Document:

exv4w12

 

Exhibit 4.12

Reed Elsevier Group PLC

HMRH Acquisition Co.

Houghton Mifflin Riverdeep Group PLC

Education Media and Publishing Group Limited

 

AGREEMENT

for the sale and purchase of

shares and assets relating to the
 Harcourt
Education Business of Reed Elsevier

 

16 July 2007

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	 	Page	 
	 	 	 
	 	 	 	 
	1.	 	Sale and Purchase
	 	 	1	 
	2.	 	Price
	 	 	2	 
	3.	 	Condition to Closing
	 	 	4	 
	4.	 	Reverse Break Fee
	 	 	6	 
	5.	 	Pre-Closing Undertakings
	 	 	8	 
	6.	 	No Leakage/ No Tax Undertaking
	 	 	8	 
	7.	 	Closing
	 	 	9	 
	8.	 	Seller Warranties and Indemnity
	 	 	9	 
	9.	 	Purchaser, Purchaser’s Parent and Purchaser’s Ultimate
Parent Warranties, Indemnity and Undertakings
	 	 	9	 
	10.	 	Conduct of Purchaser Claims
	 	 	10	 
	11.	 	No Rights of Rescission or Termination
	 	 	10	 
	12.	 	Business Assets, Contracts and Liabilities
	 	 	11	 
	13.	 	Business Properties
	 	 	11	 
	14.	 	Intellectual Property
	 	 	11	 
	15.	 	Changes of Name
	 	 	12	 
	16.	 	US Business Employees
	 	 	12	 
	17.	 	UK Business Employees
	 	 	14	 
	18.	 	Employees of Target Companies
	 	 	15	 
	19.	 	Retirement Benefits
	 	 	17	 
	20.	 	Tax
	 	 	18	 
	21.	 	Insurance
	 	 	18	 
	22.	 	Payment of Cash Pooling and Inter Company Debt
	 	 	18	 
	23.	 	Separation and Transition
	 	 	19	 
	24.	 	Third Party Assurances
	 	 	21	 
	25.	 	Purchaser’s Parent Guarantee
	 	 	21	 
	26.	 	Seller’s Guarantee
	 	 	23	 
	27.	 	Information, Records and Assistance Post-Closing
	 	 	24	 
	28.	 	Agency Structure
	 	 	24	 
	29.	 	Payments
	 	 	24	 
	30.	 	Announcements
	 	 	25	 
	31.	 	Confidentiality
	 	 	25	 
	32.	 	Assignment
	 	 	26	 
	33.	 	Transfer of assets
	 	 	27	 
	34.	 	Non-Solicitation
	 	 	29	 
	35.	 	Further Assurances
	 	 	29	 
	36.	 	Costs
	 	 	29	 
	37.	 	Notices
	 	 	29	 
	38.	 	Agent for Service of Process
	 	 	31	 
	39.	 	Conflict with other Agreements
	 	 	32	 
	40.	 	Whole Agreement
	 	 	32	 

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	Clause	 	 	 	Page	 
	 	 	 
	 	 	 	 
	41.	 	Waivers, Rights and Remedies
	 	 	33	 
	42.	 	Counterparts
	 	 	33	 
	43.	 	Variations
	 	 	33	 
	44.	 	Invalidity
	 	 	33	 
	45.	 	No Third Party Enforcement Rights
	 	 	33	 
	46.	 	Governing Law and Jurisdiction
	 	 	33	 
	Definitions and Interpretation	 	 	34	 

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EXHIBITS REFERRED TO IN THIS AGREEMENT

	 	 	 
	Description	 	 
	 
	 	 
	Exhibit 1

	 	Third Party Assurances
	Exhibit 2

	 	Information on Target Companies
	Part A:

	 	Details of the Target Companies
	Part B:

	 	Details of the subsidiaries of the Target Companies
	Exhibit 3

	 	Registered Owned IP
	Exhibit 4

	 	Properties
	Part A:

	 	Information on Target Company Properties
	Part B:

	 	Information on Business Properties
	Exhibit 5

	 	UK Business employees
	Exhibit 6

	 	Purchaser Group Information

AGREED FORM DOCUMENTS

	1.	 	Locked Box Balance Sheet.
	 
	2.	 	Locked-Box Inter Company Spreadsheet.
	 
	3.	 	Accounts.
	 
	4.	 	Disclosure Letter.
	 
	5.	 	Supplemental Agency Agreement.
	 
	6.	 	IP Assignment Agreement.
	 
	7.	 	Senior Equity Facility.
	 
	8.	 	Purchaser Information Pack

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AGREEMENT

Dated 16 July 2007

PARTIES:

	1.	 	REED ELSEVIER GROUP PLC of 1-3 Strand, London WC2N 5JR, UK (the Seller)
	 
	2.	 	HMRH ACQUISITION CO. of 2711 Centreville Road
Suite 400, City of Wilmington, County of New Castle, State of Delaware 19808

USA(the Purchaser)
	 
	3.	 	HOUGHTON MIFFLIN RIVERDEEP GROUP PLC of Styne House, Upper Hatch Street, Dublin 2, Ireland
(the Purchaser’s Parent)
	 
	4.	 	EDUCATION MEDIA AND PUBLISHING LIMITED, a company incorporated in the Cayman Islands with
number MC 188094

(together the parties).

RECITALS:

Words and expressions used in this Agreement shall be interpreted in accordance with Schedule 18.

IT IS AGREED:

1. Sale and Purchase 

1.1 The Seller (through the Share Sellers and the Business Sellers) shall sell, and the Purchaser
(through the Share Purchasers and the Business Purchasers) shall purchase, the Shares and the
Businesses on the terms set out in this Agreement.

1.2 Each Share Seller shall sell with full title guarantee and free from any Third Party Rights,
and each Share Purchaser shall purchase, the particular Set of Shares for which it is identified as
the respective Share Seller or Share Purchaser in Part A of Schedule 1. Each Set of Shares shall
be sold with all rights attaching to them at Closing including the right to receive all
distributions and dividends declared, paid or made in respect of the relevant Shares after the
Locked Box Balance Sheet Date.

1.3 Each Business Seller shall sell with full title guarantee and free from any Third Party Rights,
and each Business Purchaser shall purchase, the particular Business for which it is identified as
the respective Business Seller or Business Purchaser in Part B of Schedule 1. Each Business shall
be sold as a going concern with effect from Closing.

1.4 Clause 1.3 shall operate as an assignment of such of the Owned IP which is not registered,
together with all goodwill associated therewith and all rights of action (including the right to
claim for past infringement) remedies, powers and benefits pertaining thereto.

 

 

2. Price

2.1 At Closing the Purchaser shall pay to the Seller (or to one or more entities nominated by the
Seller) the Consideration (together with an amount equivalent to interest on that sum at a rate of
8% per annum, accrued on a daily basis from the date falling nine months after the date on which
the notification is made under the Hart-Scott-Rodino Act in relation to the acquisition of the
Target Business to the Closing Date) in US dollars in accordance with clause 29.

2.2 The Consideration will be satisfied:

	(a)	 	(subject to clause 2.4) as to US$300,000,000, in the form of HMR Paper by the allotment and
issue of 30,000,000 shares of US$0.001 each in the capital of HMR Topco at a US$10 per share
valuation, such shares to be allotted and issued to Harcourt Inc. (or to one or more entities
nominated by the Seller) credited as fully paid and free of any Third Party Rights (save to
the extent that such rights are contained in the articles of association of HMR Topco); and
	 
	(b)	 	as to the balance, in cash in US dollars in accordance with clause 29.

2.3 The principal terms attaching to the HMR Paper are summarised in Schedule 16. Each party shall
act in good faith to the other and co-operate with and assist the other (and any relevant third
party) as regards agreeing and finalising the additional rights attaching to the HMR Paper as soon
as reasonably practicable following the signing of this Agreement (and, in any event, prior to
Closing).

2.4 If DLJ Merchant Banking (and/or one or more of its Affiliates) invests in HMR Topco or any of
its Affiliates at any time prior to Closing, the Purchaser shall use the net proceeds of that
investment, dollar for dollar, to settle the Consideration in cash (in US dollars in accordance
with clause 29) instead of in HMR Paper.

2.5 At Closing the Purchaser shall pay to the Seller the Inter Company Consideration in US dollars
in accordance with clause 29.

2.6 From the Closing Date until the date falling 12 months after the date of this Agreement, the
Purchaser may require Harcourt Inc. or any transferee of any shares that form part of the
Consideration pursuant to clause 2.2(a), to sell such shares to either DLJ Merchant Banking or any
other investor for a sum no less than US$10 per share.

2.7 The Consideration and the apportionment thereof set out in Schedule 1 shall be adopted for all
Tax reporting purposes.

2.8 Any payment made in satisfaction of a liability arising under a Seller Obligation or a
Purchaser Obligation, shall be made on the following basis:

	(a)	 	if it is specifically referable to any particular Set of Shares (or to any Target Company or
Target Companies in a particular Target Sub-Group) or any particular Business or Business
Asset, it shall so far as possible adjust the price paid for the relevant Shares or Business
or Business Asset;
	 
	(b)	 	otherwise, it shall adjust the price for such Shares or Business as the Seller and the
Purchaser agree to be appropriate in the circumstances; or in the absence of such agreement it
shall adjust pro rata the price paid for the relevant Shares and that part of the price paid
for the relevant Business as is attributable to goodwill.

