 	 	$	800.00	 	 	 	10/25/2005	 	 	 	10/25/2010	 
	CMS223755
	 	RLI Insurance Company	 	Cambium Education, Inc.	 	State of Tenessee - State Textbook Commission	 	Schools-All	 	Textbook Contract - Contract Term - 6/1/2007 - 6/30/2013	 	$	430,000.00	 	 	$	8,600.00	 	 	 	2/28/2007	 	 	 	6/30/2011	 
	CMS223758
	 	RLI Insurance Company	 	Cambium Education, Inc.	 	State of Alabama	 	Schools-All	 	Textbook Contract - 6/1/2008 - 6/1/2014	 	$	5,000.00	 	 	$	600.00	 	 	 	6/1/2008	 	 	 	6/1/2014	 
	CMS223759
	 	RLI Insurance Company	 	Cambium Education, Inc.	 	State of West Virginia - Board of Education	 	Schools-All	 	Instructional Materials Adoption - Contract Term 7/1/2008 - 7/1/2014	 	$	2,000.00	 	 	$	600.00	 	 	 	7/1/2008	 	 	 	7/1/2014	 

 

-9-

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Type of	 	 	 	 	 	 	 	 	 	 	 	Effective	 	 	Expiration	 
	Bond Number	 	Issuing Carrier	 	Principal	 	Obligee	 	Bond	 	Description	 	Bond Amount	 	 	Premium	 	 	Date	 	 	Date	 
	CMS223760
	 	RLI Insurance Company	 	Cambium Education, Inc.	 	State of Florida - Board of Education	 	Schools-All	 	Publishers of State-Adopted Instructional Materials - Contract Term 4/1/2008 - 4/1/2014	 	$	25,000.00	 	 	$	3,000.00	 	 	 	1/31/2008	 	 	 	4/1/2014	 
	HOIFSU0494764
	 	International Fidelity Insurance Company	 	Cambium Education, Inc.	 	State of Tenessee - State Textbook Commission	 	Schools-All	 	Textbook Adoption of Voyager Passport Reading Journeys Program	 	$	100,000.00	 	 	$	9,000.00	 	 	 	6/1/2010	 	 	 	6/30/2016	 
	HOIFSU0494765
	 	International Fidelity Insurance Company	 	Cambium Education, Inc.	 	Houston Independent School District	 	Class A Contract	 	Contract# 08-11-06 year(2)of five year contract for Language! Program and Professional Services	 	$	737,351.00	 	 	$	7,374.00	 	 	 	6/23/2010	 	 	 	9/9/2011	 
	HOIFSU0494769
	 	International Fidelity Insurance Company	 	Cambium Learning Group, Inc.; Cambium Education, Inc.	 	Mississippi Department of Education	 	Schools-All	 	Textbook adoption for a preschool program contract #112201440110-7	 	$	3,000.00	 	 	$	250.00	 	 	 	1/1/2011	 	 	 	12/31/2016	 
	 
	 	 	 	 	 	 	 	 	 	Total Bonds in force	 	$	1,322,351.00	 	 	 	 	 	 	 	 	 	 	 	 	 

 

-10-

 

Exhibit 7.1.14

Taxes

	 	 	 	 	 
	 	 	Federal Taxpayer	 
	Legal Name	 	Identification Number	 
	Cambium Learning, Inc.
	 	 	45-0525540	 
	LAZEL, Inc.
	 	 	27-1609020	 
	Kurzweil/Intellitools, Inc.
	 	 	04-3554733	 
	Cambium Education, Inc.
	 	 	84-0770709	 

 

-11-

 

Exhibit 7.1.15

Brokers

None

 

-12-

 

Exhibit 7.1.16

Patents, Trademarks, Copyrights and Licenses

See attached Schedule of Patents

See attached Schedule of Copyrights

See attached Schedule of Trademarks

 

-13-

 

LICENSES

	 	•	 	Development Agreement dated April 26, 2007 between MetaMetrics, Inc. and Voyager
Expanded Learning, Inc. as amended by that certain Amendment to the Agreement, dated April
24, 2009, between MetaMetrics, Inc. and Voyager Expanded Learning, L.P.

	 	•	 	License and Service Agreement between Voyager Expanded Learning, Inc. and Walker Reading
Technologies, Inc. dated May 26, 2009.

	 	•	 	Dynamic Indicators of Basic Early Literacy Skills (DIBELS), and derivative products.
License agreement dated 2/24/10 with copyright owner Dynamic Measurement Group, Inc. gives
Sopris exclusive rights to the print version and to electronic version for Non-Mobile
Devices (as defined in the agreement.) License is potentially but not necessarily
perpetual and worldwide. License includes the trademark DIBELS.

	 	•	 	RAVE-O. License agreement dated 2/8/10 with copyright owners Maryanne Wolf and Tufts
University gives Sopris exclusive license of all rights. Agreement also includes an
exclusive trademark license for the RAVE-O mark from Tufts, which owns the mark.

	 	•	 	Software Work for Hire and License Agreement by and between Third Millennium Press, LLC,
d/b/a ExploreLearning and Pearson Education, Inc., dated as of February 1, 2003 (the
“Gizmos License”).

	 	•	 	ABBYY Runtime License Agreement

	 	•	 	AyudaTech Licensing and Distribution Agreement.

	 	•	 	Cartesian License and Distribution Agreement.

	 	•	 	CDMA Development Agreement.

	 	•	 	Cepstral VAR_OEM Agreement.

	 	•	 	Data Viz Software Licensing Agreement.

	 	•	 	Fonix OEM Software License Agreement.

	 	•	 	JITIT Virtualization Suite License.

	 	•	 	Neospeech VAR_OEM Agreement.

	 	•	 	Nuance OEM License Agreement.

	 	•	 	Oracle Embedded Software License Agreement

	 	•	 	Oracle License Agreement.

	 	•	 	Oxford University Press License Agreement.

	 	•	 	PIR Subcontractor Agreement.

	 	•	 	PIR_Pendergast School District MOU.

	 	•	 	RTK Software License Agreement.

	 	•	 	Vantage License Agreement.

	 	•	 	VMware License Agreement.

	 	•	 	Warburg College Curriculum Cooperation Agreement.

	 	•	 	Wizzard Software_OEM License Agreement.

	 	•	 	Working Software Licensing Agreement.

	 	•	 	Administrator’s desk reference of behavior management : v. 1, Leadership guide, by
Randall Sprick, Lisa Howard, B. J. Wise, Kim Marcum, Mike Haykin.

	 	•	 	Administrator’s desk reference of behavior management : v. 2, Referrals and solutions,
by Randall Sprick, Lisa Howard, B. J. Wise, Kim Marcum, Mike Haykin

	 	•	 	Basic Skill Builders by Ray Beck, Peggy Anderson and Denise Conrad

	 	•	 	Building self-esteem in the classroom : primary version, by Pat Huggins, Donna Wood
Manion, Larry Moen.

	 	•	 	Bully-proofing your child : first aid for hurt feelings, by Carla Garrity, Mitchell
Baris, William Porter.

 

-14-

 

	 	•	 	Bully-proofing your child : parent’s guide, by Carla Garrity, Mitchell Baris, William
Porter.

	 	•	 	CHAMPS : a proactive and positive approach to classroom management : for grades K-9 by
Randall Sprick, Lisa M. Howard, Mickey Garrison.

	 	•	 	Children’s Progress (various titles), by Children’s Progress, Inc.

	 	•	 	Choosing education goals : teacher manual and student lessons, by James E. Martin, Wanda
Hughes, Laura Huber Marshall, Patty Jerman, Laurie Maxson.

	 	•	 	Choosing personal goals : teacher manual and student lessons, by Laura Huber Marshall,
James E. Martin, Patty Jerman, Wanda Hughes, Laurie Maxson.

	 	•	 	Creating a caring classroom : a validated Washington State innovative education program,
by Pat Huggins

	 	•	 	DEC recommended practices in early intervention/early childhood special education, by
Susan Sandall, Mary E. McLean, Barbara J. Smith.

	 	•	 	DEC recommended practices program assessment : improving practices for young children
with special needs and their families, by Mary Louise Hemmeter, Gail E. Joseph, Barbara J.
Smith, Susan Sandall.

	 	•	 	Different is not Bad; Different is the World by Sally Smith.

	 	•	 	Family-based practices / the Division for Early Childhood of the Council For Exceptional
Children; Eva Horn, Michaelene M. Ostrosky, and Hazel Jones, co-editors.

	 	•	 	First Step to Success by Hill M. Walker, Bruce Stiller, Annemieke Golly, Edward Feil,
Kate Kavanaugh, Herb Severson.

	 	•	 	Fifty Ways to Make Teaching Math More Fun [pub’d as Simple Ways to Make Teaching Math
More Fun], by Bob Algozzine

	 	•	 	Functional Assessment and Intervention Program, by Utah State Board of Education

	 	•	 	Good Talking Words, by Lucy Hart Paulson.

	 	•	 	Good Thinking, by by Orville Clark and Wayne Hull

	 	•	 	Got it! : seven steps for teaching students to get on top of their problems, by Laurie
Hartwig and Gina Meredith.

	 	•	 	Helping kids find their strengths, by Pat Huggins, Donna Wood Manion, Larry Moen and
Elizabeth Tyler.

	 	•	 	Helping kids handle anger : a validated Washington State innovative education program,
by Pat Huggins

	 	•	 	Helping kids handle conflict : teaching self-control : intermediate version, by Lorraine
Shakarian and Pat Huggins.

	 	•	 	Helping kids handle put-downs, by Pat Huggins, Donna Wood Manion, and Lorraine
Shakarian.

	 	•	 	IEP Connections and related titles, by Stevan Kukic and Judy Schrag

	 	•	 	Interdisciplinary teams / the Division for Early Childhood of the Council for
Exceptional Children ; Eva M. Horn and Hazel Jones, co-editors

	 	•	 	J&J Language Readers Level I-III, Vocabulary Cars Level I-II, Kids Poster and Coloring
Book, by Jane Fell Greene and Judy Fell Woods

	 	•	 	Language Roots by Anne R. Bebko, Richard Doucet and John Alexander

	 	•	 	Making Inclusion Work, by Anne Beninghof

	 	•	 	Natural environments and inclusion / the Division for Early Childhood of the Council for
Exceptional Children ; Susan Sandall and Michaelene Ostrosky, co-editors.

	 	•	 	One Minute Skill Builder, and related materials, by Susan Mulkey and Karen Kemp.

	 	•	 	Please! Teach all of me by Joni Hanson, Paula Neys, Marcia Gums and Jackie Crawford.

	 	•	 	Self-directed IEP : teacher’s manual, by by James E. Martin, Laura Huber Marshall,
Laurie Maxson, Patty Jerman.

	 	•	 	Spelling skill builder timings, by Ray Beck, Denise Conrad & Peggy Anderson.

	 	•	 	Staff/Student Support Teams by Vicki Phillips and Laura McCullough.

 

-15-

 

	 	•	 	Stop and Think support materials, by Howard M. Knoff and George M. Batsche

	 	•	 	Stop, Think and Plan, by Ernie Hergenroeder

	 	•	 	Strategies and tactics for effective instruction, by Bob Algozzine, Jim Ysseldyke, Judy
Elliott.

	 	•	 	Systematic Screening for Behavior Disorders (SSBD), by Hill Walker and Herbert Severson.

	 	•	 	Take action : making goals happen : teacher’s manual, by Laura Huber Marshall, James E.
Martin, Laurie Maxon, Wanda Hughes, Terry Miller, Toria McGill, Patty Jerman.

	 	•	 	Teaching cooperation skills : a validated Washington State innovative education program,
by Pat Huggins

	 	•	 	Teaching effective classroom routines, by Joe Witt, Lynn LaFleur, Gale Naquin, Donna
Gilbertson.

	 	•	 	Teaching friendship skills : intermediate version, by Pat Huggins, Donna Wood Manion,
Larry Moen.

	 	•	 	Teaching Self-Management Strategies to Adolescents: Instructional Manual, by K. Richard
Young, Richard P. West, Deborah J. Smith and Daniel P. Morgon

	 	•	 	Teaching strategies : what to do to support young children’s development, by Michaelene
Ostrosky and Susan Sandall.

	 	•	 	The Acting-Out Child by Hill M. Walker.

	 	•	 	Think, Get Ready, Respond!, by Barbara J. Terry and Carmen Arreaga-Mayer.

	 	•	 	Think Time, by Ron Nelson and Beth Ann Carr

	 	•	 	Time savers for educators, by Judy Elliott, Bob Algozzine, Jim Ysseldyke.

	 	•	 	Tog;ether We Can, by Charles Greenwood; Joseph C. Delquadri; and Judith Carta

	 	•	 	Tough kid new teacher kit : practical classroom management survival strategies for the
new teacher, by Ginger Rhode, William R. Jenson, Daniel P. Morgan.

	 	•	 	Tough kid video series, by Ginger Rhode, William R. Jenson.

	 	•	 	Why Don’t They Like Me? By Susan Sheridan.

	 	•	 	Working Together: Tools for Collaborative Teaching, by Anita DeBoer and Susan
Fister-Mulkey, and other Working Together titles

	 	•	 	Young exceptional children monograph series : no. 1, Practical ideas for addressing
challenging behaviors, by Susan Sandall and Michaelene Ostrosky, co-editors.

 

-16-

 

Exhibit 7.1.19

Restrictions

None

 

-17-

 

Exhibit 7.1.20

Litigation

None

 

-18-

 

Exhibit 7.1.22

Leases

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Legal	 	 	 	 	 	 
	 	 	 	 	 	 	Description of	 	 	 	 	 	 	 	 	 	Description (if	 	 	 	 	 	Option to
	 	 	 	 	 	 	Lease or Other	 	 	 	 	 	 	 	 	 	Encumbered	 	 	 	To be	 	Purchase/
	 	 	Common	 	 	 	Documents	 	 	 	Improvements	 	Approximate	 	by Mortgage	 	To be	 	Encumbered	 	Right of
	Entity of	 	Name and	 	Landlord /	 	Evidencing	 	Purpose/	 	Located on Real	 	Square	 	and/or Fixture	 	Encumbered	 	by Fixture	 	First
	Record	 	Address	 	Owner	 	Interest	 	Use	 	Property	 	Footage	 	Filing)	 	by Mortgage	 	Filing	 	Refusal
	Cambium Learning,
Inc.

	 	17855 North Dallas
Pkwy,
Suite 400
Dallas, Texas 75287
	 	Briargrove Place,
L.L.C.
	 	Office Lease
Agreement, dated as
of July 9, 2010
	 	Office
	 	N/A
	 	 	42,500	 	N/A
	 	NO
	 	NO
	 	NO
	Cambium Learning,
Inc.

	 	24 Prime Parkway,
Suite 303, Natick,
MA 01760
	 	LMF Cochituate Corp.
	 	Lease, dated as of
October 6, 2009
	 	Office
	 	N/A
	 	 	13,000	 	N/A
	 	NO
	 	NO
	 	NO
	Sopris West
Educational
Services, Inc.
(n/k/a Cambium
Education, Inc.)

	 	4093 Specialty Place

Longmont, CO 80504
	 	Cactus

Investments, LLP
	 	Lease Agreement
dated June 1, 2003
	 	Office; 

Collateral Location
	 	N/A
	 	 	60,000	 	N/A
	 	NO
	 	NO
	 	NO
	Sopris West
Educational
Services, Inc.
(n/k/a Cambium
Education, Inc.)

	 	4185 Salazar Way

Frederick, CO 80504
	 	OIRE Colorado C,
LLC
(as successor in
interest to Opus
Northwest, L.L.C.)
	 	Build-to-Suit Net
Lease, dated as of
September 30, 2005,
as amended 

Price Participation
Agreement, dated as
of September 30,
2005
	 	Collateral Location
	 	See table

below
	 	 	200,000	 	NO
	 	NO
	 	NO
	 	NO

 

-19-

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Legal	 	 	 	 	 	 
	 	 	 	 	 	 	Description of	 	 	 	 	 	 	 	 	 	Description (if	 	 	 	 	 	Option to
	 	 	 	 	 	 	Lease or Other	 	 	 	 	 	 	 	 	 	Encumbered	 	 	 	To be	 	Purchase/
	 	 	Common	 	 	 	Documents	 	 	 	Improvements	 	Approximate	 	by Mortgage	 	To be	 	Encumbered	 	Right of
	Entity of	 	Name and	 	Landlord /	 	Evidencing	 	Purpose/	 	Located on Real	 	Square	 	and/or Fixture	 	Encumbered	 	by Fixture	 	First
	Record	 	Address	 	Owner	 	Interest	 	Use	 	Property	 	Footage	 	Filing)	 	by Mortgage	 	Filing	 	Refusal
	LAZEL, Inc.

	 	3767 Ranchero
Drive, Suite 200,
Ann Arbor, MI 48108
	 	Valley Ranch
Business Park No.
20, LLC
	 	Valley Ranch
Business Park
Lease, dated as of
September 24, 2010
	 	Office
	 	N/A
	 	 	5,000	 	N/A
	 	NO
	 	NO
	 	NO
	Voyager Expanded
Learning, Inc.
(n/k/a Cambium
Education, Inc.)

	 	1840 E. River Road,
Tucson, AZ 85718
	 	Cambric Partners
	 	Lease, dated as of
June 5, 2005, as
amended
	 	Office
	 	N/A
	 	 	13,000	 	N/A
	 	NO
	 	NO
	 	NO
	LAZEL, Inc. (d/b/a
Explore Learning,
Inc.)

	 	400 East Main

Street,

Charlottesville, VA

22902
	 	OMD, LLC
	 	Lease Agreement,
dated July 19, 2007
	 	Office
	 	N/A
	 	 	4,000	 	N/A
	 	NO
	 	NO
	 	NO

Personal Property Leases

Various operating leases for office and warehouse equipment

 

-20-

 

Exhibit 7.1.23

Pension Plans

Cambium Learning 401(k) Savings Plan

 

Exhibit 8.1.3 - Page 1

 

Exhibit 7.1.25

Labor Relations

None

 

Exhibit 8.1.3 - Page 2

 

EXHIBIT 8.1.3

COMPLIANCE CERTIFICATE

[                         ]

                    ,      

Harris N.A., as Agent

111 West Monroe Street

Chicago, Illinois 60603

The undersigned, the chief financial officer of Cambium Group, Inc. (“Borrower
Representative”), gives this certificate to Harris N.A., in its capacity as Agent (“Agent”) in
accordance with the requirements of subsection 8.1.3 of that certain Loan and Security Agreement
dated February 17, 2011 among Borrower Representative, and the Subsidiaries of Borrower
Representative party hereto, Agent, and Barclays Bank PLC, as Collateral Agent and the Lenders
party thereto (“Loan Agreement”). Capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings ascribed to them in the Loan Agreement.

1. Based upon my review of the balance sheets and statements of income of Borrower
Representative and its Subsidiaries for the [                    ] period ending                     ,      ,
copies of which are attached hereto, I hereby certify that:

(i) Capital Expenditures during the period (for the month ending                     ) and for
the fiscal year to date total $                     and $                    , respectively.

(ii) Rentals during the period (month ending                     ) and for the fiscal year to date
total $                     and $                    , respectively.

(iii) [No Covenant Trigger Period exists] or [The Fixed Charge Coverage Ratio for the
      month period ending                           ,
201____
is       to 1.]

2. No Default exists on the date hereof, other than:                                          
                    [if none, so state]; and

3. No Event of Default exists on the date hereof, other than                                             
                 [if none, so state].

	 	 	 	 	 
	 

	 	Very truly yours,	 	 
	 
	 	 	 	 
	 

	 	 

Chief Financial Officer
	 	 

 

Exhibit 8.1.3 - Page 3

 

EXHIBIT 8.1.3A

FORM OF MONTHLY REPORT

[to come]

 

Exhibit 8.1.3A - Page 1

 

EXHIBIT 8.1.4

FORM OF BORROWING BASE CERTIFICATE

[to come]

 

A-1

 

Exhibit 8.2.2

Loans

None

 

A-2

 

Exhibit 8.2.3

Total Indebtedness

None

 

A-3

 

Exhibit 8.2.5

Liens

None

 

A-4

 

Exhibit 8.2.12

Permitted Investments

None

 

A-5

 

EXHIBIT 8.3

FINANCIAL COVENANTS

DEFINITIONS

Capitalized Software Expenditures — for any period, the aggregate of all expenditures
(whether paid in cash or accrued as liabilities) by a Person and its Subsidiaries during such
period in respect of licensed or purchased software or internally developed software and software
enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized
costs on the consolidated balance sheet of Person and its Subsidiaries.

Consolidated Depreciation and Amortization Expense — with respect to any Person for
any period, the total amount of depreciation and amortization expense of such Person, including the
amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses,
curriculum development expenses and fixed asset purchases and Capitalized Software Expenditures of
such Person and its Subsidiaries for such period on a consolidated basis and otherwise determined
in accordance with GAAP.

Consolidated Interest Expense — with respect to any Person for any period, without
duplication, the sum of:

(1) consolidated interest expense in respect of Indebtedness for Money Borrowed of such
Person and its Subsidiaries for such period, to the extent such expense was deducted (and
not added back) in computing Consolidated Net Income (including (a) amortization of original
issue discount resulting from the issuance of Indebtedness for Money Borrowed at less than
par, (b) all commissions, discounts and other fees and charges owed with respect to letters
of credit of bankers acceptances, (c) non-cash interest charges (but excluding any non-cash
interest expense attributable to the movement in the mar to market valuation of Derivative
Obligations or other derivative instruments pursuant to GAAP), (d) the interest component of
Capitalized Lease Obligations, (e) net payments, if any, made (less net payments, if any,
received), pursuant to interest rate Derivative Obligations with respect to Indebtedness for
Money Borrowed, and excluding (v) any expense resulting from the discounting of any
Indebtedness for Money Borrowed in connection with the application of recapitalization
accounting or, if applicable, purchase accounting in connection with any acquisition, (w)
penalties and interest relating to taxes, (x) any “additional interest” or “liquidated
damages” with respect to other securities for failure to timely comply with registration
rights obligations, (y) amortization of deferred financing fees, debt issuance costs,
commissions, fees and expenses and discounted liabilities and (z) any accretion of accrued
interest on discounted liabilities; plus

(2) consolidated capitalized interest of such Person and its Subsidiaries for such
period, whether paid or accrued; less

(3) interest income of such Person and its Subsidiaries for such period.

 

Exhibit 8.3 - Page 1

 

For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit
in such Capitalized Lease Obligation in accordance with GAAP.

Consolidated Net Income (Loss) — with respect to any Person for any period, the
aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated
basis, and otherwise determined in accordance with GAAP; provided that, without
duplication,

(1) any net after-tax effect of extraordinary, non-recurring or unusual gains, losses
or charges (including all fees and expenses relating thereto), including, without
limitation, any expenses relating to severance, relocation costs, integration costs,
transition costs, pre-opening, opening, consolidation and closing costs for facilities,
costs incurred in connection with any strategic initiatives, other business optimization
expenses (including costs and expenses relating to business optimization programs and new
systems design and implementation costs), restructuring costs and curtailments or
modifications to pension and post-retirement employee benefit plans shall be excluded;

(2) any net after-tax effect of gains or losses attributable to asset dispositions or
abandonments (including any disposal of abandoned or discontinued operations) or the sale or
other disposition of any Securities of any Person other than in the ordinary course of
business as determined in good faith by Parent shall be excluded;

(3) the Net Income for such period of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be excluded; provided that
Consolidated Net Income of Borrowers shall be increased by the amount of dividends or
distributions or other payments that are actually paid in Cash Equivalents (or to the extent
converted into Cash Equivalents) to Borrower Representative or a Subsidiary thereof in
respect of such period and the net losses of any such Person shall only be included to the
extent funded with cash from Borrower Representative or any Subsidiary;

(4) effects of adjustments (including the effects of such adjustments pushed down to
Borrower Representative and its Subsidiaries) in the inventory, property and equipment,
software, goodwill, other intangible assets, in-process research and development, deferred
revenue, debt line items and other non-cash charges in such Person’s consolidated financial
statements pursuant to GAAP resulting from the application in relation to any consummated
acquisition or the amortization or write-off of any amounts thereof, net of taxes, shall be
excluded;

(5) any net after-tax effect of income (loss) from the early extinguishment or
conversion of (a) Indebtedness for Money Borrowed, (b) Derivative Obligations or (c) other
derivative instruments shall be excluded;

 

Exhibit 8.3 - Page 2

 

(6) any impairment charge or asset write-off or write-down, including impairment
charges or asset write-offs or write-downs related to intangible assets, long-lived assets,
investments in debt and equity securities or as a result of a change in law or regulation,
in each case, pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP
shall be excluded;

(7) any non-cash compensation charge or expense, including any such charge or expense
arising from the grants of stock appreciation or similar rights, stock options, restricted
stock or other rights or equity incentive programs shall be excluded;

(8) any fees, expenses or charges incurred during such period, or any amortization
thereof for such period, in connection with any acquisition, investment, asset sale outside
of the ordinary course of business, disposition, incurrence or repayment of Indebtedness for
Money Borrowed (including such fees, expenses or charges related to the offering of the
Senior Secured Notes and this Agreement), issuance of Securities, refinancing transaction or
amendment or modification of any debt instrument (including any amendment or other
modification of the Senior Secured Notes and this Agreement) and including, in each case,
any such transaction consummated prior to the Closing Date and any such transaction
undertaken but not completed, and any charges or non-recurring merger costs incurred during
such period as a result of any such transaction, in each case whether or not successful,
shall be excluded;

(9) any net unrealized gain or loss (after any offset) resulting in such period from
Derivative Obligations and the application of Accounting Standards Codification 815 shall be
excluded;

(10) any net unrealized gain or loss (after any offset) resulting in such period from
currency translation and transaction gains or losses including those related to currency
remeasurements of Indebtedness for Money Borrowed (including any net loss or gain resulting
from Derivative Obligations for currency exchange risk) and any other monetary assets and
liabilities shall be excluded; and

(11) gains and losses recorded in accordance with changes in the fair market value of
contingent value rights.

The foregoing notwithstanding, in respect of items incurred and Pro Forma Synergy
Adjustments made following the Closing Date and items not incurred and Pro Forma Synergy
Adjustments not made in connection with the transactions contemplated by this Agreement or
the Senior Secured Notes, any increases to Consolidated Net Income or EBITDA attributable to
(v) the cash portion of any losses or charges referred to in clause (1) of the definition of
Consolidated Net Income (Loss), (w) the cash portion of any fees, expenses or charges
referred to in clause (8) of the definition of Consolidated Net Income (Loss), (x) the cash
portion of any restructuring charges, accruals or reserves referred to in clause (1)(d) of
the definition of EBITDA, (y) the cash portion of any net loss from disposed or discontinued
operations referred to in clause (i) of the definition of EBITDA and (z) the amount of Pro
Forma Synergy Adjustments (as defined in the definition of Fixed Charge Coverage Ratio)
shall be limited to 20% of EBITDA for the applicable
period calculated without giving effect to the increases to Consolidated Net Income or
EBITDA resulting from the cash portion of the items referred to in such clauses or the Pro
Forma Synergy Adjustments.

 

Exhibit 8.3 - Page 3

 

Covenant Trigger Period — the period (a) commencing on the day (i) an Event of Default
occurs or (ii) Availability is less than the greater of (x) $8,000,000 and (y) 15% of the Total
Credit Facility for five consecutive days and (b) continuing until (i) in the case of clause (a)(i)
above, such Event of Default no longer exists and (ii) in the case of clause (a)(ii) above, during
the preceding sixty (60) consecutive days Availability has been greater than the greater of (x)
$8,000,000 and (y) 15% of the Total Credit Facility, at all times.

EBITDA — with respect to any Person for any period, the Consolidated Net Income of
such Person for such period:

(1) increased (without duplication) by the following, in each case (other than clause
(i)) to the extent deducted (and not added back) in determining Consolidated Net Income for
such period:

(a) provision for taxes based on income or profits or capital, including,
without limitation, federal, state, provincial, franchise, excise and similar taxes
and foreign withholding taxes (including any future taxes or other levies which
replace or are intended to be in lieu of such taxes and any penalties and interest
related to such taxes arising from tax examinations) and the net tax expense
associated with any adjustments made pursuant to clause (1) through (11) of the
definition of Consolidated Net Income; plus

(b) Consolidated Interest Expense of such Person for such period (including (x)
net losses or Derivative Obligations or other derivative instruments entered into
for the purpose of derivative interest rate risk, net of interest income and gains
with respect to such obligations, (y) costs of surety bonds in connection with
financing activities, and (z) amounts excluded from Consolidated Interest Expense as
set forth in clauses (1)(v) through (z) in the definition thereof); plus

(c) Consolidated Depreciation and Amortization Expense of such Person for such
period; plus

(d) the amount of any restructuring charges, accruals or reserves; plus

(e) any other non-cash charges (provided that if any such non-cash
charges represent an accrual or reserve for potential cash items in any future
period, the cash payment in respect thereof in such future period shall be
subtracted from EBITDA to such extent, and excluding amortization of a prepaid cash
item that was paid in a prior period); plus

(f) the amount of any minority interest expense consisting of Subsidiary income
attributable to minority equity interests of third parties in any non-wholly owned
Subsidiary; plus

 

Exhibit 8.3 - Page 4

 

(g) any costs or expense incurred by Borrower Representative or a Subsidiary
pursuant to any management equity plan or stock option plan or any other management
or employee benefit plan or agreement or any stock subscription or shareholder
agreement, to the extent that such cost or expenses are funded with cash proceeds
contributed to the capital of Borrower Representative or net cash proceeds of an
issuance of Securities of any Loan Party (other than Disqualified Stock);
plus

(h) cash receipts (or any netting arrangements resulting in reduced cash
expenditures) not representing EBITDA or Consolidated Net Income in any period to
the extent non-cash gains relating to such income were deducted in the calculation
of EBITDA pursuant to clause (2) below for any previous period and not added back;
plus

(i) any net loss from disposed or discontinued operations; and

(2) decreased (without duplication) by the following, in each case to the extent
included in determining Consolidated Net Income for such period:

(a) non-cash gains increasing Consolidated Net Income of such Person for such
period, excluding any non-cash gains to the extent they represent the reversal of an
accrual or reserve for a potential cash item that reduced EBITDA in any prior
period; plus

(b) any non-cash gains with respect to cash actually received in a prior period
unless such cash did not increase EBITDA in such prior period; plus

(c) any net income from disposed or discontinued operations; plus

(d) extraordinary gains and unusual or non-recurring gains (less all fees and
expenses relating thereto); and

(3) increased or decreased (without duplication) by, as applicable, any adjustments
resulting from the application of FASB Accounting Standards Codification 460, Guarantees.

Fixed Charge Coverage Ratio — with respect to any period, the ratio of (i) EBITDA for
such period minus non-financed Capital Expenditures during such period, to (ii) Fixed
Charges for such period, all as determined for Borrower Representative and its Subsidiaries on a
Consolidated basis and in accordance with GAAP. For purposes of making the computation referred to
above, Permitted Investments, acquisitions, dispositions, mergers, amalgamations, consolidations
and discontinued operations (as determined in accordance with GAAP) that have been made by Borrower
Representative or any of its Subsidiaries during the four quarter reference period or subsequent to
such reference period and on or prior to or simultaneously with the applicable date on which Fixed
Charge Coverage Ratio is tested shall be calculated on a pro forma basis assuming that all such
Permitted Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and
discontinued operations (and the change in any associated fixed charge obligations and the change
in EBITDA resulting
therefrom) had occurred on the first day of the four quarter reference period. If since the
beginning of such period any Person that subsequently became a Subsidiary or was merged with or
into Borrower Representative or any of its Subsidiaries since the beginning of such period shall
have made any Permitted Investment, acquisition, disposition, merger, amalgamation, consolidation
or discontinued operation that would have required adjustment pursuant to this definition, then the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as
if such Permitted Investment, acquisition, disposition, merger, amalgamation, consolidation or
discontinued operation had occurred at the beginning of the applicable four quarter period.