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2.9 The Seller and the Purchaser shall, as soon as practicable after the date of this Agreement
(and in any event prior to the Closing Date), agree the proportion of the Business Consideration,
the Assumed Liabilities and any other relevant amounts required for Tax purposes to be included in
the determination of the purchase price to be allocated to each of the Business Assets (the
Allocation).

2.10 The Allocation for any assets of the US Business shall be consistent with the provisions of
Code 1060 and the Treasury Regulations promulgated thereunder. In the event that the Seller and
the Purchaser are unable to agree to the Allocation prior to the Closing Date, the Allocation shall
be referred for final determination to an independent accountancy firm agreed upon at such time by
the Seller and the Purchaser (or, failing agreement, such accountancy firm as is appointed by the
President for the time being of the Institute of Chartered Accountants in England and Wales) (the
Independent Accountant). The Independent Accountant shall be instructed to render a decision
within thirty (30) days of his or her nomination or appointment. In the absence of manifest error,
the Independent Accountant’s decision (which shall be communicated in writing to the Seller and the
Purchaser) shall be final and binding on the Seller and the Purchaser. The fees and costs of the
Independent Accountant shall be borne and paid equally by the Seller and the Purchaser. The
Allocation agreed to by the Purchaser and Seller or determined by the Independent Accountant as the
case may be shall be conclusive and binding upon the parties for all purposes, and neither the
Seller nor the Purchaser shall take a Tax position which is inconsistent with such Allocation.

2.11 If one or more of the proposed subscribers for shares in HMR Topco under the Equity
Documentation (each a Defaulting Subscriber) fails to subscribe in accordance with his obligations
under the Equity Documentation at Closing, then Closing shall nonetheless proceed on the basis that
the manner in which the Consideration shall be satisfied shall be adjusted so that:

(a) the number of shares of US$0.001 each in the capital of HMR Topco to be allotted and issued
to Harcourt Inc. (or to one or more entities nominated by the Seller) pursuant to Clause 2.2(a)
shall be increased by the aggregate of the Shortfall Amount divided by 10; and

(b) the total amount in cash to be paid pursuant to Clause 2.2(b) shall be reduced by an amount
equal to the Shortfall Amount.

For the avoidance of doubt, the Seller (for itself and on behalf of the Seller Group) shall retain
all rights to bring claims under the Equity Documentation against those individuals that have
failed to subscribe. If the Seller does recover any sum (the Recovered Sum) from any Defaulting
Subscriber that should have been paid as subscription price by that Defaulting Subscriber, then the
Seller shall procure the transfer by the Seller Group to that Defaulting Subscriber of the number
of shares of US$0.001 each in the capital of HMR Topco that would result from dividing an amount in
US$ equal to the Recovered Sum by 10. For the avoidance of doubt, the transfer of such shares shall
be treated as between HMR Topco and the defaulting subscriber as discharging HMR Topco’s obligation
to issue the corresponding number of shares under the Equity Documentation.

For the purposes of this clause, the Shortfall Amount shall be the aggregate subscription monies
due to have been paid to a member of the Purchaser Group pursuant to the Equity Documentation less
the aggregate subscription monies actually paid to a member of the Purchaser Group pursuant to the
Equity Documentation on or prior to Closing.

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3. Condition to Closing

3.1 To the extent that the Proposed Transactions require notification pursuant to the competition
laws of the United States under the Hart-Scott-Rodino Act, Closing shall be conditional on such
necessary approvals or termination or expiration of waiting periods under the Hart-Scott-Rodino
Act, to carry out the Proposed Transactions having been obtained or having occurred (the
Condition).

3.2 In the event that a Governmental Entity has issued a Request for Additional Information and
Documentary Material (a Second Request) under the Hart-Scott-Rodino Act in relation to the
acquisition of the Target Business, the Purchaser shall:

	(a)	 	in the case of a Second Request, take all measures necessary to limit the scope of such
Second Request, and to certify substantial compliance with such Second Request as soon as
reasonably practicable after the date of receipt of such Second Request (provided that the
Seller shall also undertake to certify substantial compliance with the Second Request directed
to the Seller as soon as reasonably practicable) and to otherwise respond to and to seek to
resolve promptly any requests for information, documents, data or testimony made by any
Governmental Entity; and
	 
	(b)	 	offer such undertakings to any Governmental Entity as are necessary to ensure the fulfilment
of the Condition and the obligation in clause 3.5 below and shall do so in a timely fashion.
For the avoidance of doubt, such undertakings may include any condition, obligation,
undertaking or modification relating in any manner whatsoever to (i) any undertaking, or any
business, activities or assets of any undertaking, that is controlled by the Purchaser or any
member of the Purchaser Group or (ii) to the Business, or any business, activities or assets
of the Business.

3.3 The Purchaser shall have responsibility for making appropriate merger control notifications or
approaches (each an Initial Notification) to the relevant Governmental Entity in the United States.

Where the Seller is obliged to make an Initial Notification in the United States, it will do so at
the same time as the corresponding filing is made by the Purchaser.

3.4 Except in respect of those jurisdictions set out in clause 3.3 above, the Purchaser shall not,
in relation to the acquisition of the Target Business, prior to completion of the Proposed
Transactions, make any merger notification or similar notification/filing with any Governmental
Entity which is not required as a matter of law or regulation in order to fulfil the Condition
without prior consultation with the Seller as to the making of it and to its form and content.

3.5 Without limiting the obligations in clause 3.2 above, the Purchaser shall, at its own cost, in
order to consummate the acquisition of the Target Business, take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or advisable:

	(a)	 	to secure clearance (including by the expiration or termination of any applicable waiting
period required by any Governmental Entity, including specifically such period under the
Hart-Scott-Rodino Act) of the acquisition of the Target Business by the First Longstop Date;
and
	 
	(b)	 	to resolve any objections asserted with respect to the acquisition of the Target Business
under any Regulatory Law raised by any Governmental Entity, and to

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	 	 	prevent the entry of any court order, and to have vacated, lifted, reversed or overturned
any decree, judgment injunction or other order that would prevent, prohibit, restrict or
delay Closing, including by:

	 	(i)	 	contesting through litigation on the merits any objection or
challenge that may be asserted by any Governmental Entity, including through
appeals;
	 
	 	(ii)	 	executing settlements, undertakings, consent decrees, orders,
stipulations or other agreements with any Governmental Entity;
	 
	 	(iii)	 	selling, divesting or otherwise conveying any or all assets or
categories of assets or businesses of the Purchaser; and
	 
	 	(iv)	 	agreeing to sell, divest or otherwise convey particular assets or
categories of assets or businesses of the Target Business contemporaneously with
or subsequent to Closing.

All actions set out in this clause 3.5 shall be undertaken in a timely fashion.

3.6 Notwithstanding anything in this clause 3 to the contrary, in no event will the Purchaser or
the Seller be obligated to propose or agree to accept any undertaking or condition, to enter into
any consent decree or hold separate order, to make any divestiture, to accept any operational
restriction or limitation, or to take any other action that is not conditional on the Proposed
Transactions being completed.

3.7 The Purchaser shall have responsibility for (and the Seller shall fully cooperate with the
Purchaser in) obtaining all consents, approvals or actions of any Governmental Entity which are
required to satisfy the Condition or pursuant to its obligations under clause 3.5 above, and shall
take all steps necessary for that purpose (including making appropriate submissions, notifications
and filings promptly). Each of the Purchaser and the Seller shall (i) cooperate fully with each
other and shall furnish to the other such necessary information and reasonable assistance as the
other may request in connection with such consents, approvals or actions, including without
limitation in the preparation of any filings or meetings or presentations to or for any
Governmental Entity; and (ii) permit the other party to review and incorporate the other party’s
reasonable comments in any communication given by it to any Governmental Entity.

3.8 Each of the Purchaser and Seller will promptly notify the other party (and provide copies or,
in the case of non-written communications, details) of any such communication and shall do so in
relation to any communication in relation to any regulator promptly.

3.9 Each of the Purchaser and Seller will provide to the other party a copy of each communication
with any Governmental Entity promptly following the submission of such communication.

3.10 The Purchaser will regularly review with the Seller the progress of any notifications or
filings with a view to obtaining clearance from any Governmental Entity at the earliest reasonable
opportunity.

3.11 With respect to the obligations set forth in clauses 3.7 to 3.9 above, the Purchaser and the
Seller may designate portions of any such written or non-written communications as being provided
on an outside counsel basis where such communications contain confidential information or where
such restriction is necessary to comply with applicable law.

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3.12 Neither the Purchaser nor the Seller will independently participate in any meeting or face to
face discussion with any Governmental Entity in respect of any submissions, notifications, filings,
undertaking or other inquiry without giving the other party to this Agreement prior notice of the
meeting and, to the extent permitted by the relevant Governmental Entity, the opportunity to
attend.