 

Exhibit 8.3 - Page 5

 

For purposes of this definition, whenever pro forma effect is to be given to a Permitted
Investment, acquisition, disposition, merger, amalgamation or consolidation, the pro forma
calculations shall be made in good faith by a responsible financial or accounting officer of
Borrower Representative or Parent (and may include, for the avoidance of doubt, cost savings,
synergies and operating expense reductions resulting from such Permitted Investment, acquisition,
merger, amalgamation or consolidation which is being given pro forma effect that have been or are
reasonably expected to be realized (collectively the “Pro Forma Synergy Adjustments”));
provided that any Pro Forma Synergy Adjustments shall be limited to those that (a) are
reasonably identifiable and factually supportable as of the date of such calculation and (b) have
occurred or are reasonably expected to occur in the twelve months following the applicable date of
such calculation, in the reasonable judgment of the responsible financial or accounting officer of
Borrower Representative or Parent and, the chief financial officer of Borrower Representative or
Parent shall certify the foregoing pursuant to a duly completed certificate signed and delivered to
Agent. If any Indebtedness for Money Borrowed bears a floating rate of interest and is being given
pro forma effect, the interest on such Indebtedness for Money Borrowed shall be calculated as if
the rate in effect on the date the Fixed Charge Coverage Ratio is tested had been the applicable
rate for the entire period (taking into account any Derivative Obligations applicable to such
Indebtedness for Money Borrowed). Interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by a responsible financial or accounting officer
of Borrower Representative or Parent to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP. For purposes of making the computation referred to above,
interest on any Indebtedness for Money Borrowed under a revolving credit facility computed on a pro
forma basis shall be computed based upon the average daily balance of such Indebtedness for Money
Borrowed during the applicable period except as set forth in the first paragraph of this
definition. Interest on Indebtedness for Money Borrowed that may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a Eurocurrency interbank offered
rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none,
then based upon such optional rate chosen as Borrower Representative or Parent may designate.

Fixed Charges — with respect to any period, the sum of: (i) scheduled principal
payments required to be made during such period in respect to Indebtedness for Money Borrowed
(including the principal portion of Capitalized Lease Obligations), plus (ii) Interest
Expense for such period, plus (iii) income taxes paid in cash within such period,
plus (iv) all Distributions made in cash to Parent or any Subsidiary of Parent that is not
a Loan Party, to the extent such Distribution was not made to permit Parent or such Subsidiary to
pay an expense or charge that was otherwise included in the calculation of Consolidated Net Income
or Fixed
Charges within such period, all as determined for Borrower Representative and its Subsidiaries
on a Consolidated basis and in accordance with GAAP.

 

Exhibit 8.3 - Page 6

 

Net Income — with respect to any Person, the net income (loss) of such Person,
determined in accordance with GAAP and before any reduction in respect of Preferred Stock
dividends.

Pro Forma Synergy Adjustments — as defined in the definition of Fixed Charge Coverage
Ratio.

COVENANTS

Fixed Charge Coverage Ratio. If a Covenant Trigger Period exists, Borrowers shall not
permit the Fixed Charge Coverage Ratio for any period set forth below to be less than the ratio set
forth below opposite such period:

	 	 	 
	Period	 	Ratio
	 
	 	1.10 to 1.0

 

Exhibit 8.3 - Page 7EXhibit 4.4

Exhibit 4.4

$175,000,000

CAMBIUM LEARNING GROUP, INC.

9.75% SENIOR SECURED NOTES DUE 2017

PURCHASE AGREEMENT

February 14, 2011

BARCLAYS CAPITAL INC.

BMO CAPITAL MARKETS CORP.

As Representatives of the several

   Initial Purchasers named in Schedule I attached hereto,

c/o Barclays Capital Inc.

745 Seventh Avenue

New York, New York 10019

Ladies and Gentlemen:

Cambium Learning Group, Inc., a Delaware corporation (the “Company”), proposes, upon the terms
and conditions set forth in this agreement (this “Agreement”), to issue and sell to the several
initial purchasers named in Schedule I attached hereto (the “Initial Purchasers”), for whom you are
acting as representatives (together, the “Representatives”), $175,000,000 in aggregate principal
amount of its 9.75% Senior Secured Notes due 2017 (the “Notes”). The Notes will (i) have terms and
provisions that are summarized in the Offering Memorandum (as defined below), and (ii) are to be
issued pursuant to an Indenture (the “Indenture”) to be entered into among the Company, the
Guarantors (as defined below) and Wells Fargo, National Association, as trustee (the “Trustee”).
The Company’s obligations under the Notes, including the due and punctual payment of interest on
the Notes, will be irrevocably and unconditionally guaranteed (the “Guarantees”) by the guarantors
listed in Schedule II hereto (together the “Guarantors”). As used herein, the term “Notes” shall
include the Guarantees, unless the context otherwise requires. This Agreement is to confirm the
agreement concerning the purchase of the Notes from the Company by the Initial Purchasers.

The Notes being issued, the entry by the Company and the Guarantors into a new senior secured
asset-based revolving credit facility (the “New ABL Facility”), the initial borrowings thereunder
on the closing date thereof, if any, and the repayment of certain of the Company’s and the
Guarantors’ existing credit facilities and existing notes as described in the Pricing Disclosure
Package (as defined below), are referred to herein collectively, as the “Transactions.”

The Notes will be secured on a first priority basis, subject to certain permitted liens (to be
defined in the Indenture) (the “Permitted Liens”), by liens on certain assets (collectively, the
“Notes Collateral”) of the Company and the Guarantors other than the ABL Collateral (as defined
below), as more particularly described in the Pricing Disclosure Package. The Notes will have a
second priority security interest in the collateral securing the New ABL Facility (the
“ABL Collateral” and, together with the Notes Collateral, the “Collateral”). The rights of
holders of the Notes to the Collateral will be documented by a security agreement, and other
instruments evidencing or creating or purporting to create a security interest in favor of the
Collateral Agent (collectively, the “Security Documents”), each in favor of Wells Fargo, National
Association, as collateral agent (in such capacity, the “Collateral Agent”), for its benefit and
the benefit of the Trustee and the holders of the Notes.

 

 

 

The Notes will be entitled to the benefits of an Intercreditor Agreement, dated as of the
Closing Date (the “Intercreditor Agreement”), by and among the Collateral Agent and Harris N.A., as
administrative agent and collateral agent under the New ABL Facility (the “Administrative Agent”),
and acknowledged by the Company and the Guarantors.

1. Purchase and Resale of the Notes. The Notes will be offered and sold to the Initial
Purchasers without registration under the Securities Act of 1933, as amended (the “Securities
Act”), in reliance on an exemption pursuant to Section 4(2) under the Securities Act. The Company
and the Guarantors have prepared a preliminary offering memorandum, dated February 11, 2011 (the
“Preliminary Offering Memorandum”), a pricing term sheet substantially in the form attached hereto
as Schedule III (the “Pricing Term Sheet”) setting forth the terms of the Notes omitted from the
Preliminary Offering Memorandum and an offering memorandum, dated February 14, 2011 (the “Offering
Memorandum”), setting forth information regarding the Company, the Guarantors, the Notes, and the
Exchange Notes (as defined herein), the Guarantees and the Exchange Guarantees (as defined herein).
The Preliminary Offering Memorandum, as supplemented and amended as of the Applicable Time (as
defined below), together with the Pricing Term Sheet and any of the documents listed on Schedule
IV(A) hereto are collectively referred to as the “Pricing Disclosure Package”. The Company and the
Guarantors hereby confirm that they have authorized the use of the Pricing Disclosure Package and
the Offering Memorandum in connection with the offering and resale of the Notes by the Initial
Purchasers. “Applicable Time” means 4:15 p.m. (New York City time) on the date of this Agreement.

You have advised the Company that you will offer and resell (the “Exempt Resales”) the Notes
purchased by you hereunder on the terms set forth in each of the Pricing Disclosure Package and the
Offering Memorandum, as amended or supplemented, solely to (i) persons whom you reasonably believe
to be “qualified institutional buyers” as defined in Rule 144A under the Securities Act (“QIBs”),
and (ii) outside the United States to certain persons who are not U.S. Persons (as defined in
Regulation S under the Securities Act (“Regulation S”)) (such persons, “Non-U.S. Persons”) in
offshore transactions in reliance on Regulation S. As used herein, the terms “offshore
transaction” and “United States” have the meanings assigned to them in Regulation S. Those persons
specified in clauses (i) and (ii) are referred to herein as “Eligible Purchasers”.

Holders (including subsequent transferees) of the Notes will have the registration rights set
forth in the registration rights agreement attached hereto as Exhibit A (the “Registration Rights
Agreement”) among the Company, the Guarantors and the Initial Purchasers to be dated the Closing
Date (as defined herein), for so long as such Notes constitute “Transfer Restricted Securities” (as
defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the
Company and the Guarantors will agree to file with the United States
Securities and Exchange Commission (the “Commission”) under the circumstances set forth
therein, a registration statement under the Securities Act relating to the Company’s 9.75% Senior
Secured Notes due 2017 (the “Exchange Notes”) and the Guarantors’ Exchange Guarantees (the
“Exchange Guarantees”) to be offered in exchange for the Notes and the Guarantees. Such portion of
the offering is referred to as the “Exchange Offer”.

 

-2-

 

2. Representations, Warranties and Agreements of the Company and the Guarantors. The Company
and each of the Guarantors, jointly and severally, represent, warrant and agree as follows:

(a) When the Notes and Guarantees are issued and delivered pursuant to this Agreement, such
Notes and Guarantees will not be of the same class (within the meaning of Rule 144A under the
Securities Act) as securities of the Company or the Guarantors that are listed on a national
securities exchange registered under Section 6 of the United States Securities Exchange Act of
1934, as amended (the “Exchange Act”) or that are quoted in a United States automated inter-dealer
quotation system.

(b) Assuming the accuracy of your representations and warranties in Section 3(b) and your
compliance with your agreements set forth therein, the issuance and sale of the Notes to the
Initial Purchasers and the resale of the Notes by the Initial Purchasers pursuant hereto and in the
manner contemplated by this Agreement, the Pricing Disclosure Package and the Offering Memorandum
(including pursuant to the Exempt Resales) are exempt from the registration requirements of the
Securities Act.

(c) No form of general solicitation or general advertising within the meaning of Rule 502(c)
Regulation D (including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or broadcast over television
or radio, or any seminar or meeting whose attendees have been invited by any general solicitation
or general advertising) was used by the Company, the Guarantors, any of their respective affiliates
or any of their respective representatives (other than you, as to whom the Company and the
Guarantors make no representation) in connection with the offer and sale of the Notes.

(d) No directed selling efforts within the meaning of Rule 902 under the Securities Act were
used by the Company, the Guarantors or any of their respective representatives (other than you, as
to whom the Company and the Guarantors make no representation) with respect to Notes sold outside
the United States to Non-U.S. Persons, and the Company, any affiliate of the Company and any person
acting on its or their behalf (other than you, as to whom the Company and the Guarantors make no
representation) has complied with and will implement the “offering restrictions” required by Rule
902 under the Securities Act.

(e) Each of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the
Offering Memorandum, each as of its respective date, contains all the information that, if
requested by a prospective purchaser of the Notes, would be required to be provided to such
prospective purchaser pursuant to Rule 144A(d)(4) under the Securities Act.

 

-3-

 

(f) Neither the Company, any Guarantor nor any other person acting on behalf of the Company or
any Guarantor has sold or issued any securities (as defined in the Securities Act) that would be
integrated with the offering of the Notes contemplated by this Agreement in a manner that would
require registration of the Notes under the Securities Act, the rules and regulations thereunder or
the interpretations thereof by the Commission.

(g) The Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering
Memorandum have been prepared by the Company and the Guarantors for use by the Initial Purchasers
in connection with the Exempt Resales. No order or decree preventing the use of the Preliminary
Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or any order
asserting that the transactions contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued, and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company or any of the Guarantors is
contemplated.

(h) The Offering Memorandum will not, as of its date or as of the Closing Date, contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company and each of the Guarantors make no representation or warranty with
respect to any information contained in or omitted from the Offering Memorandum in reliance upon
and in conformity with written information furnished to the Company by or on behalf of any Initial
Purchaser through the Representatives specifically for inclusion therein, which information is
specified in Section 8(e).

(i) The Pricing Disclosure Package did not, as of the Applicable Time, and the Pricing
Disclosure Package when taken together with each Free Writing Offering Document listed in Schedule
IV(B) hereto did not, as of the Applicable Time, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided that the Company and each of
the Guarantors make no representation or warranty with respect to any information contained in or
omitted from the Pricing Disclosure Package (or Free Writing Offering Document listed in Schedule
IV(B) hereto) in reliance upon and in conformity with written information furnished to the Company
by or on behalf of any Initial Purchaser through the Representatives specifically for inclusion
therein, which information is specified in Section 8(e).

(j) Other than the Pricing Term Sheet, the Company has not made any offer to sell or
solicitation of an offer to buy the Notes that would constitute a “free writing prospectus” (if the
offering of the Notes was made pursuant to a registered offering under the Securities Act), as
defined in Rule 405 under the Securities Act (a “Free Writing Offering Document”) without the prior
consent of the Representatives; any such Free Writing Offering Document the use of which has been
previously consented to by the Initial Purchasers is listed on Schedule IV.

(k) [Reserved].

 

-4-

 

(l) Each of the Company, the Guarantors and their respective subsidiaries has been duly
organized, is validly existing and in good standing as a corporation or other business entity under
the laws of its jurisdiction of organization and is duly qualified to do business and in good
standing as a foreign corporation or other business entity in each jurisdiction in which its
ownership or lease of property or the conduct of its businesses requires such qualification, except
where the failure to be so qualified or in good standing could not, in the aggregate, reasonably be
expected to have a material adverse effect on the condition (financial or otherwise), results of
operations, stockholders’ equity, properties or business of the Company and its subsidiaries taken
as a whole (a “Material Adverse Effect”). Each of the Company, the Guarantors and their respective
subsidiaries has all power and authority necessary to own or hold its properties and to conduct the
businesses in which it is now engaged. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the subsidiaries listed in
Exhibit 21 to the Company’s Annual Report on Form 10-K for the most recent fiscal year.

(m) The Company has an authorized capitalization as set forth in each of the Pricing
Disclosure Package and the Offering Memorandum, and all of the issued shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and non-assessable.
All of (i) the issued and outstanding shares of capital stock of each subsidiary of the Company
that is a corporation have been duly authorized and validly issued, are fully paid and
non-assessable (ii) the outstanding equity interests of each subsidiary of the Company that is not
a corporation have been, to the extent applicable, duly authorized and validly issued, and, except
as otherwise set forth in the Pricing Disclosure Package and the Offering Memorandum, all
outstanding shares of capital stock or other equity interests of each such subsidiary are owned
directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or
claims, except for such liens, encumbrances, equities or claims as could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(n) The Company and each Guarantor has all requisite corporate, partnership or limited
liability company power and authority, as applicable, to execute, deliver and perform its
obligations under the Indenture. The Indenture has been duly authorized by the Company and the
Guarantors, and upon its execution and delivery in accordance with its terms by each of the parties
thereto and, assuming due authorization, execution and delivery by the Trustee and the Collateral
Agent, will constitute the valid and binding agreement of the Company and the Guarantors,
enforceable against the Company and the Guarantors in accordance with its terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is considered in a proceeding in
equity or at law) (collectively, the “Enforceability Exceptions”). No qualification of the
Indenture under the Trust Indenture Act of 1939 (the “Trust Indenture Act”) is required in
connection with the offer and sale of the Notes contemplated hereby or in connection with the
Exempt Resales. The Indenture will conform to the description thereof in each of the Pricing
Disclosure Package and the Offering Memorandum.