3.13 With respect to the foregoing matters, it is agreed that the Purchaser shall determine
strategy, lead all proceedings, and coordinate all activities with respect to any actions,
consents, approvals, or waivers of any Governmental Entity, including, without limitation, in
litigating or otherwise contesting objections to or proceedings challenging the consummation of the
Proposed Transactions. The Seller and its Representatives agree to take such actions as are deemed
prudent by the Purchaser in order to secure needed approvals from any Governmental Entity and to
assist the Purchaser in litigating or otherwise contesting objections to or proceedings challenging
the consummation of the Proposed Transactions. The Purchaser shall make all strategic and tactical
decisions as to the manner in which to contest or respond to all proceedings under any Regulatory
Law, including on what terms the Purchaser will resolve any objections or proceeding challenging
the consummation of the Proposed Transactions. Subject to clause 3.6, the Seller further agrees
that, at the sole discretion and direction of the Purchaser (and at the Purchaser’s expense), it
will agree to any and all divestitures or other remedies relating to the Target Business that are
necessary to fulfil the Condition, provided that:

	(a)	 	nothing in this clause 3.13 shall oblige the Seller to agree to any divestiture or any other
remedy where such divestiture or other remedy would involve any cost to the Seller that is not
reimbursed by the Purchaser; and
	 
	(b)	 	all such divestitures or other remedies shall be conditional on the Proposed Transactions
being completed.

3.14 The Purchaser will cooperate with the Seller in order to assist with and facilitate the
Seller’s efforts (at its own cost and expense) to obtain insurance against the risk of any US court
enjoining or otherwise prohibiting the Proposed Transaction. Such cooperation will include
introducing the Seller to the Purchaser’s and the Purchaser’s Parent’s specialist insurance
brokers, facilitating direct discussions with the proposed insurer, making the Purchaser’s and the
Purchaser’s Parent’s counsel and experts available (subject to attorney client privilege and joint
defense arrangements) to discuss the antitrust issues with the insurer’s counsel. For the
avoidance of doubt, however, neither the Purchaser nor the Purchaser’s Parent will assume any
liability in this regard for any reason including if the insurer declines to provide coverage or if
Reed elects not to proceed because it is dissatisfied with the premium or otherwise.

4. Reverse Break Fee

4.1 In the event that the Condition has not been satisfied by the First Longstop Date, within 10
Business Days of such date HMR Topco shall, or shall procure that one of its Affiliates shall, pay
by way of compensation to the Seller (acting as principal) the Reverse Break Fee.

4.2 The Reverse Break Fee shall be an amount equal to US$550 million exclusive of VAT (both parties
agreeing that such amount is a genuine pre-estimate of the minimum amount of loss that the Seller
will suffer if the Condition is not satisfied by the First Longstop Date) and the Purchaser and the
HMR Topco shall use their reasonable endeavours to ensure that all, or as much as possible, of it
shall be satisfied in cash (in accordance with clause 29).

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Provided the Purchaser and the HMR Topco have complied with such obligations to use reasonable
endeavours, HMR Topco shall be entitled to satisfy its obligation to pay the remainder of the
Reverse Break Fee by procuring the issue of the RBF Notes of a total principal amount equal to that
remainder, instead of cash.

4.3 Upon receipt by the Seller of the Reverse Break Fee, this Agreement (other than (i) if
relevant, clause 4.4 in relation to the Monetisation Arrangements and (ii) the provisions relating
to confidentiality in clause 31, which shall continue) shall terminate and have no further effect,
save that:

	(a)	 	any claim by the Seller for breach of the Purchaser’s obligations pursuant to clause 3; and
	 
	(b)	 	any claim by the Purchaser for breach of the Seller’s obligation to co-operate pursuant to
clause 3.7

shall survive in accordance with the terms of this Agreement, provided that, for the avoidance of
doubt, no such claim by the Purchaser shall entitle it to any rights of set off in relation to its
obligation to pay the Reverse Break Fee. Notwithstanding clause 4.2 above, and for the avoidance of
doubt, the parties acknowledge that the Seller shall be entitled to recover damages for any loss
suffered as a result of a breach by the Purchaser of its obligations pursuant to clause 3 that is
in excess of the value of the Reverse Break Fee.

4.4 Each of the Purchaser and the Purchaser’s Parent agrees to cooperate with the Seller and to
implement certain arrangements (the Monetisation Arrangements) to facilitate the monetisation of
the RBF Notes either:

	(a)	 	by assisting the Seller to sell the RBF Notes by way of a private placement; or
	 
	(b)	 	by undertaking a Rule 144A offering of the RBF Notes and giving the proceeds of that
offering, net of any out of pocket expenses incurred by HMR Topco or any of its Affiliates, to
the Seller (in lieu of the RBF Notes being issued to the Seller and then sold by the Seller in
accordance with clause 4.4(a)).

The Monetisation Arrangements shall include, to the extent reasonably necessary, but shall not be
limited to, preparing an offering document including all financial and other information required
and customary for any similar offering, participating in the required due diligence and marketing
efforts, including a road show, soliciting credit ratings from Moody’s Investor Service and
Standard & Poor’s, delivering the appropriate legal opinions and comfort letters, and listing the
RBF Notes on an appropriate stock exchange.

4.5 Without prejudice to the generality of any of the foregoing, each party shall act in good faith
to the other and co-operate with and assist the other (and any relevant third party) as regards
finalising the detail of:

	(a)	 	the form of the RBF Notes; and
	 
	(b)	 	the Monetisation Arrangements,

to give effect to their agreement in clauses 4.2 to 4.4 above, as soon as reasonably practicable
following the signing of this Agreement (and, in any event, prior to the First Longstop Date).

4.6 For the avoidance of doubt, if the parties finalise the detail of the RBF Notes pursuant to
clause 4.5 prior to the First Longstop Date but subsequently, prior to when the RBF Notes

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are to be issued, there is a change in market practice relating to how the terms set out in
Schedule 17 would customarily be implemented, then the form of the RBF Notes shall be updated by
amending them so that they reflect that change and once more satisfy the requirements of the
definition of “RBF Notes”.

5. Pre-Closing Undertakings

5.1 From the date of this Agreement until Closing the Seller shall (except as may be approved by
the Purchaser) ensure that the Target Business is carried on, in all material respects, only in the
ordinary course and the Seller shall comply with the obligations set out in Schedule 6.

5.2 In no event shall Schedule 6 be construed to permit the Purchaser to exercise beneficial
ownership or control over any Target Business prior to Closing in respect of such Target Business.

5.3 For the avoidance of doubt, the information to be provided pursuant to paragraphs 3, 4 and 6 of
Schedule 6 shall only be required to be provided to a Purchaser Clean Team. The Purchaser shall
procure that such Purchaser Clean Team shall keep any information provided in accordance with this
Agreement confidential in accordance with clause 31 (Confidentiality).

6. No Leakage/ No Tax Undertaking

6.1 Other than any Permitted Leakage, the Seller undertakes to the Purchaser that during the period
from the Locked Box Balance Sheet Date to and including the Closing Date neither it nor any of its
Affiliates has received or will receive, has agreed to receive or will agree to receive, or has the
right to receive or will have the right to receive, any Leakage or Benefit from any Target Company.

6.2 Other than any Permitted Leakage the Seller warrants and undertakes that no Target Company has
paid nor has become or will become obliged to pay any advisers’ fees relating to the Proposed
Transactions.

6.3 In the event of any Leakage to the Seller or any of its Representatives (other than any
Permitted Leakage) during the period from the Locked Box Balance Sheet Date to and including the
Closing Date, then the Seller shall on demand by the Purchaser pay to the relevant Target Company
(or as the Purchaser directs) an amount in cash equal to such Leakage received by such person plus
an amount equal to the total interest that would accrue on a deposit of an amount equal to such
Leakage, made on the date on which it was received by the Seller or its Representative as
appropriate, and which carries interest (accrued daily) at LIBOR.

6.4 Notwithstanding anything in the Agreement to the contrary, in the event of any payments of or
in respect of Taxes, whether payable to the Seller, its Affiliates or any Governmental Entity or
otherwise, made by any Target Company or any Business Seller (in respect of the Target Business)
during the period beginning on the Locked Box Balance Sheet Date through and including the Closing
Date, then the Seller shall pay to the relevant Target Company or Business Purchaser (or as the
Purchaser directs) at Closing an amount in cash equal to the total amount of such payments plus an
amount equal to the total interest that would accrue on a deposit of an amount equal to such
payments, made on the date on which the payments were made, and which carried interest (accrued
daily) at LIBOR, in accordance

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 with clause 29. For the avoidance of doubt, the Purchaser shall not
be entitled to recover any
amount under both this clause and Schedule 11 in respect of the same liability, loss, cost,
shortfall, damage, deficiency, breach or other set of circumstances which gives rise to more than
one claim, and for this purpose recovery by the Purchaser or any Designated Purchaser shall be
deemed to be a recovery by each of them.

7. Closing

7.1 Closing shall take place at the London offices of the Seller’s lawyers on the tenth Business
Day after the satisfaction of the Condition (the Closing Date).

7.2 At Closing, each of the Seller and the Purchaser shall deliver or perform (or ensure that there
is delivered or performed) all those documents, items and actions respectively listed in relation
to that party or any of its Affiliates in Schedule 7.

7.3 Subject to the limits contained herein, each of the parties shall take, or cause to be taken,
all appropriate action, do or cause to be done all things necessary, proper or advisable under the
applicable law in the relevant jurisdiction, and execute and deliver such documents and other
papers as may be required to consummate the Proposed Transactions at the times contemplated.

7.4 All indemnities given by the Seller shall only come into effect on Closing (including the
indemnity given pursuant to paragraph 2 of Schedule 11).

8. Seller Warranties and Indemnity

8.1 The Seller warrants to the Purchaser as at the date of this Agreement in the terms of the
Warranties. The Warranties are given subject to the limitations set out in Schedule 4 and also the
limitations set out in Schedule 11 insofar as they apply to the Tax Warranties.

8.2 The Seller further warrants to the Purchaser that the Warranties contained in paragraphs 1.1,
1.2 and 1.3 of Part A of Schedule 3 will be true and accurate at Closing as if they had been
repeated at Closing.

8.3 None of the limitations in Schedule 4 or Schedule 11 shall apply to any Claim which arises (or
to the extent that it is increased) as a consequence of fraud or fraudulent misrepresentation by
any director, officer or employee of any member of the Seller Group.

8.4 The Seller agrees to indemnify the Purchaser and any member of the Purchaser Group against any
liability, costs, losses, damages and expenses arising from claims brought by Pearson PLC under the
Pearson SPA, except for claims arising in connection with a breach of the Obligations by the
Purchaser.

9. Purchaser, Purchaser’s Parent and Purchaser’s Ultimate Parent Warranties, Indemnity and Undertakings

9.1 The Purchaser, the Purchaser’s Parent and the Purchaser’s Ultimate Parent warrant to the Seller
as at the date of this Agreement in the terms of the warranties set out in Part A of Schedule 5.

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9.2 The Purchaser agrees to indemnify the Seller and any member of the Seller Group against any
liability, costs, losses, damages and expenses arising from claims brought by Pearson PLC in
connection with a breach of the Obligations by the Purchaser.

9.3 The Purchaser, the Purchaser’s Parent and the Purchaser’s Ultimate Parent irrevocably and
unconditionally undertake to the Seller on the terms of the undertakings set out in Part B of
Schedule 5.

10. Conduct of Purchaser Claims

If the Purchaser or any Designated Purchaser becomes aware of any claim or potential claim by a
third party (a Third Party Claim), or of any other matter or circumstance, which might result in a
Non-Tax Claim being made, the Purchaser shall:

	(a)	 	promptly (and in any event within 10 Business Days of it or a Designated Purchaser becoming
aware of it) give notice of the Third Party Claim or other matter or circumstance to the
Seller, and ensure that the Seller and its Representatives are given, all reasonable
information and facilities to investigate;
	 
	(b)	 	not (and ensure that each member of the Purchaser Group shall not) admit liability or make
any agreement or compromise in relation to the Third Party Claim without prior written
approval of the Seller;
	 
	(c)	 	(subject to the Purchaser or the relevant member of the Purchaser Group being indemnified by
the Seller against all reasonable out of pocket costs and expenses incurred in respect of that
Third Party Claim) ensure that it and each member of the Purchaser Group shall:

	 	(i)	 	take such action as the Seller may reasonably request to avoid,
resist, dispute, appeal, compromise or defend the Third Party Claim;
	 
	 	(ii)	 	allow the Seller (if it elects to do so) to take over the conduct
of all proceedings and/or negotiations arising in connection with the Third
Party Claim; and
	 
	 	(iii)	 	provide such information and assistance as the Seller may
reasonably require in connection with the preparation for and conduct of any
proceedings and/or negotiations relating to the Third Party Claim,

provided that nothing in this clause 10 shall oblige any member of the Purchaser Group to
(1) provide information, facilities or assistance in circumstances where to do so would be
materially prejudicial to the Purchaser Group’s position in subsequent litigation
proceedings with the Seller or its Representatives; or (2) take (or omit to take) any
action in circumstances where to do so (or not to do so) would, in the reasonable opinion
of the Purchaser, be materially prejudicial to the business of any member of the Purchaser
Group or of the Target Business, provided that nothing in this clause 10 shall prejudice
the Purchaser’s duty to mitigates its losses.

11. No Rights of Rescission or Termination

Neither the Purchaser nor any Designated Purchaser shall be entitled to rescind or terminate this
Agreement in any circumstances whatsoever (whether before or after Closing). This shall not
exclude any liability for (or remedy in respect of) fraudulent misrepresentation.

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12. Business Assets, Contracts and Liabilities

12.1 Nothing in this Agreement or any Transaction Document shall operate to transfer any of the
Excluded Assets to the Purchaser (or any Business Purchaser) or make the Purchaser (or any Business
Purchaser) liable for any of the Excluded Liabilities, save that clause 13 shall apply in relation
to the Business Properties and clause 2 and Schedule 12 shall apply in relation to Inter Company
Debt, and each Business Seller shall indemnify the Purchaser and each of its Affiliates from and
against any and all such Excluded Liabilities and any and all Costs suffered or incurred by any of
them as a result of any such Excluded Liabilities.

12.2 Each Business Purchaser shall from Closing (i) assume and discharge when due any and all
Assumed Liabilities of the Business Seller (including obligations arising under the Business
Contracts, relating to the relevant Business and (ii) indemnify the Seller and each of its
Affiliates against any and all such Assumed Liabilities and any and all Costs suffered or incurred
by any of them as a result of any such Assumed Liabilities or any failure to perform and discharge
any obligations arising under the Business Contracts.

12.3 After Closing, the Purchaser shall at its cost execute and deliver all such further documents
and/or take such other action as the Seller may reasonably request in order to effect the release
and discharge in full of the relevant member of the Seller Group from any Assumed Liabilities or
the assumption by the Purchaser (or a Designated Purchaser) as the primary obligor in respect of
any Assumed Liabilities in substitution for the relevant member of the Seller Group (in each case
on a non-recourse basis to any member of the Seller Group).

12.4 The provisions of Schedule 8 shall apply if and to the extent that the benefit and/or burden
of any of the Business Contracts and Business Claims cannot be assigned or transferred to the
Purchaser or the relevant Designated Purchaser except by an agreement of novation or without
obtaining a consent, approval, waiver or the like to the assignment or transfer from a third party
(such agreement of novation or consent, a Third Party Consent).

13. Business Properties

Notwithstanding any other provisions of this Agreement, the provisions of Schedule 9 shall apply in
respect of the Business Properties.

14. Intellectual Property

14.1 Nothing in this Agreement give to the Purchaser Group any rights (including IP) in the names
of “Reed”, “Reed Elsevier”, “Elsevier” or “Butterworth” or any name or mark incorporating any of
them, whether as Target Company IP, Owned IP or otherwise. All such rights owned by the Seller
Group shall continue to vest solely in the Seller Group.

14.2 Subject to clause 14.1, but without prejudice to clause 1.3, the Seller will use reasonable
endeavours to procure that the Target Companies and the Business Purchasers have rights to the IP
of the Seller Group to the extent that such rights are needed for the conduct of the Target
Business as at the Locked Box Balance Sheet Date.

14.3 Subject to clause 14.1, the provisions of Schedule 10 shall apply in respect of the use of IP
by the Purchaser Group and by the Seller Group after Closing.

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15. Changes of Name

15.1 The Purchaser shall procure that:

	(a)	 	as soon as reasonably practicable after the Closing Date and in any event within 30 days
afterwards, the name of any Target Company which consists of or incorporates any of the words
“Reed”, “Reed Elsevier”, “Elsevier” or “Butterworth” is changed to a name which does not
include such word or words, or any name which, in the reasonable opinion of the Seller, is
substantially or confusingly similar;
	 
	(b)	 	as soon as reasonably practicable after the Closing Date and in any event within 6 months
afterwards, the Target Companies and the Businesses shall cease to use or display any trade or
service name or mark, business name, logo or domain name used or held by any member of the
Seller Group or any mark, name or logo which, in the reasonable opinion of the Seller, is
substantially or confusingly similar to any of them.

15.2 For a period of 12 months from Closing, the restrictions in clause 15.1 shall not apply to the
use, display, or disposal of any stock, inventory, stationery, sales or marketing documentation or
any other media, in each case, which was produced prior to the Closing Date. The restrictions in
clause 15.1 shall not apply to any incidental, de minimis, use of any of the words “Reed”, “Reed
Elsevier”, “Elsevier” or “Butterworth” resulting from any Target Company having being an Affiliate
of the Seller prior to Closing including, without limitation, such usage in copyright notices,
title pages and similar incidental uses in publications produced prior to the Closing Date.

15.3 On or as soon as possible after Closing, the Purchaser and the Seller shall send out a joint
notice in the Agreed Form to an agreed list of the suppliers, customers and clients of the Target
Business advising them of the transfer of the Target Business.