(o) The Company has all requisite corporate power and authority to execute, issue, sell and
perform its obligations under the Notes. The Notes have been duly authorized by the Company and,
when duly executed by the Company in accordance with the terms of the Indenture, assuming due
authentication of the Notes by the Trustee, upon delivery to the Initial Purchasers as provided in
the Indenture against payment therefor in accordance with the terms hereof, will be validly issued
and outstanding and will constitute valid and binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, subject to the Enforceability Exceptions. The Notes will conform
in all material respects to the description thereof in each of the Pricing Disclosure Package and
the Offering Memorandum.

 

-5-

 

(p) The Company has all requisite corporate power and authority to execute, issue and perform
its obligations under the Exchange Notes. The Exchange Notes have been duly and validly authorized
by the Company and if and when issued and authenticated in accordance with the terms of the
Indenture and delivered in accordance with the Exchange Offer provided for in the Registration
Rights Agreement, will be validly issued and outstanding and will constitute valid and binding
obligations of the Company, entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, subject to the Enforceability Exceptions.

(q) Each Guarantor has all requisite corporate, partnership or limited liability company power
and authority, as applicable, to execute, issue and perform its obligations under the Guarantees.
The Guarantees have been duly and validly authorized by the Guarantors and when the Indenture is
duly executed and delivered by the Guarantors in accordance with its terms and upon the due
execution, authentication and delivery of the Notes in accordance with the Indenture and the
issuance of the Notes against payment therefor in the sale to the Initial Purchasers contemplated
by this Agreement, will constitute valid and binding obligations of the Guarantors, enforceable
against the Guarantors in accordance with their terms, subject to the Enforceability Exceptions.
The Guarantees will conform in all material respects to the description thereof in each of the
Pricing Disclosure Package and the Offering Memorandum.

(r) Each Guarantor has all requisite corporate, partnership or limited liability company power
and authority, as applicable, to execute, issue and perform its obligations under the Exchange
Guarantees. The Exchange Guarantees have been duly and validly authorized by the Guarantors and if
and when executed and delivered by the Guarantors in accordance with the terms of the Indenture and
upon the due execution and authentication of the Exchange Notes in accordance with the Indenture
and the issuance and delivery of the Exchange Notes in the Exchange Offer contemplated by the
Registration Rights Agreement, will be validly issued and delivered and will constitute valid and
binding obligations of the Guarantors entitled to the benefits of the Indenture, enforceable
against the Guarantors in accordance with their terms, subject to the Enforceability Exceptions.

(s) The Company and each Guarantor has all requisite corporate, partnership or limited
liability company power and authority, as applicable, to execute, deliver and perform its
obligations under the Registration Rights Agreement. The Registration Rights Agreement has been
duly authorized by the Company and each Guarantor and, when executed and delivered by the Company
and each Guarantor in accordance with the terms hereof and thereof, will be validly executed and
delivered and (assuming the due authorization, execution and delivery thereof by you) will be the
legally valid and binding obligation of the Company and each Guarantor in accordance with the terms
thereof, enforceable against the Company and each Guarantor in accordance with its terms, subject
to the Enforceability Exceptions and, as to rights of indemnification and contribution, by
principles of public policy. The Registration Rights Agreement will conform in all material
respects to the description thereof in each of the Pricing Disclosure Package and the Offering
Memorandum.

 

-6-

 

(t) The Company and each Guarantor has all requisite corporate, partnership or limited
liability company power, as applicable, to execute, deliver and perform their respective
obligations under this Agreement. This Agreement has been duly and validly authorized, executed
and delivered by the Company and each of the Guarantors.

(u) The Intercreditor Agreement has been duly and validly authorized by the Company and the
Guarantors, and upon its execution and delivery and, assuming due authorization, execution and
delivery by the Collateral Agent and the Administrative Agent, will constitute the valid and
legally binding agreement of the Company and the Guarantors, enforceable against the Company and
the Guarantors in accordance with its terms, subject to the Enforceability Exceptions. The
Intercreditor Agreement will conform in all material respects to the description thereof in each of
the Pricing Disclosure Package and the Offering Memorandum.

(v) Each of the Security Documents has been duly authorized by the Company or the applicable
Guarantor, as appropriate, and, when executed and delivered by all parties thereto, will constitute
the legal, valid, binding and enforceable agreement of the Company or the applicable Guarantor,
subject to the Enforceability Exceptions. The Security Documents, when executed and delivered in
connection with the sale of the Notes, will create in favor of the Collateral Agent for the benefit
of itself, the Trustee and the holders of the Notes, valid and enforceable security interests in
and liens on the Collateral and, upon the filing of appropriate Uniform Commercial Code financing
statements and the taking of the other actions, in each case as further described in the Security
Documents, the security interests in and liens on the rights of the Company or the applicable
Guarantor in such Collateral will be, (i) in the case of the Notes Collateral, valid and perfected
first priority security interests and liens, superior to and prior to the liens of all third
persons other than Permitted Liens and except as otherwise provided for in such Security Documents
and the Intercreditor Agreement and (ii) in the case of the ABL Collateral, valid and perfected
second priority security interests and liens, superior to and prior to the liens of all third
persons other than Permitted Liens and except as otherwise provided for in such Security Documents
and the Intercreditor Agreement. The Security Documents will conform in all material respects to
the descriptions thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

(w) The issue and sale of the Notes and the Guarantees, the execution, delivery and
performance by the Company and the Guarantors of the Notes, the Guarantees, the Exchange Notes, the
Exchange Guarantees, the Indenture, the Registration Rights Agreement, this Agreement, the Security
Documents, and the Intercreditor Agreement (collectively, the “Transaction Documents”), the
application of the proceeds from the sale of the Notes as described under “Use of Proceeds” in each
of the Pricing Disclosure Package and the Offering Memorandum, the granting of the security
interest in the Collateral and the consummation of the transactions contemplated hereby and
thereby, will not (i) conflict with or result in a breach or violation of any of the terms or
provisions of, or impose any lien, charge or encumbrance upon any property or assets of the
Company, the Guarantors or their respective subsidiaries other than pursuant to the Transaction
Documents, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement,
license, lease or other agreement or instrument to which the Company, the Guarantors or any of
their respective subsidiaries is a party or by which the Company, the Guarantors or any of their
respective subsidiaries is bound or to which any of the property or assets of the Company, the
Guarantors or any of their respective subsidiaries is subject, (ii) result in any
violation of the provisions of the charter or by-laws (or similar organizational documents) of
the Company, the Guarantors or any of their respective subsidiaries, or (iii) result in any
violation of any statute or any judgment, order, decree, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, the Guarantors or any of their
respective subsidiaries or any of their properties or assets, except, with respect to clauses (i)
and (iii), conflicts or violations that would not reasonably be expected to have a Material Adverse
Effect.

 

-7-

 

(x) No consent, approval, authorization or order of, or filing, registration or qualification
with any court or governmental agency or body having jurisdiction over the Company, the Guarantors
or any of their respective subsidiaries or any of their properties or assets is required for the
issue and sale of the Notes and the Guarantees, the execution, delivery and performance by the
Company and the Guarantors of each of the Transaction Documents, the application of the proceeds
from the sale of the Notes as described under “Use of Proceeds” in each of the Pricing Disclosure
Package and the Offering Memorandum, the granting of the security interest in the Collateral and
the consummation of the transactions contemplated hereby and thereby, except for (i) the filing of
a registration statement by the Company with the Commission pursuant to the Securities Act as
required by the Registration Rights Agreement, (ii) such consents, approvals, authorizations,
orders, filings, registrations or qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the Notes by the Initial Purchasers,
each of which has been obtained and is in full force and effect and (iii) the filing of financing
statements under the Uniform Commercial Code as from time to time in effect in the relevant
jurisdictions and any filing to be made in the United States Patent and Trademark Office or the
United States Copyright Office.

(y) The consolidated historical financial statements (including the related notes) included in
the Pricing Disclosure Package and the Offering Memorandum present fairly in all material respects
the financial condition, results of operations and cash flows of the entities purported to be shown
thereby, at the dates and for the periods indicated, and have been prepared in conformity with
accounting principles generally accepted in the United States (US GAAP) applied on a consistent
basis throughout the periods involved.

(z) The pro forma financial statements included in the Pricing Disclosure Package and the
Offering Memorandum include assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and events described therein, the
related pro forma adjustments give appropriate effect to those assumptions, and the pro forma
adjustments reflect the proper application of those adjustments to the historical financial
statement amounts in the pro forma financial statements included in the Pricing Disclosure Package.
The pro forma financial statements included in the Pricing Disclosure Package have been prepared
in accordance with the Commission’s rules and guidance with respect to pro forma financial
information. The pro forma financial statements set forth in the Pricing Disclosure Package and
the Offering Memorandum have been prepared on the basis consistent with such historical financial
statements, except for the pro forma adjustments specified therein, include all material
adjustments to the historical financial data required by Rule 11-02 of Regulation S-X of the
Commission, and give effect to assumptions made on a reasonable basis and in good faith present
fairly in all material respects the historical and proposed transactions contemplated by the
Pricing Disclosure Package and the Offering Memorandum. The other financial information and data
included in the Offering Memorandum, historical and pro forma, are, in all material respects,
accurately presented and prepared on a basis consistent with such financial statements
and the books and records of the Company.

 

-8-

 

(aa) Whitley Penn LLP, who have certified certain financial statements of the Company and of
Voyager Learning Company (“Voyager”), whose reports appear in the Pricing Disclosure Package and
the Offering Memorandum therein and who have delivered the initial letters referred to in Section
7(e) hereof, are independent registered public accountants within the meaning of the Securities Act
and the applicable published interpretations and rulings thereunder. Grant Thornton LLP and Ernst &
Young LLP whose reports appear in the Pricing Disclosure Package and the Offering Memorandum and
who have delivered the initial letter referred to in Section 7(e) hereof, were independent
registered public accountants within the meaning of the Securities Act and the applicable published
interpretations thereunder.

(bb) The Company and each of its subsidiaries maintain a system of internal control over
financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that complies
with the requirements of the Exchange Act and that has been designed by, or under the supervision
of, the Company’s principal executive and principal financial officers, to provide reasonable
assurance that (i) transactions are executed in accordance with management’s general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation of the Company’s
financial statements in conformity with accounting principles generally accepted in the United
States and to maintain accountability for its assets, (iii) access to the Company’s assets is
permitted only in accordance with management’s general or specific authorization, and (iv) the
recorded accountability for the Company’s assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company’s Annual
Report on Form 10-K for the year ended December 31, 2009 does not include a report of management’s
assessment regarding internal control over financial reporting or an attestation report of the
Company’s independent registered public accounting firm due to a transition period established by
rules of the SEC for newly public companies. As of September 30, 2010, the Company is not aware of
any material weaknesses in the Company’s internal controls.

(cc) (i) The Company and each of its subsidiaries maintain disclosure controls and procedures
(as such term is defined in Rule 13a-15(e) under the Exchange Act), (ii) such disclosure controls
and procedures are designed to provide reasonable assurance that the information required to be
disclosed by the Company in the reports they file or submit under the Exchange Act is accumulated
and communicated to management of the Company and its subsidiaries, including its principal
executive officer and principal financial officer, as appropriate, to allow timely decisions
regarding required disclosure; and (iii) such disclosure controls and procedures are effective in
all material respects to perform the functions for which they were established.

(dd) Since the date of the most recent balance sheet of the Company and its consolidated
subsidiaries reviewed or audited by Whitley Penn LLP and the audit committee of the board of
directors of the Company, there have been no significant changes in internal controls or in other
factors that could materially affect the Company’s internal controls.

(ee) There is and has been no failure on the part of the Company and, to the Company’s
knowledge, any of the Company’s directors or officers, in their capacities as such, to
comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated in connection therewith.

 

-9-

 

(ff) Since the date of the latest audited financial statements included in the Pricing
Disclosure Package and the Offering Memorandum, except as disclosed or contemplated in the Pricing
Disclosure Package and the Offering Memorandum, neither the Company, the Guarantors nor any of
their respective subsidiaries has (i) sustained any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or court or governmental action, order or decree, (ii) issued or granted any
securities, (iii) incurred any material liability or obligation, direct or contingent, other than
liabilities and obligations that were incurred in the ordinary course of business, (iv) entered
into any material transaction not in the ordinary course of business and (v) declared or paid any
dividend on its capital stock; and since such date, there has not been any change in the capital
stock, partnership or limited liability interests, as applicable, or long-term debt of the Company,
the Guarantors or any of their respective subsidiaries or any adverse change, or any development
involving a prospective adverse change, in or affecting the condition (financial or otherwise),
results of operations, stockholders’ equity, properties, management, business or prospects of the
Company and its subsidiaries, taken as a whole, in each case except as could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(gg) The Company, the Guarantors and each of their respective subsidiaries has good and
marketable title in fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances and defects, except
such liens, encumbrances and defects as are described in the Pricing Disclosure Package and the
Offering Memorandum and such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company, the
Guarantors or any of their respective subsidiaries. All assets held under lease by the Company,
the Guarantors or any of their respective subsidiaries are held by them under valid, subsisting and
enforceable leases, except where the failure to hold such leases could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(hh) The Company and each of its subsidiaries have such permits, licenses, patents,
franchises, certificates of need and other approvals or authorizations of governmental or
regulatory authorities (“Permits”) as are necessary under applicable law to own their properties
and conduct their businesses in the manner described in the Pricing Disclosure Package and the
Offering Memorandum, except for any of the foregoing that could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect. The Company and each of its subsidiaries have
fulfilled and performed all of its obligations with respect to the Permits, and no event has
occurred that allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of the holder or any such Permits, except
for any of the foregoing that could not reasonably be expected to have a Material Adverse Effect.
Neither the Company, nor any of its subsidiaries has received written notice of any revocation or
modification of any such Permits that are material to the business or has any reason to believe
that any such Permits that are material to the business will not be renewed in the ordinary course.

 

-10-

 

(ii) The Company and each of its subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses, know-how, software, systems and
technology (including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of their respective
businesses except where the failure to own or possess such rights could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company and each of its subsidiaries
have no reason to believe that the conduct of their respective businesses will conflict with, and
have not received any notice of any claim of conflict with, any such rights of others.

(jj) Except as described in the Pricing Disclosure Package and the Offering Memorandum, there
are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property or assets of the Company or any of its subsidiaries is the subject
that could, in the aggregate, reasonably be expected to have a Material Adverse Effect or could, in
the aggregate, reasonably be expected to have a material adverse effect on the performance by the
Company and the Guarantors of the performance of this Agreement, the Indenture, the Notes, the
Guarantees, the Security Documents, the Intercreditor Agreement or the consummation of any of the
transactions contemplated hereby. To the Company’s and each Guarantors’ knowledge, no such
proceedings are threatened or contemplated in writing by governmental authorities or others.

(kk) The Company, the Guarantors and each of their respective subsidiaries carry, or are
covered by, insurance from insurers of recognized financial responsibility covering such risks as
the Company has determined is adequate for the conduct of their respective businesses and the value
of their respective properties. All policies of insurance of the Company, the Guarantors and their
respective subsidiaries are in full force and effect; the Company, the Guarantors and each of their
respective subsidiaries are in compliance with the terms of such policies in all material respects;
and neither the Company, the Guarantors nor any of their respective subsidiaries has received
notice from any insurer or agent of such insurer that capital improvements or other expenditures
are required or necessary to be made in order to continue such insurance.

(ll) No relationship, direct or indirect, that would be required to be described in a
registration statement of the Company pursuant to Item 404 of Regulation S-K, exists between or
among the Company or any Guarantor and their respective subsidiaries, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company or any Guarantor and their
respective subsidiaries, on the other hand, that has not been described in the Pricing Disclosure
Package and the Offering Memorandum.

(mm) No labor disturbance by or dispute with any organized group of employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Company or any Guarantor, is imminent
that could reasonably be expected to have a Material Adverse Effect.