15.4 Save as expressly provided for in the Transaction Documents, the Seller undertakes that it
shall not, and shall procure that no member of the Seller Group:

	(a)	 	contain in their company name, trade or business name, use or display for any purposes, any
name, mark, logo or domain name forming part of the Target Company IP or Owned IP or anything
which in the reasonable opinion of the Purchaser is substantially or confusingly similar to
any name, mark, logo or domain name forming part of the Target Company IP or Owned IP; or
	 
	(b)	 	apply for registration or grant of any trade mark, logo or domain name or other Intellectual
Property Rights containing any name, mark, logo or domain name forming part of the Target
Company IP or Owned IP or any name, mark, logo or domain name which, in the reasonable opinion
of the Purchaser, is substantially or confusingly similar.

16. US Business Employees

16.1 The relevant Business Purchaser shall:

	(a)	 	make offers of employment to each relevant US Business Employee as of the Closing Date,
including any such individuals on vacation or an approved leave of absence (including
maternity and paternity leave, vacation, sick leave, short-term or long-term disability leave
of absence in accordance with the Family and Medical Leave Act of 1983 or any similar state or
local law, or any military leave with respect to which 

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	 	 	reemployment rights are protected
pursuant to applicable law) on the Closing Date (with those US Business Employees who accept
its offer of employment referred to herein as the Transferred Employees), provided, however,
that an individual on an
approved leave of absence on the Closing Date shall become a Transferred Employee upon his
or her return to active employment, on terms and conditions (which shall include treating
any period of service, and including any period of service with a predecessor entity, but
only to the extent such predecessor service was credited as service for purposes of the
relevant Current US Benefit Plans, for purposes of eligibility and vesting, but not for
benefit accrual with respect to any defined benefit plan with any member of the Seller
Group as if it were service with the Business Purchaser) which, until the first (1-year)
anniversary of the Closing Date are no less favourable, in aggregate, than those on which
comparable employees of the members of the Purchaser Group are employed, provided that no
relevant Business Purchaser shall be obliged to provide, (and the failure to provide shall
not result in terms and conditions of employment no less favourable, in the aggregate, than
those provided to comparable employees of the Purchaser Group), any equity or stock based
compensation plans or defined benefit plan that is terminated or in which benefit accruals
are frozen for all participants on the later of the date falling three (3) months after
Closing or March 31, 2008, and that service for eligibility and vesting purposes (but not
service for benefit accrual purposes) in relation to retirement related plans shall only
apply to the Purchaser Group’s defined contribution plan or defined benefit plan, if such
plan is not terminated or its benefit accruals frozen within the time period described
above, and to any plan that provides for post-retirement health benefit or life insurance
coverage;

	(b)	 	indemnify the Seller or the relevant member of the Seller Group against the costs associated
with the Transferred Employees’ employment, the Target Benefit Plans, the termination of the
Transferred Employees’ employment with the relevant member of the Purchaser Group, in each
case, after Closing, and in relation to any liabilities or costs associated with or incurred
by the Seller or relevant member of the Seller Group in circumstances where any US Business
Employee is not offered employment in a comparable position and at a comparable salary to that
held or provided prior to Closing;
	 
	(c)	 	provide offer letter or other communications (i) to the Seller for review and comment by no
later than 10 Business Days before Closing; and (ii) to the US Business Employees for
consideration by no later than 5 Business Days before Closing and the Seller shall provide to
the Purchaser for its review and comment, copies of all communications to US Business
Employees regarding the transactions contemplated pursuant to this Agreement;
	 
	(d)	 	be responsible for any liability arising under the Worker Adjustment and Retraining
Notification Act (the WARN Act) for actions that the relevant Business Purchaser takes on or
after the Closing Date. The parties hereto intend that the Purchaser will pursuant to this
clause 16.1(d) be responsible for actions taken during the 90-day period following the Closing
Date that give rise to any such liability as a result of aggregating such actions with actions
taken by the Seller Group prior to the Closing Date. The Purchaser hereby indemnifies the
Seller Group against and agrees to hold the Seller Group harmless from any and all damages
incurred or suffered by the Seller Group or any other member of the Seller Group with respect
to liabilities and obligations described in this clause 16.1(d); and

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	(e)	 	for a period of not less than one (1) year from and after the Closing Date, provide to the
relevant US Business Employees who accept its offers of employment as of the Closing Date,
redundancy/severance policies of the Seller Group that were provided to such employees as of
the Closing Date (the Severance Policies). In the event that
the relevant Business Purchaser shall terminate the employment of any such US Business
Employee within such one-year period, the Purchaser will pay to such US Business Employee
not less than the full amount to which such US Business Employee would have been entitled
under the applicable Severance Policy had such policy continued to be applicable with
respect to the US Business Employee, it being agreed that, for purposes of determining such
amount, the Purchaser will credit such US Business Employee with his or her years of
employment with the Seller Group plus the term of his or her employment with the Purchaser.

16.2 The Seller shall be responsible for the payment of any retention bonus or Sales Bonus to or
for any US Business Employee who is engaged in the US Business by any of the Business Sellers,
which is agreed by the Seller (or any member of the Seller Group) prior to the date of this
Agreement and shall indemnify the Purchaser and each member of the Purchaser Group in respect of
such payment and any Tax payable in connection therewith.

16.3 The Seller shall retain, and the relevant Business Purchaser shall have no responsibility for,
any and all liabilities that have arisen or may arise with respect to (i) any Seller Plan or US
Benefit Plan (that, in each case, is not a Target Benefit Plan), and (ii) any US Business Employee
who is not a Transferred Employee.

16.4 The relevant Business Purchaser shall assume all employment and offer letters relating to the
US Business Employees and the US Employees (except for those contracts or offer letters relating to
Pat Tierney, Buzz Waterhouse, Raymond Fagan, Julie McGee and David Kim) which do not have a fixed
term, with the exception that any term in such employment agreement or offer letter which provides
that the employee at issue is eligible for more than 12 months of severance pay, which provides for
the participation of the employee at issue in Reed Elsevier’s option or other share-based plans or
to benefits under any Reed Elsevier employee benefit plan, or which relates to any payment for
which the Seller is responsible pursuant to clauses 16.2, 16.3, 18.2 or 18.5 hereof shall not be
assumed by the relevant Purchaser. Nothing in this clause 16.4 shall operate to reduce the
obligations of the relevant Business Purchaser under clause 16.1.

17. UK Business Employees

17.1 The parties acknowledge and agree that the sale of the UK Business from the relevant Business
Seller to the relevant Business Purchaser is a “relevant transfer” within the meaning of the
Transfer Regulations.

17.2 If for any reason the contracts of employment of any of the UK Business Employees are not
automatically transferred to the relevant Business Purchaser pursuant to the Transfer Regulations,
the relevant Business Purchaser shall immediately offer to employ such persons on terms and
conditions (save as in respect to pension contributions and pension benefits) no less favourable to
the UK Business Employees than the terms on which they were employed immediately prior to Closing,
the terms of which offer shall be agreed with the Seller in advance, and the relevant Business
Seller will promptly release the UK Business Employees who accept such offer from their contracts
of employment.

17.3 The Purchaser shall provide the Seller with such information as the Seller may reasonably
request in writing as is necessary for the Seller or any of the Business Sellers to

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 comply with any
legal requirement (whether statutory or pursuant to any written agreement with any trade union or
other employee body) in relation to the Proposed Transactions to consult with or inform the UK
Business Employees (or any of them), a relevant trade union or any other employee representatives.

17.4 The Seller shall indemnify the Purchaser in relation to any claim in relation to the Seller’s
failure to comply in all respects with its obligations under the Transfer Regulations and any Tax
payable in connection therewith.

17.5 The Seller shall be responsible for the payment of any retention bonus or Sales Bonus to or
for any UK Business Employee who is engaged in the UK Business by any of the Business Sellers,
which is agreed by the Seller prior to the date of this Agreement and shall indemnify the Purchaser
and each member of the Purchaser’s Group in respect of such payment and any Tax payable in
connection therewith.

17.6 The Seller shall indemnify the Purchaser against all outstanding UK Business Employee’s
Liabilities incurred up to the Closing Date and any claim by or on behalf of any of the UK Business
Employees arising from or in connection with their employment or its termination on or prior to the
Closing Date, save that this indemnity shall not related to any costs incurred in the ordinary
course of business (including, without limitation, routine payments of salary and other benefits)
between the Locked Box Balance Sheet Date and Closing). The Seller shall indemnify the Purchaser
against all Liabilities and claims by or on behalf of the employees not identified as UK Business
Employees in Exhibit 5, and any Tax payable in connection therewith.

17.7 The Purchaser shall indemnify the Seller against all liabilities in relation to any UK
Business Employee incurred after the Closing Date and any claim by or on behalf of any UK Business
Employee arising from or in connection with their employment after the Closing Date. This shall
include, but shall not be limited to, any liability arising out of the termination of employment or
dismissal of any UK Business Employee, any substantial change in working conditions to the material
detriment of any UK Business Employee, any failure by the relevant Business Purchaser to offer
terms and conditions of employment which are no less favourable than those which apply to the
Employees up to the Closing Date, and any failure by the relevant Business Purchaser to comply with
its obligations under the Transfer Regulations.