(nn) Neither the Company nor any of its subsidiaries (i) is in violation of its charter or
by-laws (or similar organizational documents), (ii) is in default, and no event has occurred that,
with notice or lapse of time or both, would constitute such a default, in the due performance or
observance of any term, covenant, condition or other obligation contained in any indenture,
mortgage, deed of trust, loan agreement, license or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or assets is subject, or (iii) is
in violation of any statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over it or its property or assets or has failed to obtain any
license, permit, certificate, franchise or other governmental authorization or permit necessary to
the ownership of its property or to the conduct of its business, except in the case of clauses (ii)
and (iii), to the extent any such conflict, breach, violation or default could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

-11-

 

(oo) Except as described in the Pricing Disclosure Package and the Offering Memorandum or as
would not, in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) there
are no proceedings that are pending, or known to be contemplated, against the Company or any of its
subsidiaries under any laws, regulations, ordinances, rules, orders, judgments, decrees, permits or
other legal requirements of any governmental authority, including without limitation any
international, foreign, national, state, provincial, regional, or local authority, relating to
pollution, the protection of human health or safety, the environment, or natural resources, or to
use, handling, storage, manufacturing, transportation, treatment, discharge, disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
the Company, the Guarantors and their respective subsidiaries are not aware of any issues regarding
compliance with Environmental Laws, including any pending or proposed Environmental Laws, or
liabilities or other obligations under Environmental Laws or concerning hazardous or toxic
substances or wastes, pollutants or contaminants, and (iii) none of the Company, the Guarantors and
their respective subsidiaries anticipates material capital expenditures relating to Environmental
Laws.

(pp) The Company, the Guarantors and each of their respective subsidiaries have filed all
material federal, state, local and foreign tax returns required to be filed through the date
hereof, subject to permitted extensions, and have paid all taxes due, and no tax deficiency has
been determined adversely to the Company, the Guarantors or any of their respective subsidiaries,
nor does the Company or any Guarantor have any knowledge of any tax deficiencies that have been, or
could reasonably be expected to be asserted against the Company, the Guarantors and each of their
respective subsidiaries, that could, in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(qq) Except as would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect, (i) each “employee benefit plan” (within the meaning of Section 3(3) of the Employee
Retirement Security Act of 1974, as amended (“ERISA”)) for which the Company or any member of its
“Controlled Group” (defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended
(the “Code”)) would have any liability (each a “Plan”) has been maintained in compliance with its
terms and with the requirements of all applicable statutes, rules and regulations including ERISA
and the Code; (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code, has occurred with respect to any Plan excluding transactions effected pursuant to
a statutory or administrative exemption; (iii) with respect to each Plan subject to Title IV of
ERISA (A) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or is
reasonably expected to occur, (B) no “accumulated funding deficiency” (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived, has occurred or is
reasonably expected to occur, and (C) neither the Company or any member of its Controlled Group has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA (other than
contributions to the Plan or premiums to the
Pension Benefit Guaranty Corporation in the ordinary course and without default) in respect of
a Plan (including a “multiemployer plan”, within the meaning of Section 4001(c)(3) of ERISA); and
(iv) each Plan that is intended to be qualified under Section 401(a) of the Code is so qualified
and nothing has occurred, whether by action or by failure to act, which would cause the loss of
such qualification.

 

-12-

 

(rr) No subsidiary of the Company is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution on such subsidiary’s capital
stock, from repaying to the Company any loans or advances to such subsidiary from the Company or
from transferring any of such subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as described in the Pricing Disclosure Package and the Offering
Memorandum.

(ss) The statistical and market-related data included in the Pricing Disclosure Package and
the Offering Memorandum and the consolidated financial statements of the Company and its
subsidiaries included in the Pricing Disclosure Package and the Offering Memorandum are based on or
derived from sources that the Company believes to be reliable in all material respects.

(tt) Neither the Company, the Guarantors nor any of their respective subsidiaries is, and
after giving effect to the offer and sale of the Notes and the application of the proceeds
therefrom as described under “Use of Proceeds” in each of the Pricing Disclosure Package and the
Offering Memorandum will be, an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.

(uu) Immediately after the consummation of the Transactions, the Company will be Solvent. As
used in this paragraph, the term “Solvent” means, with respect to a particular date, that on such
date (i) the present fair market value (or present fair saleable value) of the assets of the
Company are not less than the total amount required to pay the probable liabilities of the Company
on its total existing debts and liabilities (including contingent liabilities) as they become
absolute and matured, (ii) the Company is able to realize upon its assets and pay its debts and
other liabilities, contingent obligations and commitments as they mature and become due in the
normal course of business, (iii) the Company is not engaged in any business or transaction, and is
not about to engage in any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the prevailing practice in the
industry in which the Company is engaged, and (iv) the Company is not a defendant in any civil
action that would result in a judgment that the Company is or would become unable to satisfy. In
computing the amount of such contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that would be reasonably expected to become an actual
or matured liability.

(vv) Except as described in the Pricing Disclosure Package and the Offering Memorandum, there
are no contracts, agreements or understandings between the Company, any Guarantor and any person
granting such person the right to require the Company or any Guarantor to file a registration
statement under the Securities Act with respect to any securities of the Company or any Guarantor
(other than the Registration Rights Agreement) owned or to be owned by
such person or to require the Company or any Guarantor to include such securities in the
securities registered pursuant to the Registration Rights Agreement or in any securities being
registered pursuant to any other registration statement filed by the Company or any Guarantor under
the Securities Act.

 

-13-

 

(ww) Neither the Company nor any of its subsidiaries is a party to any contract, agreement or
understanding with any person (other than this Agreement and other than as contemplated by the
Company’s consulting fee agreement with Veronis Suhler Stevenson LLC as disclosed in the Pricing
Disclosure Package and the Offering Memorandum) that could give rise to a valid claim against any
of them or the Initial Purchasers for a brokerage commission, finder’s fee or like payment in
connection with the offering and sale of the Notes.

(xx) None of the transactions contemplated by this Agreement (including, without limitation,
the use of the proceeds from the sale of the Notes), will violate or result in a violation of
Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System.

(yy) The Company and its affiliates have not taken, directly or indirectly, any action
designed to or that has constituted or that could reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company or the Guarantors in
connection with the offering of the Notes.

(zz) [Reserved].

(aaa) Neither the Company nor any of its subsidiaries is in violation of or has received
notice of any violation with respect to any federal or state law relating to discrimination in the
hiring, promotion or pay of employees, nor any applicable federal or state wage and hour laws, nor
any state law precluding the denial of credit due to the neighborhood in which a property is
situated, the violation of any of which could reasonably be expected to have a Material Adverse
Affect.

(bbb) Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company
and the Guarantors, any director, officer, agent, employee or other person acting on behalf of the
Company, the Guarantors or any of their respective subsidiaries, has (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.

(ccc) Except for the embezzlement matter described in the Pricing Disclosure Package and the
Offering Memorandum, the operations of the Company and its subsidiaries are and have been conducted
at all times in compliance with applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company, threatened.

 

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(ddd) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee or controlled affiliate of the Company, excluding portfolio
companies of Veronis Suhler Stevenson LLC, other than the Company and its subsidiaries, or any of
its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any U.S. sanctions administered by
OFAC.

(eee) The New ABL Facility has been duly and validly authorized by the Company and the
Guarantors, and upon its execution and delivery and, assuming due authorization, execution and
delivery by the lenders party thereto, will constitute the valid and legally binding agreement of
the Company and the Guarantors, enforceable against the Company and the Guarantors in accordance
with its terms, subject to the Enforceability Exceptions.

3. Purchase of the Notes by the Initial Purchasers, Agreements to Sell, Purchase and Resell.

(a) The Company and the Guarantors, jointly and severally hereby agree, on the basis of the
representations, warranties, covenants and agreements of the Initial Purchasers contained herein
and subject to all the terms and conditions set forth herein, to issue and sell to the Initial
Purchasers and, upon the basis of the representations, warranties and agreements of the Company and
the Guarantors herein contained and subject to all the terms and conditions set forth herein, each
Initial Purchaser agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 96.942% of the principal amount thereof, the principal amount of Notes set forth opposite
the name of such Initial Purchaser in Schedule I hereto. The Company and the Guarantors shall not
be obligated to deliver any of the securities to be delivered hereunder except upon payment for all
of the securities to be purchased as provided herein.

(b) Each of the Initial Purchasers, severally and not jointly hereby represents and warrants
to the Company that it will offer the Notes for sale upon the terms and conditions set forth in
this Agreement and in the Pricing Disclosure Package. Each of the Initial Purchasers, severally
and not jointly, hereby represents and warrants to, and agrees with, the Company, on the basis of
the representations, warranties and agreements of the Company and the Guarantors, that such Initial
Purchaser: (i) is a QIB with such knowledge and experience in financial and business matters as are
necessary in order to evaluate the merits and risks of an investment in the Notes; (ii) is
purchasing the Notes pursuant to a private sale exempt from registration under the Securities Act;
(iii) in connection with the Exempt Resales, will solicit offers to buy the Notes only from, and
will offer to sell the Notes only to, the Eligible Purchasers in accordance with this Agreement and
on the terms contemplated by the Pricing Disclosure Package; and (iv) will not offer or sell the
Notes, nor has it offered or sold the Notes by, or otherwise engaged in, any form of general
solicitation or general advertising (within the meaning of Regulation D, including, but
not limited to, advertisements, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general advertising) and
will not engage in any directed selling efforts within the meaning of Rule 902 under the Securities
Act, in connection with the offering of the Notes. The Initial Purchasers have advised the Company
that they will offer the Notes to Eligible Purchasers at a price initially equal to 99.442% of the
principal amount thereof, plus accrued interest, if any, from the date of issuance of the Notes.
Such price may be changed by the Initial Purchasers at any time without notice.

 

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(c) The Initial Purchasers have not nor, prior to the later to occur of (A) the Closing Date
and (B) completion of the distribution of the Notes, will not, use, authorize use of, refer to or
distribute any material in connection with the offering and sale of the Notes other than (i) the
Preliminary Offering Memorandum, the Pricing Disclosure Package, the Offering Memorandum, (ii) any
written communication that contains no “issuer information” (as defined in Rule 433(h)(2) under the
Act) that was not included (including through incorporation by reference) in the Preliminary
Offering Memorandum or any Free Writing Offering Document listed on Schedule IV hereto, (iii) the
Free Writing Offering Documents listed on Schedule IV hereto, (iv) any written communication
prepared by such Initial Purchaser and approved by the Company in writing, or (v) any written
communication relating to or that contains the terms of the Notes and/or other information that was
included (including through incorporation by reference) in the Preliminary Offering Memorandum, the
Pricing Disclosure Package or the Offering Memorandum.

(d) Each of the Initial Purchasers hereby acknowledges that upon original issuance thereof,
and until such time as the same is no longer required under the applicable requirements of the
Securities Act, the Notes (and all securities issued in exchange therefore or in substitution
thereof) shall bear legends substantially in the forms as set forth in the “Notice to Investors”
section of the Pricing Disclosure Package and Offering Memorandum (along with such other legends as
the Company and its counsel deem necessary).

Each of the Initial Purchasers understands that the Company and, for purposes of the opinions
to be delivered to the Initial Purchasers pursuant to Sections 7(c) and 7(d) hereof, counsel to the
Company and counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations, warranties and agreements, and the Initial Purchasers hereby consent to
such reliance.

4. Delivery of the Notes and Payment Therefor. Delivery to the Initial Purchasers of and
payment for the Notes shall be made at the office of Cahill Gordon & Reindel LLP, at 10:00 A.M.,
New York City time, on February 17, 2011 (the “Closing Date”). The place of closing for the Notes
and the Closing Date may be varied by agreement between the Initial Purchasers and the Company.

The Notes will be delivered to the Initial Purchasers, or the Trustee as custodian for The
Depository Trust Company (“DTC”), against payment by or on behalf of the Initial Purchasers of the
purchase price therefor by wire transfer in immediately available funds, by causing DTC to credit
the Notes to the account of the Initial Purchasers at DTC. The Notes will be evidenced by one or
more global securities in definitive form (the “Global Notes”) and will be registered in the name
of Cede & Co. as nominee of DTC. The Notes to be delivered to the Initial
Purchasers shall be made available to the Initial Purchasers in New York City for inspection
and packaging not later than 10:00 A.M., New York City time, on the business day next preceding the
Closing Date.

 

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5. Agreements of the Company and the Guarantors. The Company and the Guarantors, jointly and
severally, agree with each of the Initial Purchasers as follows:

(a) The Company and the Guarantors will furnish to the Initial Purchasers, without charge,
within one business day of the date of the Offering Memorandum, such number of copies of the
Offering Memorandum as may then be amended or supplemented as they may reasonably request.

(b) The Company and the Guarantors will prepare the Offering Memorandum in a form approved by
the Initial Purchasers and will not make any amendment or supplement to the Pricing Disclosure
Package or to the Offering Memorandum of which the Initial Purchasers shall not previously have
been advised or to which they shall reasonably object after being so advised.

(c) The Company and each of the Guarantors consents to the use of the Pricing Disclosure
Package and the Offering Memorandum in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Notes are offered by the Initial Purchasers and by all dealers to whom
Notes may be sold, in connection with the offering and sale of the Notes.

(d) If, at any time prior to completion of the distribution of the Notes by the Initial
Purchasers to Eligible Purchasers, any event occurs or information becomes known that, in the
judgment of the Company or any of the Guarantors or in the opinion of counsel for the Initial
Purchasers, should be set forth in the Pricing Disclosure Package or the Offering Memorandum so
that the Pricing Disclosure Package or the Offering Memorandum, as then amended or supplemented,
does not include any untrue statement of material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the Pricing Disclosure Package
or the Offering Memorandum in order to comply with any law, the Company and the Guarantors will
forthwith prepare an appropriate supplement or amendment thereto, and will expeditiously furnish to
the Initial Purchasers and dealers a reasonable number of copies thereof.

(e) None of the Company nor any Guarantor will make any offer to sell or solicitation of an
offer to buy the Notes that would constitute a Free Writing Offering Document without the prior
consent of the Representatives, which consent shall not be unreasonably withheld or delayed. If at
any time following issuance of a Free Writing Offering Document any event occurred or occurs as a
result of which such Free Writing Offering Document conflicts with the information in the
Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum or, when
taken together with the information in the Preliminary Offering Memorandum, the Pricing Disclosure
Package or the Offering Memorandum, includes an untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading, as promptly as practicable after becoming aware
thereof, the Company will give notice thereof to the Initial Purchasers through the Representatives
and, if requested by the Representatives, will prepare and
furnish without charge to each Initial Purchaser a Free Writing Offering Document or other
document which will correct such conflict, statement or omission.

 

-17-

 

(f) Promptly from time to time to take such action as the Initial Purchasers may reasonably
request to qualify the Notes for offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Notes; provided that in connection therewith the Company shall
not be required to (i) qualify as a foreign corporation in any jurisdiction in which it would not
otherwise be required to so qualify, (ii) file a general consent to service of process in any such
jurisdiction, or (iii) subject itself to taxation in any jurisdiction in which it would not
otherwise be subject.

(g) For a period commencing on the date hereof and ending on the 90th day after the date of
the Offering Memorandum, the Company and the Guarantors agree not to, directly or indirectly, (i)
offer for sale, sell, or otherwise dispose of (or enter into any transaction or device that is
designed to, or would be expected to, result in the disposition by any person at any time in the
future of) any debt securities of the Company substantially similar to the Notes or securities
convertible into or exchangeable for such debt securities of the Company, or sell or grant options,
rights or warrants with respect to such debt securities of the Company or securities convertible
into or exchangeable for such debt securities of the Company, (ii) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such debt securities of the Company, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of debt securities of the
Company or other securities, in cash or otherwise, (iii) file or cause to be filed a registration
statement, including any amendments, with respect to the registration of debt securities of the
Company substantially similar to the Notes or securities convertible, exercisable or exchangeable
into debt securities of the Company, or (iv) publicly announce an offering of any debt securities
of the Company substantially similar to the Notes or securities convertible or exchangeable into
such debt securities, in each case without the prior written consent of Barclays Capital Inc., on
behalf of the Initial Purchasers, except in exchange for the Exchange Notes and the Exchange
Guarantees in connection with the Exchange Offer.

(h) So long as any of the Notes are outstanding, the Company and the Guarantors will, furnish
at their expense to the Initial Purchasers, and, upon reasonable request, to the holders of the
Notes and prospective purchasers of the Notes the information required by Rule 144A(d)(4) under the
Securities Act (if any).

(i) The Company and the Guarantors will apply the net proceeds from the sale of the Notes to
be sold by it hereunder substantially in accordance with the description set forth in the Pricing
Disclosure Package and the Offering Memorandum under the caption “Use of Proceeds.”

(j) The Company shall take such actions as it and the Representatives deem appropriate under
applicable laws to cause the Notes to be secured by perfected liens on the Notes Collateral (it
being understood that the Notes shall be secured by perfected second priority liens on the ABL
Collateral) to the extent and in the manner provided for in the Indenture and the Security
Documents and as described in the Pricing Disclosure Package and the Offering
Memorandum.

 

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(k) The Company, the Guarantors and their respective affiliates will not take, directly or
indirectly, any action designed to or that has constituted or that reasonably could be expected to
cause or result in the stabilization or manipulation of the price of any security of the Company or
the Guarantors in connection with the offering of the Notes.

(l) The Company and the Guarantors will use their best efforts to permit the Notes to be
eligible for clearance and settlement through DTC.

(m) The Company and the Guarantors will not, and will not permit any of their respective
affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Notes that have
been acquired by any of them, except for Notes purchased by the Company, the Guarantors or any of
their respective affiliates and resold in a transaction registered under the Securities Act.

(n) The Company and the Guarantors agree not to sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in the Securities Act) that would be
integrated with the sale of the Notes in a manner that would require the registration under the
Securities Act of the sale to the Initial Purchasers or the Eligible Purchasers of the Notes. The
Company and the Guarantors will take reasonable precautions designed to insure that any offer or
sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under
the Securities Act), of any Notes or any substantially similar security issued by the Company or
any Guarantor, within six months subsequent to the date on which the distribution of the Notes has
been completed (as notified to the Company by the Initial Purchasers), is made under restrictions
and other circumstances reasonably designed not to affect the status of the offer and sale of the
Notes in the United States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Securities Act, including any sales pursuant to Rule
144A under, or Regulations D or S of, the Securities Act.

(o) The Company and the Guarantors agree to comply in all material respects with all the terms
and conditions of the Registration Rights Agreement and all agreements set forth in the
representation letters of the Company and the Guarantors to DTC relating to the approval of the
Notes by DTC for “book entry” transfer.

(p) The Company and the Guarantors will do and perform all things required or necessary to be
done and performed under this Agreement by them prior to the Closing Date, and to satisfy all
conditions precedent to the Initial Purchasers’ obligations hereunder to purchase the Notes.

 

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6. Expenses. Whether or not the transactions contemplated by this Agreement are consummated
or this Agreement is terminated, the Company and the Guarantors, jointly and severally, agree, to
pay all expenses, costs, fees and taxes incident to and in connection with: (a) the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum, the Pricing Disclosure
Package and the Offering Memorandum (including, without limitation, financial statements and
exhibits) and all amendments and supplements thereto (including
the fees, disbursements and expenses of the Company’s and the Guarantors’ accountants and
counsel, but not, however, legal fees and expenses of the Initial Purchasers’ counsel incurred in
connection therewith); (b) the preparation, printing (including, without limitation, word
processing and duplication costs) and delivery of this Agreement, the Indenture, the Registration
Rights Agreement, the Security Documents, the Intercreditor Agreement, all Blue Sky memoranda and
all other agreements, memoranda, correspondence and other documents printed and delivered in
connection therewith and with the Exempt Resales (but not, however, legal fees and expenses of the
Initial Purchasers’ counsel incurred in connection with any of the foregoing other than fees of
such counsel plus reasonable disbursements incurred in connection with the preparation, printing
and delivery of such Blue Sky memoranda); (c) the issuance and delivery by the Company of the Notes
and by the Guarantors of the Guarantees and any taxes payable in connection therewith; (d) the
qualification of the Notes and Exchange Notes for offer and sale under the securities or Blue Sky
laws of the several states and any foreign jurisdictions as the Initial Purchasers may designate
(including, without limitation, the reasonable fees and disbursements of the Initial Purchasers’
counsel relating to such registration or qualification); (e) the furnishing of such copies of the
Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum, and
all amendments and supplements thereto, as may be reasonably requested for use in connection with
the Exempt Resales; (f) the preparation of certificates for the Notes (including, without
limitation, printing and engraving thereof); (g) the approval of the Notes by DTC for “book-entry”
transfer (including fees and expenses of counsel for the Initial Purchasers); (h) the rating of the
Notes and the Exchange Notes; (i) the obligations of the Trustee, any agent of the Trustee and the
counsel for the Trustee in connection with the Indenture, the Notes, the Guarantees, the Exchange
Notes, the Exchange Guarantees, the Security Documents and the Intercreditor Agreement; (j) the
performance by the Company and the Guarantors of their other obligations under this Agreement; (k)
all fees, costs and expenses (including the out-of-pocket fees and disbursements of counsel for the
Initial Purchasers related thereto) of creating and perfecting security interests and liens on the
Collateral, including all filing, recording and post-closing fees and expenses, related taxes and
title insurances premiums and fees with respect thereto, as set forth in the Security Documents;
and (l) all travel expenses (including expenses related to chartered aircraft) of each Initial
Purchaser and the Company’s officers and employees and any other expenses of each Initial Purchaser
and the Company in connection with attending or hosting meetings with prospective purchasers of the
Notes, and expenses associated with any electronic road show.

7. Conditions to Initial Purchasers’ Obligations. The respective obligations of the Initial
Purchasers hereunder are subject to the accuracy, when made and on and as of the Closing Date, of
the representations and warranties of the Company and the Guarantors contained herein, to the
performance by the Company and the Guarantors of their respective obligations hereunder, and to
each of the following additional terms and conditions:

(a) The Initial Purchasers shall not have discovered and disclosed to the Company on or prior
to the Closing Date that the Pricing Disclosure Package or the Offering Memorandum, or any
amendment or supplement thereto, contains an untrue statement of a fact which, in the opinion of
Cahill Gordon & Reindel LLP, counsel to the Initial Purchasers, is material or omits to state a
fact which, in the opinion of such counsel, is material and is necessary in order to make the
statements therein, in the light of the circumstances then prevailing, not misleading.

 

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(b) All corporate proceedings and other legal matters incident to the authorization, form and
validity of this Agreement, the Notes, the Guarantees, the Exchange Notes, the Exchange Guarantees,
the Registration Rights Agreement, the Indenture, the Security Documents, the Intercreditor
Agreement, the Pricing Disclosure Package and the Offering Memorandum, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Initial Purchasers, and the Company and
the Guarantors shall have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.

(c) Lowenstein Sandler PC and the General Counsel of the Company shall have furnished to the
Initial Purchasers their written opinions, as counsel to the Company and the Guarantors, addressed
to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchasers, substantially in the forms of Exhibit B and Exhibit C hereto,
respectively.

(d) The Initial Purchasers shall have received from Cahill Gordon & Reindel LLP, counsel for
the Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Notes, the Pricing Disclosure Package, the Offering Memorandum and other
related matters as the Initial Purchasers may reasonably require, and the Company shall have
furnished to such counsel such documents and information as such counsel reasonably requests for
the purpose of enabling them to pass upon such matters.

(e) At the time of execution of this Agreement, the Initial Purchasers shall have received
from each of Whitley Penn LLP, the current independent registered accountant of the Company and the
old independent registered accountant of Voyager, Grant Thornton LLP, the old independent
registered accountant of VSS-Cambium Holdings, LLC (“VSS”), and Ernst & Young LLP, the predecessor
independent registered accountant of VSS, letters, in form and substance reasonably satisfactory to
the Initial Purchasers, addressed to the Initial Purchasers and dated the date hereof (i)
confirming that they are independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective dates as of which
specified financial information is given in the Pricing Disclosure Package, as of a date not more
than three days prior to the date hereof), the conclusions and findings of such firm with respect
to the financial information and (iii) covering such other matters as are ordinarily covered by
accountants’ “comfort letters” to underwriters in connection with registered public offerings.

(f) With respect to the letters of Whitley Penn LLP, Grant Thornton LLP and Ernst & Young LLP
referred to in the preceding paragraph and delivered to the Initial Purchasers concurrently with
the execution of this Agreement (the “initial letter”), the Company shall have furnished to the
Initial Purchasers a “bring-down letter” of such accountants, addressed to the Initial Purchasers
and dated the Closing Date (i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the Closing Date (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
each of the Pricing Disclosure Package or the Offering Memorandum, as of a date not more than
three days prior to the date of the Closing Date), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the initial letter, and (iii)
confirming in all material respects the conclusions and findings set forth in the initial letter.

 

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(g) (i) Neither the Company, any Guarantor nor any of their respective subsidiaries shall have
sustained, since the date of the latest audited financial statements included in the Pricing
Disclosure Package and the Offering Memorandum, any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, or (ii) since such date, there shall not
have been any change in the capital stock or long-term debt of the Company, any Guarantor or any of
their respective subsidiaries or any change, or any development involving a prospective change, in
or affecting the condition (financial or otherwise), results of operations, stockholders’ equity,
properties, management, business or prospects of the Company, the Guarantors and their respective
subsidiaries, taken as a whole, the effect of which, in any such case described in clause (i) or
(ii), is, individually or in the aggregate, in the judgment of the Representatives, so material and
adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of
the Notes being delivered on the Closing Date on the terms and in the manner contemplated in the
Pricing Disclosure Package and the Offering Memorandum.

(h) Except as otherwise provided for in the Security Documents, the Intercreditor Agreement,
the Indenture or the other documents entered into pursuant to the Transactions, the Representatives
and the Collateral Agent shall have received each of the Security Documents and the Intercreditor
Agreement and all other certificates, agreements or instruments necessary to perfect the Collateral
Agent’s security interest in all of the Collateral, including but not limited to, control
agreements, stock certificates accompanied by instruments of transfer and stock powers undated and
endorsed in blank, Uniform Commercial Code financing statements in appropriate form for filing and
filings with the United States Patent and Trademark Office in appropriate form for filing; each
such document executed by the Company and each other party thereto, and each such document shall be
in full force and effect and evidence that all of the liens on the Collateral other than Permitted
Liens have been released. The Representatives shall also have received (i) certified copies of
Uniform Commercial Code financing statements, tax and judgment lien searches and lien search with
the U.S. Patent and Trademark Office, or equivalent reports or searches, each of a recent date
listing all effective financing statements, lien notices or comparable documents that name the
Company or any Guarantor as debtor and that are filed in those state jurisdictions in which the
Company or Guarantors are organized or maintain their chief executive office and such other
searches that the Representatives deems necessary or appropriate, none of which encumber the
Collateral covered or intended to be covered by the Security Documents (other than Permitted Liens)
and (ii) acceptable evidence of payment or arrangements for payment by the Company and the
Guarantors of all applicable recording taxes, fees, charges, costs and expenses required for the
recording of the Security Documents.

 

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(i) The Company and each Guarantor shall have furnished or caused to be furnished to the
Initial Purchasers dated as of the Closing Date a certificate of the Chief Executive Officer and
Chief Financial Officer of the Company and each Guarantor, or other officers satisfactory to the
Initial Purchasers, as to such matters as the Representatives may reasonably request, including,
without limitation, a statement that:

(i) The representations, warranties and agreements of the Company and the
Guarantors in Section 2 are true and correct in all material respects (except to the
extent such representation and warranty is qualified as to materiality, in which
case such representation and warranty shall be accurate in all respects) on and as
of the Closing Date, and the Company has complied in all material respects (except
to the extent such representation and warranty is qualified as to materiality, in
which case such representation and warranty shall be accurate in all respects) with
all its agreements contained herein and satisfied all the conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date; and

(ii) They have examined the Pricing Disclosure Package and the Offering
Memorandum, and, in their opinion, (A) the Pricing Disclosure Package, as of the
Applicable Time, and the Offering Memorandum, as of its date and as of the Closing
Date, did not and do not contain any untrue statement of a material fact and did not
and do not omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading and (B)
since the date of the Pricing Disclosure Package and the Offering Memorandum, no
event has occurred which should have been set forth in a supplement or amendment to
the Pricing Disclosure Package and the Offering Memorandum.

(j) Subsequent to the earlier of the Applicable Time and the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating accorded the Company’s debt
securities by any “nationally recognized statistical rating organization,” as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company’s debt securities.

(k) The Notes shall be eligible for clearance and settlement through DTC.

(l) The Company and the Guarantors shall have executed and delivered the Registration Rights
Agreement, and the Initial Purchasers shall have received an original copy thereof, duly executed
by the Company and the Guarantors.

(m) The Company, the Guarantors and the Trustee shall have executed and delivered the
Indenture, and the Initial Purchasers shall have received an original copy thereof, duly executed
by the Company, the Guarantors and the Trustee.

 

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(n) Subsequent to the execution and delivery of this Agreement there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock Exchange, the
NASDAQ or the NYSE Amex Equities or in the over-the-counter market, (ii) trading in any securities
of the Company on any exchange or in the over-the-counter market, in each case shall have been
suspended or materially limited or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any such exchange or such
market by the Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (iii) a general moratorium on commercial banking
activities shall have been declared by federal or state authorities, (iv) the United States
shall have become engaged in hostilities, there shall have been an escalation in hostilities
involving the United States, or there shall have been a declaration of a national emergency or war
by the United States, or (v) there shall have occurred such a material adverse change in general
economic, political or financial conditions, including, without limitation, as a result of
terrorist activities after the date hereof (or the effect of international conditions on the
financial markets in the United States shall be such), as to make it, in the judgment of the
Representatives, impracticable or inadvisable to proceed with the offering or delivery of the Notes
being delivered on the Closing Date on the terms and in the manner contemplated in the Offering
Memorandum or that, in the judgment of the Representatives, could materially and adversely affect
the financial markets or the markets for the Notes and other debt securities.

(o) Concurrently with or prior to the issue and sale of the Notes by the Company, the Company
shall have entered into the New ABL Facility, in form and substance reasonably satisfactory to the
Representatives; the Representatives shall have received conformed counterparts thereof and all
other documents and agreements entered into and received thereunder in connection with the closing
of the New ABL Facility in form and substance reasonably satisfactory to the Representatives.

(p) There shall exist at and as of the Closing Date no condition that would constitute a
default (or an event that with notice or the lapse of time, or both, would constitute a default)
under the Indenture or the New ABL Facility as in effect at the Closing Date (or an event that with
notice or lapse of time, or both, would constitute such a default or material breach). On the
Closing Date, the New ABL Facility shall be in full force and effect, shall conform in all material
respects to the description thereof contained in the Pricing Disclosure Package and the Offering
Memorandum and shall not have been modified.

(q) The Company shall have furnished to the Initial Purchasers a certificate, dated as of the
Closing Date, of the Chief Financial Officer of the Company as to the Solvency of the Company
following the consummation of the Transactions.

(r) On or prior to the Closing Date, the Company and the Guarantors shall have furnished to
the Initial Purchasers such further certificates and documents as the Initial Purchasers may
reasonably request.

All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Initial Purchasers.