18. Employees of Target Companies

18.1 The relevant Share Purchaser shall cause the Target Companies to continue the employment of
each US Employee employed by the Target Companies on the Closing Date, including any such
individuals on approved leave of absence (including maternity and paternity leave, vacation, sick
leave, short-term or long-term disability leave of absence) from the Target Companies on the
Closing Date (the Affected Employees), provided, however, that an individual on a long-term
disability leave from the Target Companies on the Closing Date shall become an Affected Employee
upon his or her return to active employment, on terms and conditions (which shall include treating
any period of service, and including any period of service with a predecessor entity, but only to
the extent such predecessor service was credited as service for purposes of the relevant Current US
Benefit Plans, for purposes of eligibility and vesting, but not for benefit accrual with respect to
any defined benefit scheme with any member of the Seller Group as if it were service with the Share
Purchaser) which, until the first (1-year) anniversary of the Closing Date are no less favourable,
in aggregate, than those on which comparable employees of the members of the Purchaser Group are
employed, provided that no relevant member of the Purchaser Group shall be obliged to provide (and
the

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failure to provide shall not result in terms and conditions of employment no less favourable in
the aggregate, than those provided to comparable employees of the Purchaser Group) any equity or
stock based compensation plans or defined benefit plan that is terminated or in which benefit
accruals are frozen for all participants on the later of three (3) months after Closing or March
31, 2008 and that service for eligibility and vesting purposes (but not
service for benefit accrual purposes) in relation to retirement related plans shall only apply to
the Purchaser Group’s defined contribution plan or defined benefit plan, if such plan is not
terminated or its benefit accruals frozen within the time period described above, and to any plan
that provides for post retirement health benefit or life insurance coverage. The Purchaser shall
indemnify the Seller or the relevant member of the Seller Group against the costs associated with
the Affected Employees’ termination of employment with the relevant member of the Seller Group in
circumstances where any US Employee’s employment immediately following the Closing Date is not in
a comparable position and at a comparable salary to that held or provided prior to Closing.

18.2 The Seller shall retain, and the relevant Share Purchaser shall have no responsibility for,
any and all liabilities that have arisen or may arise with respect to (i) any Seller Plan or US
Benefit Plan that is not a Target Benefit Plan (as such term is herein defined), and (ii) any
former employee who is not an Affected Employee but nothing in this clause shall be taken to
prevent amounts payable by the Seller under this clause being taken into account for the purposes
of determining the Cash Pooling Balance.

18.3 Without limiting the scope of clause 18.2, the Seller shall assume and be responsible for (i)
claims for workers compensation or for the type of benefits described in Section 3(1) of ERISA
(whether or not covered by ERISA) that are incurred on or prior to the Closing Date by Affected
Employees, and (ii) claims relating to COBRA coverage attributable to “qualifying events” occurring
on or prior to the Closing Date with respect of any Affected Employees and their beneficiaries and
dependents but nothing in this clause shall be taken to prevent amounts payable by the Seller under
this clause being taken into account for the purposes of determining the Cash Pooling Balance..
The relevant Share Purchaser shall be responsible for (i) disability benefits and workers
compensation benefits for Affected Employees for claims incurred after the Closing Date, and (ii)
claims relating to COBRA coverage attributable to “qualifying events” occurring after the Closing
Date with respect to Affected Employees and their beneficiaries and dependents. For purposes of
this clause 18.3, a medical/dental claim shall be considered incurred when the medical services are
rendered or medical supplies are provided, and not when the condition arose; provided that
claims relating to a hospital confinement that commences on or prior to the Closing Date but
continues thereafter shall be treated as incurred on or prior to the Closing Date if the injury or
condition giving rise to the claim occurs on or prior to the Closing Date. A disability or workers
compensation claim shall be considered incurred on or prior to the Closing Date if the injury or
condition giving rise to the claim occurs on or prior to the Closing Date.

18.4 No Employee Rights: Termination/Modification of Plans. The provisions of clause 18 are solely
for the benefit of the respective parties to this Agreement and nothing in this clause 18, express
or implied, shall confer upon any Transferred Employee or Affected Employee, or legal
representative or beneficiary thereof, any rights or remedies, including any right to employment or
continued employment for any specified period, or compensation or benefits of any nature or kind
whatsoever under this Agreement.

18.5 The Seller shall be responsible for the payment of any retention bonus or Sales Bonus to or
for any officer or Employee of any of the Target Companies which is agreed by the Seller (or any
member of the Seller Group or any Target Company) prior to the date of this

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 Agreement and shall
indemnify the Purchaser and each member of the Purchaser’s Group in respect of such payment and any
Tax payable in connection therewith.

19. Retirement Benefits

19.1 United States

	(a)	 	The Seller (or an Affiliate of the Seller) shall use all reasonable endeavours to procure
that, as of the Closing Date:

	 	(i)	 	each US Employee’s and each US Business Employee’s accrued
benefits or account balances within the US Retirement Plans at the Closing Date
shall vest in full; and
	 
	 	(ii)	 	the participation of each US Employee and each US Business
Employee, and all service credits and benefit accruals under any US Retirement
Plan shall cease.

	(b)	 	The Seller (or an Affiliate of the Seller) shall retain all liabilities with respect to the
US Retirement Plans arising on and after the Closing Date.
	 
	(c)	 	The relevant Share Purchaser, the relevant Business Purchaser and the Sellers will take all
actions necessary, upon the request of either an Affected Employee or a Transferred Employee,
to facilitate a direct transfer of an eligible rollover distribution (as defined in section
401(a)(31) of the Code), including up to two (2) plan loans, and will consider accepting one
additional loan if this can be accomplished without significant changes to the administrative
process of the plan, from the Reed Elsevier US Salary Investment Plan to the retirement
benefit plan operated by the Purchaser’s Parent which includes a Tax-qualified cash or
deferred arrangement within the meaning of section 401(k) of the Code, sponsored by an
Affiliate of the relevant Share Purchaser or relevant Business Seller.
	 
	(d)	 	The Seller shall indemnify and hold harmless the Purchaser and the Purchaser Group on demand
against all and any losses, liabilities, costs, claims, damages and expenses which they may
suffer or incur in connection with the US Retirement Plans and/or any other “employee pension
benefit plan” (as defined in Section 3(2) of ERISA) or arrangement of the Seller or Seller
Group for the provision of retirement benefits to any Employee or US Business Employees save
that this indemnity shall not relate to any costs incurred in the ordinary course of business
(including, without limitation, routine contributions payable in respect of any US Retirement
Benefit Plans or any other plan or arrangement under this clause between the Locked Box
Balance Sheet Date and Closing.

19.2 UK

	(a)	 	The Purchaser shall ensure that the UK Business Employees shall have the same access to and
rights under the relevant retirement benefit arrangements operated in the UK by the Purchaser,
in respect of their service with the Purchaser Group on and after the Closing Date, as an
ordinary employee hired by the Purchaser Group in the UK on or after the Closing Date and
performing the same or similar work (subject to provision of any minimum level of benefits as
required under the Transfer of Employment (Pension Protection) Regulations 2005).

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	(b)	 	The Seller shall indemnify and hold harmless the Purchaser and the Purchaser Group on demand
against all and any losses, liabilities, Costs, claims, damages and expenses which they may
suffer or incur in connection with the UK Business Employees to the extent that such liability
relates to their participation in the Reed Elsevier Pension Scheme and/or any other scheme
plan fund or arrangement for the provision by the Seller or member of the Seller Group of
retirement benefits to UK Business Employees prior to the Closing Date (except to the extent
that such losses are the result of any act or omission of the Purchaser or relevant member of
the Purchaser
Group or Target Company after the Closing Date) save that this indemnity shall not relate
to any costs incurred in the ordinary course of business (including, without limitation,
routine contributions payable in respect of the Reed Elsevier Pension Scheme or any other
plan or arrangement under this clause between the Locked Box Balance Sheet Date and
Closing..

20. Tax

The provisions of Schedule 11 (other than paragraph 1 thereof which shall apply from the date of
this Agreement) shall come into effect at Closing.

21. Insurance

21.1 From the date of this Agreement until (and including) the Closing Date, members of the Seller
Group and the Target Companies shall continue in force all policies of insurance maintained by them
in respect of the Target Business.

21.2 From and after Closing, all insurance cover arranged in relation to the Target Companies by
the Seller Group (whether under policies maintained with third party insurers or other members of
the Seller Group) shall cease. With respect to events or circumstances relating to the Business
Assets, the assets owned or used by the Target Companies, the Assumed Liabilities, the Employees or
the Target Companies that occurred or existed prior to the Closing Date that are covered by
occurrence-based third party insurance policies maintained by the Seller Group’s occurrence-based
insurance policies and any workers’ compensation insurance policies and/or comparable workers’
compensation self-insurance, state or country programs (collectively, the Pre-Closing Insurance),
the Purchaser may make such claims as are permitted under such policies and programs, and the
Seller shall provide reasonable assistance to the Purchaser or take such actions as may reasonably
be required in connection with the tendering of such claims to the applicable insurers under such
Pre-Closing Insurance and provide the Purchaser with the proceeds paid with respect to such claims.

21.3 With respect to any open claims against the Seller Group’s insurance policies relating to the
Business Assets, the assets owned or used by the Target Companies, the Assumed Liabilities, the
Employees or the Target Companies through to Closing, the Seller shall (i) use its reasonable
efforts to pursue such claims and obtain such expected proceeds, and (ii) remit any net proceeds it
realises from such claims to the Purchaser upon full and final settlement of such claims.

22. Payment of Cash Pooling and Inter Company Debt

22.1 If the Cash Pooling Balance at Closing is negative (such that cash is owed by the Target
Business to the Seller Group), the Purchaser (as agent for the relevant Target

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Companies) shall pay
an amount equal to such Cash Pooling Balance to the Seller (as agent for the relevant Seller Group
companies) in accordance with the provisions of clause 29.

22.2 If the Cash Pooling Balance at Closing is positive (such that cash is owed by the Seller Group
to the Target Business), the Seller (as agent for the relevant Seller Group companies) shall pay an
amount equal to such Cash Pooling Balance to the Purchaser (as agent for the relevant Target
Companies) in accordance with the provisions of clause 29.

22.3 The provisions of Schedule 12 shall apply in respect of the payment of Inter Company Debt.

23. Separation and Transition

23.1 Objectives

	(a)	 	Each party agrees to develop a reasonable set of procedures and arrangements for:

	 	(i)	 	the separation of assets, contracts and employees in connection
with the transactions contemplated by this Agreement;
	 
	 	(ii)	 	any transitional arrangements or services, to the extent
necessary for the carrying out of the Target Business and the business of the
Seller Group in the manner (in all material respects) in which such business was
carried out immediately prior to execution of this Agreement,

which aim to minimise any disruption to, and to ensure continuity of, the business of and
to provide service and support to, and avoid any material adverse impact upon, the Seller
Group (including but not limited to the provision of the requisite level of facilities and
services to Elsevier Science at the Orlando facility), the Purchaser Group, the Target
Companies and the Target Business (as applicable) as a result of the transaction
contemplated by this Agreement (the Overall Objectives).

	(b)	 	The arrangements agreed by the parties to achieve the Overall Objectives shall incorporate
the following areas of business activity as appropriate and the principles set out in Schedule
14:

	 	(i)	 	the Business Assets and the Excluded Assets, and anything
equivalent relating to the Target Companies, as well as the Employees;
	 
	 	(ii)	 	historical data and other content used by the Target Companies,
the Target Business and/or by the Seller Group, a plan for its migration or
copying or other access to permit its continued use;
	 
	 	(iii)	 	IT Systems and/or other desktops, hardware, software, software
products, systems, computer and telecommunications networks (local and wide
area), infrastructure and peripherals, email, online products or services, web
or internet/intranet sites and domain names, product or other content, customer
or other databases, sales and marketing systems, content delivery systems,
distribution and/or warehousing systems, enterprise resource planning systems,
production management and scheduling systems, links to transactional systems,
hosted, managed or outsourced services (including without limitation online
testing), business continuity and/or disaster recovery, and/or services and
support in relation to each of the foregoing;

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	 	(iv)	 	functions such as legal, accounting (including without limitation
accounts receivable, accounts payable and credit control), human resources
(including without limitation information, pensions other than with respect to
the US Business Employees, benefits and payroll), customer service, sales,
marketing and public relations, Tax, insurance, real estate, premises, shared
services and service or other centres, and other office functions; and
	 
	 	(v)	 	any other item or thing, services or support provided or used by
or for the Target Companies and/or the Target Business immediately prior to
Closing which materially affects the Overall Objectives.

	(c)	 	Each party agrees that its respective group shall, unless otherwise expressly agreed between
the parties, bear the cost of developing and implementing the requirements ascribed to that
group in achieving the Overall Objectives save that the Transitional Services to be provided
under the agreement may be charged in an “at cost” manner consistent with historic amounts
recharged by the Seller Group for such service immediately prior to the date of this Agreement
or, if such service is not recharged immediately prior the date of this Agreement, at cost.
	 
	(d)	 	Each party shall act in good faith to the other and co-operate with and assist the other (and
any relevant third party) as regards achieving the Overall Objectives.
	 
	(e)	 	The arrangements agreed by the parties for the Transitional Services to achieve the Overall
Objectives shall incorporate the following where relevant:

	 	(i)	 	specifications, quantity thresholds, and service levels (in each
case based on those as at the Closing Date) or such other date as may be
relevant where the services are seasonal or cyclical in nature);
	 
	 	(ii)	 	changes to the service, security and other requirements to be
complied with;
	 
	 	(iii)	 	provisions relating to intellectual property, third party
consents and similar approvals, access and information, audit and inspection,
payment, termination, liability, indemnities and warranties, in each case as
customary in relation to such arrangements;
	 
	 	(iv)	 	provisions dealing with force majeure and other circumstances in
which it may not be possible to provide the relevant Transitional Services; and
	 
	 	(v)	 	a provision dealing with maximum aggregate liability whether for
damages, breach of contract, negligence or otherwise.

23.2 Process

	(a)	 	The Seller shall provide to the Purchaser, as soon as practicable following the date of
execution of this Agreement and in any event no later than 60 days following the date of
execution of this Agreement and subject to applicable law and regulation:

	 	(i)	 	a high-level description of relevant significant assets,
contracts and employees used to run the Target Companies and/or the Target
Business immediately prior to execution of this Agreement together with an
executive summary of the proposed way in which the Overall Objectives might be
achieved in respect of those assets, contracts and employees;

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	 	(ii)	 	a draft master separation and transition agreement (with local
statements of work); and
	 
	 	(iii)	 	a proposed work-plan designed to enable the parties to finalise
the separation and transition agreement (and local statements of work),
in each case which reflects the principles set out in Schedule 14.

	(b)	 	Each party agrees to negotiate in good faith to enter into a separation and transition
agreement based on the draft provided by the Seller as envisaged under clause 23.2(a)(ii) as
soon as practicable following receipt of the draft.
	 
	(c)	 	During the period commencing on the Closing Date and ending on the date on which the parties
enter into a separation and transition agreement, the parties agree to provide Transitional
Services in relation to the relevant Target Business(es) in accordance with the Overall
Objectives and the provisions of this clause 23 and Schedule 14.

23.3 This clause 23 shall only apply to the Properties to the extent that they are not otherwise
dealt with under the terms of Schedule 9 and in the event of any conflict between the terms of this
clause 23 and the provisions of Schedule 9, Schedule 9 shall prevail.

24. Third Party Assurances

24.1 The Purchaser shall ensure that at Closing each member of the Seller Group is released in full
from all Third Party Assurances listed in Part A of Exhibit 1 and shall use its reasonable efforts
to ensure that, as soon as reasonably practical, the Seller Group is released in full from all
Third Party Assurances listed in Part B of Exhibit 1 and shall indemnify the Seller and each of its
Affiliates against any and all Costs arising after Closing in respect of such Third Party
Assurances listed in Exhibit 1.

24.2 In addition to its obligations contained in clause 24.1, the Purchaser shall use its
reasonable efforts to ensure that, as soon as reasonably practicable after becoming aware of any
other Third Party Assurance in respect of any obligations of any Target Company or relating to any
Business Contract, each member of the Seller Group is released in full from such Third Party
Assurance. Pending release of any Third Party Assurance referred to in this clause 24, the
Purchaser shall indemnify the Seller and each of its Affiliates against any and all Costs arising
after Closing under or by reason of that Third Party Assurance.

24.3 The Seller shall use its reasonable efforts to ensure that, as soon as reasonably practicable
after becoming aware of any Third Party Assurance in respect of any obligations of any member of
the Seller Group, each Target Company is released in full from such Third Party Assurance. Pending
release of any Third Party Assurance referred to in this clause 24, the Seller shall indemnify the
Purchaser and each of its Affiliates against any and all Costs arising after Closing under or by
reason of that Third Party Assurance.

25. Purchaser’s Parent Guarantee

25.1 The Purchaser’s Parent unconditionally and irrevocably guarantees to the Seller and the
Designated Sellers the due and punctual performance and observance by the Purchaser and each of the
Designated Purchasers of all of their respective obligations (including any

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liabilities to pay
damages arising out of or in connection with this Agreement) under or pursuant to the Transaction
Documents (the Purchaser Guaranteed Obligations) and hereby agrees to indemnify the Seller and the
Designated Sellers in respect of the full amount of any sum payable (including any liability to pay
damages) by the Purchaser and each Designated Purchaser under or pursuant to the Transaction
Documents.

25.2 Without prejudice to the rights of the Seller against the Purchaser or any of the Designated
Purchasers, the Purchaser’s Parent shall be a primary obligor and shall be deemed
a principal debtor in respect of its obligations (including the Purchaser Guaranteed Obligations)
under this Agreement and not a surety.

25.3 The Seller may enforce its rights against the Purchaser’s Parent without first exercising any
rights or remedies against the relevant Designated Purchaser.