 

-24-

 

8. Indemnification and Contribution.

(a) The Company and each Guarantor, hereby agree, jointly and severally, to indemnify and hold
harmless each Initial Purchaser, its affiliates, directors, officers and employees and each person,
if any, who controls any Initial Purchaser within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Notes), to which that Initial
Purchaser, affiliate, director, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Free Writing Offering Document, the Preliminary Offering Memorandum, the
Pricing Disclosure Package or the Offering Memorandum or in any amendment or supplement thereto,
(B) in any Blue Sky application or other document prepared or executed by the Company or any
Guarantor (or based upon any written information furnished by the Company or any Guarantor)
specifically for the purpose of qualifying any or all of the Notes under the securities laws of any
state or other jurisdiction (any such application, document or information being hereinafter called
a “Blue Sky Application”), or (C) in any materials or information provided to investors by, or with
the approval of, the Company or any Guarantor in connection with the marketing of the offering of
the Notes (“Marketing Materials”), including any road show or investor presentations made to
investors by the Company (whether in person or electronically), or (ii) the omission or alleged
omission to state in any Free Writing Offering Document, the Preliminary Offering Memorandum, the
Pricing Disclosure Package or the Offering Memorandum, or in any amendment or supplement thereto,
or in any Blue Sky Application or in any Marketing Materials, any material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Initial Purchaser and each such director, officer, employee or
controlling person promptly upon demand for any legal or other expenses reasonably incurred by that
Initial Purchaser, director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company and the Guarantors
shall not be liable in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Offering Memorandum, the Pricing Disclosure
Package or Offering Memorandum, or in any such amendment or supplement thereto, or in any Blue Sky
Application or in any Marketing Materials, in reliance upon and in conformity with written
information concerning such Initial Purchaser furnished to the Company through the Representatives
by or on behalf of any Initial Purchaser specifically for inclusion therein, which information
consists solely of the information specified in Section 8(e). The foregoing indemnity agreement is
in addition to any liability that the Company or the Guarantors may otherwise have to any Initial
Purchaser or to any affiliate, director, officer, employee or controlling person of that Initial
Purchaser.

(b) Each Initial Purchaser, severally and not jointly, hereby agrees to indemnify and hold
harmless the Company, each Guarantor, their respective officers and employees, each of their
respective directors, and each person, if any, who controls the Company or any Guarantor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the
Company, any Guarantor or any such director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Free Writing Offering Document, Preliminary Offering Memorandum,
the Pricing Disclosure Package or the Offering Memorandum or in any amendment or supplement
thereto, (B) in any Blue Sky Application, or (C) in any Marketing Materials, or (ii) the omission
or alleged omission to state in any Free Writing Offering Document, Preliminary Offering
Memorandum, the Pricing Disclosure Package or the Offering
Memorandum, or in any amendment or supplement thereto, or in any Blue Sky Application or in
any Marketing Materials any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information concerning such Initial Purchaser
furnished to the Company through the Representatives by or on behalf of that Initial Purchaser
specifically for inclusion therein, which information is limited to the information set forth in
Section 8(e). The foregoing indemnity agreement is in addition to any liability that any Initial
Purchaser may otherwise have to the Company, any Guarantor or any such director, officer, employee
or controlling person.

 

-25-

 

(c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim
or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability that it may have under this
Section 8 except to the extent it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure and; provided, further, that the failure to notify
the indemnifying party shall not relieve it from any liability that it may have to an indemnified
party otherwise than under this Section 8. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the Initial Purchasers shall have the
right to employ counsel to represent jointly the Initial Purchasers and their respective directors,
officers, employees and controlling persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the Initial Purchasers against the Company or
any Guarantor under this Section 8, if (i) the Company, the Guarantors and the Initial Purchasers
shall have so mutually agreed; (ii) the Company and the Guarantors have failed within a reasonable
time to retain counsel reasonably satisfactory to the Initial Purchasers; (iii) the Initial
Purchasers and their respective directors, officers, employees and controlling persons shall have
reasonably concluded, based on the advice of counsel, that there may be legal defenses available to
them that are different from or in addition to those available to the Company and the Guarantors;
or (iv) the named parties in any such proceeding (including any impleaded parties) include both the
Initial Purchasers or their respective directors, officers, employees or controlling persons, on
the one hand, and the Company and the Guarantors, on the other hand, and representation of both
sets of parties by the same counsel would present a conflict due to actual or potential differing
interests between them, and in any such event the fees and expenses of such separate counsel shall
be paid by the Company and the Guarantors. No indemnifying party shall (x) without the prior
written consent of the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or potential parties
to such claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding and does not include a statement as to, or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party, or (y) be liable for any
settlement of any such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a
final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by reason of such
settlement or judgment.

 

-26-

 

(d) If the indemnification provided for in this Section 8 shall for any reason be unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in respect of
any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect
the relative benefits received by the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other, from the offering of the Notes, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other, with
respect to the statements or omissions that resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors, on the one hand, and the Initial Purchasers,
on the other, with respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Notes purchased under this Agreement (before deducting
expenses) received by the Company and the Guarantors, on the one hand, and the total underwriting
discounts and commissions received by the Initial Purchasers with respect to the Notes purchased
under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the
Notes under this Agreement as set forth on the cover page of the Offering Memorandum. The relative
fault shall be determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company, the Guarantors, or the Initial Purchasers, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or prevent such
statement or omission. For purposes of the preceding two sentences, the net proceeds deemed to be
received by the Company shall be deemed to be also for the benefit of the Guarantors, and
information supplied by the Company shall also be deemed to have been supplied by the Guarantors.
The Company, the Guarantors, and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section 8(d) shall be deemed
to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the net proceeds
from the sale to Eligible Purchasers of the Notes initially purchased by it exceeds the amount
of any damages that such Initial Purchaser has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The Initial Purchasers’ obligations to contribute as provided in this Section 8(d) are several in
proportion to their respective purchase obligations and not joint.

 

-27-

 

(e) The Initial Purchasers severally confirm and the Company and the Guarantors acknowledge
and agree that the statements with respect to the offering of the Notes by the Initial Purchasers
set forth in the sixth paragraph and in the fourth sentence of the seventh paragraph of the section
entitled “Plan of Distribution” in the Pricing Disclosure Package and the Offering Memorandum are
correct and constitute the only information concerning such Initial Purchasers furnished in writing
to the Company or any Guarantor by or on behalf of the Initial Purchasers specifically for
inclusion in the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering
Memorandum or in any amendment or supplement thereto.

9. Defaulting Initial Purchasers.

(a) If, on the Closing Date, any Initial Purchaser defaults in its obligations to purchase the
Notes that it has agreed to purchase under this Agreement, the remaining non-defaulting Initial
Purchasers may in their discretion arrange for the purchase of such Notes by the non-defaulting
Initial Purchasers or other persons satisfactory to the Company on the terms contained in this
Agreement. If, within 36 hours after any such default by any Initial Purchaser, the non-defaulting
Initial Purchasers do not arrange for the purchase of such Notes, then the Company shall be
entitled to a further period of 36 hours within which to procure other persons satisfactory to the
non-defaulting Initial Purchasers to purchase such Notes on such terms. In the event that within
the respective prescribed periods, the non-defaulting Initial Purchasers notify the Company that
they have so arranged for the purchase of such Notes, or the Company notifies the non-defaulting
Initial Purchasers that it has so arranged for the purchase of such Notes, either the
non-defaulting Initial Purchasers or the Company may postpone the Closing Date for up to seven full
business days in order to effect any changes that in the opinion of counsel for the Company or
counsel for the Initial Purchasers may be necessary in the Pricing Disclosure Package, the Offering
Memorandum or in any other document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Pricing Disclosure Package or the Offering Memorandum that effects
any such changes. As used in this Agreement, the term “Initial Purchaser” includes, for all
purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule
I hereto that, pursuant to this Section 9, purchases Notes that a defaulting Initial Purchaser
agreed but failed to purchase.

(b) If, after giving effect to any arrangements for the purchase of the Notes of a defaulting
Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as
provided in paragraph (a) above, the aggregate principal amount of such Notes that remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Notes, then
the Company shall have the right to require each non-defaulting Initial Purchaser to purchase the
principal amount of Notes that such Initial Purchaser agreed to purchase hereunder plus such
Initial Purchaser’s pro rata share (based on the principal amount of Notes that
such Initial Purchaser agreed to purchase hereunder) of the Notes of such defaulting Initial Purchaser
or Initial Purchasers for which such arrangements have not been made; provided that the
non-defaulting Initial Purchasers shall not be obligated to purchase more than 110% of the
aggregate principal amount of Notes that it agreed to purchase on the Closing Date pursuant to the
terms of Section 3.

 

-28-

 

(c) If, after giving effect to any arrangements for the purchase of the Notes of a defaulting
Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as
provided in paragraph (a) above, the aggregate principal amount of such Notes that remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all the Notes, or if the
Company shall not exercise the right described in paragraph (b) above, then this Agreement shall
terminate without liability on the part of the non-defaulting Initial Purchasers. Any termination
of this Agreement pursuant to this Section 9 shall be without liability on the part of the Company
or the Guarantors, except that the Company and each of the Guarantors will continue to be liable
for the payment of expenses as set forth in Sections 6 and 11 and except that the provisions of
Section 8 shall not terminate and shall remain in effect.

(d) Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it
may have to the Company, the Guarantors or any non-defaulting Initial Purchaser for damages caused
by its default.

10. Termination. The obligations of the Initial Purchasers hereunder may be terminated by the
Initial Purchasers by notice given to and received by the Company prior to delivery of and payment
for the Notes if, prior to that time, any of the events described in Sections 7(g), (j) or (n)
shall have occurred or if the Initial Purchasers shall decline to purchase the Notes for any reason
permitted under this Agreement.

11. Reimbursement of Initial Purchasers’ Expenses. If (a) the Company for any reason fails to
tender the Notes for delivery to the Initial Purchasers, or (b) the Initial Purchasers shall
decline to purchase the Notes for any reason permitted under this Agreement (other than solely
resulting from a failure to satisfy the condition under clause 7(n)(i), (iii), (iv) or (v)), the
Company and the Guarantors shall reimburse the Initial Purchasers for all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of counsel for the Initial Purchasers)
incurred by the Initial Purchasers in connection with this Agreement and the proposed purchase of
the Notes, and upon demand the Company and the Guarantors shall pay the full amount thereof to the
Initial Purchasers. If this Agreement is terminated pursuant to Section 9 by reason of the default
of one or more Initial Purchasers, the Company and the Guarantors shall not be obligated to
reimburse any Initial Purchaser on account of those expenses.

12. Notices, etc. All statements, requests, notices and agreements hereunder shall be in
writing, and:

(a) if to any Initial Purchaser, shall be delivered or sent by hand delivery, mail, telex,
overnight courier or facsimile transmission to Barclays Capital Inc., 745 Seventh Avenue, New York,
New York 10019, Attention: Syndicate Registration with a copy to Cahill Gordon & Reindel LLP, 80
Pine Street, New York, New York 10005, Attention: Stuart G. Downing (Fax: 212-378-2409), and with a
copy, in the case of any notice pursuant to Section 8(c), to the Director of
Litigation, Office of the General Counsel, Barclays Capital Inc., 745 Seventh Ave., New York,
New York 10019;

 

-29-

 

(b) if to the Company or any Guarantor, shall be delivered or sent by mail, telex, overnight
courier or facsimile transmission to Cambium Learning Group, Inc. at 17855 N. Dallas Pkwy, Suite
400, Dallas, Texas 75287, Attention: Todd W. Buchardt, General Counsel (Fax: 214-424-6425), with a
copy to Lowenstein Sandler PC, 1251 Avenue of the Americas, New York, New York 10020, Attention:
Steve E. Siesser (Fax: 973-597-2507); provided, however, that any notice to an Initial Purchaser
pursuant to Section 8(c) shall be delivered or sent by hand delivery, mail, telex or facsimile or
electronic transmission to such Initial Purchaser at its address set forth in its acceptance telex
to Barclays Capital Inc., which address will be supplied to any other party hereto by Barclays
Capital Inc. upon request. Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Company shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Initial Purchasers by Barclays Capital
Inc.

13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers, the Company, the Guarantors and their respective
successors. This Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that the representations, warranties, indemnities and agreements of the
Company and the Guarantors contained in this Agreement shall also be deemed to be for the benefit
of directors, officers and employees of the Initial Purchasers and each person or persons, if any,
controlling any Initial Purchaser within the meaning of Section 15 of the Securities Act. Nothing
in this Agreement is intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein.

14. Survival. The respective indemnities, rights of contribution, representations, warranties
and agreements of the Company, the Guarantors and the Initial Purchasers contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive
the delivery of and payment for the Notes and shall remain in full force and effect, regardless of
any termination of this Agreement or any investigation made by or on behalf of any of them or any
person controlling any of them.

15. Definition of the Terms “Business Day”, “Affiliate”, and “Subsidiary”. For purposes of
this Agreement, (a) “business day” means any day on which the New York Stock Exchange, Inc. is open
for trading, and (b) “affiliate” and “subsidiary” have the meanings set forth in Rule 405 under the
Securities Act.

16. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

17. Waiver of Jury Trial. The Company and each of the Initial Purchasers hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in
any legal proceeding arising out of or relating to this Agreement or the transactions contemplated
hereby.

 

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18. No Fiduciary Duty. The Company and the Guarantors acknowledge and agree that in
connection with this offering, or any other services the Initial Purchasers may be deemed to be
providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between
the parties or any oral representations or assurances previously or subsequently made by the
Initial Purchasers: (a) no fiduciary or agency relationship between the Company, any Guarantor and
any other person, on the one hand, and the Initial Purchasers, on the other, exists; (b) the
Initial Purchasers are not acting as advisors, expert or otherwise, to the Company or the
Guarantors, including, without limitation, with respect to the determination of the purchase price
of the Notes, and such relationship between the Company and the Guarantors, on the one hand, and
the Initial Purchasers, on the other, is entirely and solely commercial, based on arms-length
negotiations; (c) any duties and obligations that the Initial Purchasers may have to the Company
and the Guarantors shall be limited to those duties and obligations specifically stated herein; (d)
the Initial Purchasers and their respective affiliates may have interests that differ from those of
the Company and the Guarantors; and (e) the Company and the Guarantors have consulted their own
legal and financial advisors to the extent they deemed appropriate. The Company and the Guarantors
hereby waive any claims that the Company and the Guarantors may have against the Initial Purchasers
with respect to any breach of fiduciary duty in connection with the Notes.

19. Counterparts. This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be deemed to be an original but
all such counterparts shall together constitute one and the same instrument.

20. Headings. The headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.

 

-31-

 

If the foregoing correctly sets forth the agreement between the Company, the Guarantors, and
the Initial Purchasers, please indicate your acceptance in the space provided for that purpose
below.

	 	 	 	 	 
	 	Very truly yours,

CAMBIUM LEARNING GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	GUARANTORS:

VSS-CAMBIUM HOLDINGS II CORP.

 	 
	 	By:  	/s/ Scott J. Troeller
 	 
	 	 	Name:  	Scott J. Troeller 	 
	 	 	Title:  	President 	 
	 	 	 	 	 
	 	VSS-CAMBIUM HOLDINGS, LLC
 	 
	 	By:  	VSS-Cambium Holdings II Corp., its sole member
 	 

	 	 	 	 	 
	 	By:  	                     /s/ Scott J. Troeller
 	 
	 	 	Name:  	Scott J. Troeller 	 
	 	 	Title:  	President 	 

	 	 	 	 	 
	 	VSS-CAMBIUM HOLDINGS IV, LLC
 	 
	 	By:  	VSS-Cambium Holdings, LLC, its sole member
 	 
	 	 	By: VSS-Cambium Holdings II Corp., its sole member 	 

	 	 	 	 	 
	 	By:  	                                               /s/ Scott J. Troeller
 	 
	 	 	Name:  	Scott J. Troeller 	 
	 	 	Title:  	President 	 

	 	 	 	 	 
	 	CAMBIUM LEARNING, INC.

 	 
	 	By:  	                 /s/ Ronald Klausner
 	 
	 	 	Name:  	Ronald Klausner 	 
	 	 	Title:  	Chief Executive Officer 	 

 

-32-

 

	 	 	 	 	 
	 	KURZWEIL/INTELLITOOLS, INC.

 	 
	 	By:  	/s/ Ronald Klausner
 	 
	 	 	Name:  	Ronald Klausner 	 
	 	 	Title:  	Chief Executive Officer 	 
	 	 	 	 	 
	 	CAMBIUM EDUCATION, INC.

 	 
	 	By:  	/s/ Ronald Klausner
 	 
	 	 	Name:  	Ronald Klausner 	 
	 	 	Title:  	Chief Executive Officer 	 
	 	 	 	 	 
	 	LAZEL, INC.

 	 
	 	By:  	/s/ Ronald Klausner
 	 
	 	 	Name:  	Ronald Klausner 	 
	 	 	Title:  	Chief Executive Officer 	 

 

-33-

 

Accepted:

BARCLAYS CAPITAL INC.

BMO CAPITAL MARKETS CORP.

By BARCLAYS CAPITAL INC., as Authorized Representative

	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	By BMO CAPITAL MARKETS CORP., as Authorized Representative	 	 
	 
	 	 	 	 	 	 
	By
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

 

-34-

 

SCHEDULE I

	 	 	 	 	 
	 	 	Principal	 
	 	 	Amount of	 
	 	 	Notes	 
	 	 	to be	 
	Initial Purchasers	 	Purchased	 
	Barclays Capital Inc.
	 	$	105,000,000	 
	BMO Capital Markets Corp.
	 	$	70,000,000	 
	 
	 	 	 
	Total
	 	$	175,000,000	 
	 
	 	 	 

 

Schedule I-1

 

SCHEDULE II

LIST OF GUARANTORS

VSS-Cambium Holdings II Corp.

VSS-Cambium Holdings, LLC

VSS-Cambium Holdings IV, LLC

Cambium Learning, Inc.

Kurzweil/Intellitools, Inc.

Cambium Education, Inc.

LAZEL, Inc.

 

Schedule II-1

 

SCHEDULE III

CAMBIUM LEARNING GROUP, INC.

PRICING TERM SHEET

 

Schedule III-1

 

SCHEDULE IV

A. Insert list of each document provided as an amendment or supplement to the Preliminary
Offering Memorandum.

(i) Pricing term sheet substantially in the form attached hereto as Schedule III.

B. Insert list of any “road show” materials that are Free Writing Offering Documents.

(i) None

 

Schedule IV-1

 

Exhibit A

Form of Registration Rights Agreement

 

Exhibit A-1

 

Exhibit B

[Lowenstein Sandler PC Form of Opinion]

Lowenstein Sandler PC shall have furnished to the Initial Purchasers its written opinion, as
counsel to the Company and the Guarantors, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance reasonably satisfactory to the Representatives, to the effect
that:

(a) Each of the Company and the Guarantors is validly existing and in good standing as a
corporation or other business entity under the laws of its jurisdiction of organization. Each of
the Company and the Guarantors is duly qualified to do business and in good standing as a foreign
corporation or other business entity in each jurisdiction listed on Annex I to the opinion. Each
of the Company and the Guarantors has all power and authority necessary to own or hold its
properties and to conduct the businesses as described in the Pricing Disclosure Package and the
Offering Memorandum;

(b) No registration under the Securities Act of the Notes or the Guarantees, and no
qualification of the Indenture under the Trust Indenture Act with respect thereto, is required for
the sale of the Notes and the Guarantees to you as contemplated hereby or for the initial resale of
Notes by you in the Exempt Resales, assuming (i) the accuracy of the Initial Purchasers’
representations in this Agreement and (ii) the accuracy of the Company’s and the Guarantors’
representations in this Agreement;

(c) The Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Registration Rights Agreement, the Indenture, the
Notes, the Exchange Notes, the Security Documents and the Intercreditor Agreement (the “Transaction
Documents”) and to issue and sell the Notes and the Exchange Notes. Each Guarantor has all
requisite corporate power and authority to execute, deliver and perform its obligations under this
Agreement, the Registration Rights Agreement, the Indenture, the Guarantees, the Exchange
Guarantees, the Security Documents and the Intercreditor Agreement;

(d) This Agreement has been duly authorized, executed and delivered by the Company and each of
the Guarantors;

(e) The Indenture has been duly authorized by all necessary corporate action of the Company,
has been duly executed and delivered by the Company, and is the legally valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms;

(f) The Indenture has been duly authorized by all necessary corporate action of each of the
Guarantors, and has been duly executed and delivered by each of the Guarantors. The Indenture,
including the Guarantee contained therein, is the legally valid and binding agreement of each of
the Guarantors, enforceable against each of them in accordance with its terms;

(g) The Notes have been duly authorized by all necessary corporate action of the Company and,
when executed, issued and authenticated in accordance with the terms of the Indenture and delivered
to and paid for by you in accordance with the terms of the Agreement, will
be the legally valid and binding obligations of the Company, enforceable against the Company
in accordance with their terms;

 

Exhibit B-1

 

(h) The Exchange Notes have been duly authorized by the Company;

(i) The Guarantees of the Exchange Notes have been duly authorized by the Guarantors;

(j) The Registration Rights Agreement has been duly authorized, executed and delivered by the
Company and each of the Guarantors and, assuming the due authorization, execution and delivery
thereof by the Initial Purchasers, is the legally valid and binding agreement of the Company and
each of the Guarantors, enforceable against the Company and each of the Guarantors in accordance
with its terms;

(k) Each of the Security Documents has been duly authorized by the Company or the applicable
Guarantor, as appropriate, and when executed and delivered by the Company or the applicable
Guarantor and, the Collateral Agent, will constitute the legal, valid, binding and enforceable
agreement of the Company or the applicable Guarantor;

(l) The Intercreditor Agreement has been duly and validly authorized by the Company and the
Guarantors, and upon its execution and delivery, assuming due authorization, execution and delivery
by the Collateral Agent and the Administrative Agent, will constitute the valid and legally binding
agreement of the Company and the Guarantors, enforceable against the Company and the Guarantors in
accordance with its terms;

(m) The execution, delivery and performance by the Company and each Guarantor of the
Transaction Documents, the Guarantees and the Exchange Guarantees to which each is a party and the
issuance and sale of the Notes and the Guarantees by the Company and the Guarantors to the Initial
Purchasers pursuant to this Agreement will not (i) conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, or, other than pursuant to the
Security Documents, result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of the Guarantors pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument listed on Annex I hereto,
(ii) result in any violation of the provisions of the certificate of incorporation, by-laws,
certificate of formation or limited liability company agreement of the Company or any of the
Guarantors or (iii) result in the violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority of which we have
knowledge, except in the case of clauses (i) and (iii) above, for any such conflict, breach,
violation, default, lien, charge or encumbrance that would not, singly or in the aggregate, have a
Material Adverse Effect;

(n) No consent, approval, authorization or order of, or filing, registration or qualification
with any court or governmental agency or body having jurisdiction over the Company and the
Guarantors is required for the issue and sale of the Notes and the Guarantees, the execution,
delivery and performance by the Company and the Guarantors of each of the Transaction Documents,
the Guarantees and the Exchange Guarantee, the granting of the security interest in the Collateral
and the consummation of the transactions contemplated hereby and thereby, except for
(i) the filing of a registration statement by the Company with the Commission pursuant to the
Securities Act as required by the Registration Rights Agreement, (ii) such consents, approvals,
authorizations, orders, filings, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of the Notes by the
Initial Purchasers and (iii) the filing of financing statements under the Uniform Commercial Code
as from time to time in effect in the relevant jurisdictions and any filing to be made in the
United States Patent and Trademark Office or the United States Copyright Office.

 

Exhibit B-2

 

(o) The Security Documents, when executed and delivered in connection with the sale of the
Notes, will be effective to create in favor of the Collateral Agent for the benefit of the Secured
Parties, the security interests in the Collateral owned by the Company and the Guarantors in which
security interests may be created under Article 9 of the Uniform Commercial Code as in effect in
the State of New York (“New York Article 9”);

(p) Upon the proper filing of the financing statements attached hereto as Exhibit
 _____ 

(collectively, the “Financing Statements”) in the office of the Secretary of State of the State of
Delaware (the “Delaware Filing Office”), the security interest in favor of the Collateral Agent of
the benefit of the Secured Parties in the Collateral granted by the Company and the Guarantors
under the Security Documents will be perfected to the extent a security interest in such Collateral
can be perfected under Article 9 of the Uniform Commercial Code of the State of Delaware (“Delaware
Article 9”) by the filing of a financing statement in the Delaware Filing Office;

(q) Upon the proper filing of the financing statements attached hereto as Exhibit
 _____ 

(the
“Financing Statement”) in the office of the Secretary of State of the State of Colorado (the
“Colorado Filing Office”), the security interest in favor of the Collateral Agent of the benefit of
the Secured Parties in the Collateral granted by the Company and the Guarantors under the Security
Documents will be perfected to the extent a security interest in such Collateral can be perfected
under Article 9 of the Uniform Commercial Code of the State of Colorado (“Colorado Article 9”) by
the filing of a financing statement in the Colorado Filing Office;

(r) Assuming that the certificates evidencing the Pledged Equity Interests (as defined in the
Security Agreement), consisting of the outstanding capital stock of the Guarantors and listed on
Exhibit
 _____ 

to the Security Agreement, that constitute “certificated securities” (within the meaning
of Section 8-102(a)(4) of the UCC) indorsed by an appropriate person in blank or accompanied by
instruments of transfer or assignment in blank duly executed by an appropriate person, have been
delivered on or prior to the date hereof to the Collateral Agent, and have been continuously held
by the Collateral Agent since such delivery, in each case in the State of New York, (i) the
security interest in favor of the Collateral Agent of the benefit of the Secured Parties in such
Pledged Equity Interests is perfected to the extent it can be under the UCC, (ii) the Collateral
Agent has, for the benefit of the Secured Parties (as defined in the Security Agreement), control
(within the meaning of Section 8-106 of the UCC) of such Pledged Equity Interests and (iii)
assuming the absence of notice of any adverse claim (within the meaning of Section 8-102(a)(1) of
the UCC) thereto on the part of any Secured Party and the Secured Parties have given value (within
the meaning of Section 1-201(44) of the UCC), the Collateral Agent will be a protected purchaser
(within the meaning of Section 8-303(a) of the UCC) of such security interest in such Pledged
Equity Interests;

 

Exhibit B-3

 

(s) Neither the consummation of the transactions contemplated by the Agreement nor the sale,
issuance, execution or delivery of the Notes will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System;

(t) Neither the Company nor any Guarantor is, and after giving effect to the offer and sale of
the Notes and the application of the proceeds therefrom as described under “Use of Proceeds” in
each of the Pricing Disclosure Package and the Offering Memorandum will be, an “investment company”
or a company “controlled” by an “investment company” within the meaning of the Investment Company
Act of 1940, as amended, and the rules and regulations of the Commission thereunder;

(u) The statements contained in the Pricing Disclosure Package and the Offering Memorandum
under the captions “Description of Certain Indebtedness” insofar as they purport to constitute
summaries of the terms of contracts and other documents, fairly summarize the terms of such
contracts and other documents in all material respects; and the Offering Memorandum under the
caption “Description of Notes” and “Exchange Offer; Registration Rights” insofar as they purport to
constitute a summary of the terms of the Indenture, the Notes, the Guarantees, the Registration
Rights Agreement, the Security Documents and the Intercreditor Agreement fairly summarize such
documents in all material respects; and

(v) The statements contained in the Pricing Disclosure Package or the Offering Memorandum
under the caption “Certain U.S. Federal Income Tax Considerations,” insofar as they purport to
constitute summaries of matters of United States federal tax law or legal conclusions with respect
thereto, constitute accurate summaries of the matters described therein in all material respects.

Such counsel shall also have furnished to the Initial Purchasers a written statement,
addressed to the Initial Purchasers and dated the applicable Closing Date, in form and substance
satisfactory to the Initial Purchasers, to the effect that (y) such counsel has acted as special
counsel to the Company in connection with the sale to Barclays Capital Inc. and the several Initial
Purchasers for whom Barclays Capital Inc. and BMO Capital Markets Corp. are acting as
representatives by the Company of $175,000,000 in aggregate principal amount of the Notes and the
Guarantees by the Guarantors pursuant to the Agreement, and (z) based on its participation, review
and reliance as described in such written statement, no facts came to the attention of such counsel
that caused it to believe that:

(a) the Pricing Disclosure Package, as of the Applicable Time, contained an untrue
statement of a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; or

 

Exhibit B-4

 

(b) the Offering Memorandum, as of its date or as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading,

except that in each case such counsel need express no opinion with respect to the financial
statements or other financial data contained in or omitted from the Pricing Disclosure Package and
the Offering Memorandum. The foregoing opinion and statement may be qualified by a statement to
the effect that such counsel does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Pricing Disclosure Package or the Offering Memorandum,
except to the extent set forth in paragraphs (u) and (v) above.

 

Exhibit B-5

 

Exhibit C

[General Counsel of the Company Form of Opinion]

[“Guarantor” as used herein, refers solely to Cambium Education, Inc., a Colorado corporation.]

Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions
set forth herein, I am of the opinion that:

(a) The Guarantor is validly existing and in good standing as a corporation or other business
entity under the laws of its jurisdiction of organization. The Guarantor is duly qualified to do
business and in good standing as a foreign corporation or other business entity in each
jurisdiction listed on Annex I. The Guarantor has all power and authority necessary to own or hold
its properties and to conduct the businesses as described in the Pricing Disclosure Package and the
Offering Memorandum.

(b) The Guarantor has all requisite corporate power and authority to execute, deliver and
perform its obligations under the Purchase Agreement, the Registration Rights Agreement, the
Indenture, the Guarantee, the Exchange Guarantee, the applicable Security Documents and the
Intercreditor Agreement.

(c) The Purchase Agreement has been duly authorized, executed and delivered by the Guarantor.

(d) The Indenture has been duly authorized by all necessary corporate action of the Guarantor,
and has been duly executed and delivered by the Guarantor. The Indenture, including the Guarantee
contained therein, is the legally valid and binding agreement of the Guarantor.

(e) The Guarantee of the Exchange Notes has been duly authorized by the Guarantor.

(f) The Registration Rights Agreement has been duly authorized, executed and delivered by the
Guarantor and, assuming the due authorization, execution and delivery thereof by the Initial
Purchasers, is the legally valid and binding agreement of the Guarantor.

(g) Each of the applicable Security Documents has been duly authorized by the Guarantor, as
appropriate, and when executed and delivered by the Guarantor and, the Collateral Agent, will
constitute the legal, valid and binding agreement of the Guarantor.

(h) The Intercreditor Agreement has been duly and validly authorized by the Guarantor, and
upon its execution and delivery, assuming due authorization, execution and delivery by the
Collateral Agent and the Administrative Agent, will constitute the valid and legally binding
agreement of the Guarantor.

 

Exhibit C-1

 

(i) The execution, delivery and performance by the Guarantor of the Transaction Documents, the
Guarantee and the Exchange Guarantee to which Guarantee is a party and the issuance and sale of the
Guarantee by the Guarantor to the Initial Purchasers pursuant to the
Purchase Agreement will not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or, other than pursuant to the Transaction
Documents, result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Guarantor pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument listed on Annex II hereto, (ii) result in any violation
of the provisions of the certificate of incorporation, by-laws, certificate of formation or limited
liability company agreement of Guarantor or (iii) result in the violation of any law or statute or
any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory
authority of which I have knowledge, except in the case of clauses (i) and (iii) above, for any
such conflict, breach, violation, default, lien, charge or encumbrance that would not, singly or in
the aggregate, have a Material Adverse Effect.

(j) No consent, approval, authorization or order of, or filing, registration or qualification
with any court or governmental agency or body having jurisdiction over the Guarantor is required
for the issue and sale of the Guarantee, the execution, delivery and performance by the Guarantor
of each of the Transaction Documents, the Guarantee and the Exchange Guarantee, the granting of the
security interest in the Collateral and the consummation of the transactions contemplated hereby
and thereby, except for (i) the filing of a registration statement by the Company with the
Commission pursuant to the Securities Act as required by the Registration Rights Agreement, (ii)
such consents, approvals, authorizations, orders, filings, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection with the purchase and
distribution of the Notes by the Initial Purchasers and (iii) the filing of financing statements
under the Uniform Commercial Code as from time to time in effect in the relevant jurisdictions and
any filing to be made in the United States Patent and Trademark Office or the United States
Copyright Office.

 

Exhibit C-2

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