25.4 The Purchaser’s Parent’s liability to the Seller under this clause 25.4 shall not be
discharged, impaired or affected by:

	(a)	 	any legal limitation, disability or incapacity or other circumstances relating to the
Purchaser or any of the Designated Purchasers or any change in the members or status of the
Purchaser or any of the Designated Purchasers or any other person;
	 
	(b)	 	any variation of any of the terms of this Agreement or of any of the Purchaser Guaranteed
Obligations;
	 
	(c)	 	any time, waiver or consent granted to or composition with the Purchaser or any of the
Designated Purchasers or any other person;
	 
	(d)	 	the bankruptcy, liquidation or dissolution of the Purchaser or any of the Designated
Purchasers or the appointment of a receiver, administrative receiver or administrator of the
Purchaser or any of the Designated Purchaser’s assets or any other insolvency proceeding
relating the Purchaser or to any of the Designated Purchasers or any change of control of the
Purchaser or any of the Designated Purchasers or any other matter affecting the obligation of
the Purchaser or any of the Designated Purchasers to perform any Purchaser Guaranteed
Obligation;
	 
	(e)	 	any unenforceability, illegality or invalidity of any obligation of any person under this
Agreement; or
	 
	(f)	 	any other matter which, but for this clause, would reduce, vitiate or affect the obligations
of the Purchaser in respect of the Purchaser Guaranteed Obligations.

25.5 In the event that the Purchaser’s Parent is no longer the ultimate holding company of the
Purchaser Group, the Purchaser’s Ultimate Parent agrees to unconditionally and irrevocably
guarantee to the Seller and the Designated Sellers the due and punctual performance and observance
by the Purchaser and each of the Designated Purchasers of the Purchaser Guaranteed Obligations on
the same terms as the Purchaser’s Parent under this clause 25 (the Additional Guarantee). Provided
the Seller and the Designated Sellers receive at least the same level of financial covenant and
legal protection from the Purchaser’s Ultimate Parent pursuant to this clause 25.5 (considering,
amongst other things, the relative covenant strength and credit standing of the Purchaser’s
Ultimate Parent and the Purchaser’s Parent) as they do from the Purchaser’s Parent under this
clause 25.5 and upon the consent of the Seller, such consent not to be unreasonably withheld or
delayed, the Purchaser’s Parent shall be released and discharged from all further performance,
claims, duties, liabilities and obligations under, and shall cease to be a party to, and entitled
to exercise any rights under,

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this Agreement (the Guarantee Release), provided that the Purchaser
has provided the Seller with all information that the Seller may reasonably request to enable it to
evaluate the levels of financial covenant and legal protection received from the Purchaser and the
Purchaser’s Parent. Without prejudice to the generality of clause 35, each of the Seller, the
Purchaser and the Purchaser’s Parent undertake to execute such further documents and do all such
things as may be reasonably necessary to facilitate the Guarantee Release.

26. Seller’s Guarantee

26.1 The Seller unconditionally and irrevocably guarantees to the Purchaser and the Designated
Purchasers the due and punctual performance and observance by the Seller and each of the Designated
Sellers of all of their respective obligations (including any liabilities to pay damages arising
out of or in connection with this Agreement) under or pursuant to the Transaction Documents (the
Seller Guaranteed Obligations) and hereby agrees to indemnify the Purchaser and the Designated
Purchasers in respect of the full amount of any sum payable (including any liability to pay
damages) by the Seller and each Designated Seller under or pursuant to the Transaction Documents.

26.2 Without prejudice to the rights of the Purchaser against the Seller or any of the Designated
Sellers, the Seller shall be a primary obligor and shall be deemed a principal debtor in respect of
its obligations (including the Seller Guaranteed Obligations) under this Agreement and not a
surety.

26.3 The Purchaser may enforce its rights against the Seller without first exercising any rights or
remedies against the relevant Designated Seller.

26.4 The Seller’s liability to the Purchaser under this clause 26.4 shall not be discharged,
impaired or affected by:

	(a)	 	any legal limitation, disability or incapacity or other circumstances relating to the Seller
or any of the Designated Sellers or any change in the members or status of the Seller or any
of the Designated Sellers or any other person;
	 
	(b)	 	any variation of any of the terms of this Agreement or of any of the Seller Guaranteed
Obligations;
	 
	(c)	 	any time, waiver or consent granted to or composition with the Seller or any of the
Designated Sellers or any other person;
	 
	(d)	 	the bankruptcy, liquidation or dissolution of the Seller or any of the Designated Sellers or
the appointment of a receiver, administrative receiver or administrator of the Seller or any
of the Designated Seller’s assets or any other insolvency proceeding relating the Seller or to
any of the Designated Sellers or any change of control of the Seller or any of the Designated
Sellers or any other matter affecting the obligation of the Seller or any of the Designated
Sellers to perform any Seller Guaranteed Obligation;
	 
	(e)	 	any unenforceability, illegality or invalidity of any obligation of any person under this
Agreement; or
	 
	(f)	 	any other matter which, but for this clause, would reduce, vitiate or affect the obligations
of the Seller in respect of the Seller Guaranteed Obligations.

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27. Information, Records and Assistance Post-Closing

27.1 Save as provided elsewhere in the Agreement, for 2 years following the Closing Date each
member of the Purchaser Group shall provide the Seller (at the Seller’s expense) and each member of
the Seller Group shall provide the Purchaser (at the Purchaser’s expense) with reasonable access at
reasonable times to (and the right to take copies of) the books, accounts, customer lists and all
other records that are required by law to be kept (for so long as such records are required to be
kept by law) and held by it after Closing to the extent that
they relate to the Target Business and to the period up to Closing (the Records). This obligation
is subject to the provisions of clause 31 (Confidentiality).

27.2 For 7 years following the Closing Date no member of the Purchaser Group and no member of the
Seller Group shall dispose of or destroy any of the Records without first giving the Seller or the
Purchaser, as the case may be, at least 2 months’ notice of its intention to do so and giving the
Seller or the Purchaser (as the case may be) a reasonable opportunity to remove and retain any of
them (at the Seller’s or Purchaser’s expense, as the case may be).

27.3 Each member of the Purchaser Group shall (at the Seller’s expense) and each member of the
Seller Group shall (at the Purchaser’s expense) also give such assistance to any member of the
Seller Group or the Purchaser Group as the Seller or Purchaser (as the case may be) may reasonably
request in relation to any third party proceedings by or against any member of the Seller Group or
the Purchaser Group (as the case may be) so far as they relate to the Target Business, including
proceedings relating to employees’ claims.

28. Agency Structure

Each of the Seller and the Purchaser agrees that it is entering into this Agreement on its own
behalf as principal and as agent on behalf of the Designated Sellers or (as the case may be) the
Designated Purchasers on the basis set out in Schedule 13.

29. Payments

29.1 Any payment to be made pursuant to this Agreement by the Purchaser (or any member of the
Purchaser Group) shall be made to the Seller’s Bank Account. The Seller agrees to pay each member
of the Seller Group that part of each payment to which it is entitled.

29.2 Any payment to be made pursuant to this Agreement by the Seller (or any member of the Seller
Group) shall be made to the Purchaser’s Bank Account or, in the case of any payment to any Target
Company, to such account as the Purchaser may nominate. The Purchaser agrees to pay each member of
the Purchaser Group that part of each payment to which it is entitled.

29.3 Payment under clause 29.1 and 29.2 shall, unless otherwise agreed, be in US dollars and in
immediately available funds by electronic transfer on the due date for payment. Receipt of the
amount due shall be an effective discharge of the relevant payment obligation.

29.4 If any sum due for payment in accordance with this Agreement is not paid on the due date for
payment, the person in default shall pay Default Interest on that sum from but excluding the due
date to and including the date of actual payment calculated on a daily basis.

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29.5 All sums payable under this Agreement are (unless expressly stated otherwise) exclusive of any
applicable VAT which shall be payable in addition to any such sum on receipt of a valid VAT
invoice.

30. Announcements

30.1 Until the Closing Date, neither the Seller nor the Purchaser (nor any of their respective
Affiliates) shall make any announcement or issue any circular in connection with the existence or
subject matter of this Agreement (or any other Transaction Document)
without the prior written approval of the other (such approval not to be unreasonably withheld or
delayed).

30.2 The restriction in clause 30.1 shall not apply to the extent that the announcement or circular
is required by law, by any stock exchange or any regulatory or supervisory body or authority of
competent jurisdiction, whether or not the requirement has the force of law. If this exception
applies, the party making the announcement or issuing the circular shall use its reasonable efforts
to consult with the other party in advance as to its form, content and timing.

31. Confidentiality

31.1 For the purposes of this clause 31, Confidential Information means:

	 	(i)	 	(in relation to the obligations of the Purchaser) any information
received or held by the Purchaser (or any of its Representatives) relating to
the Seller Group or, prior to Closing, any of the Target Companies and/or the
Businesses; or
	 
	 	(ii)	 	(in relation to the obligations of the Seller) any information
received or held by the Seller (or any of its Representatives) relating to the
Purchaser Group or, following Closing, any of the Target Companies and/or the
Businesses; and
	 
	 	(iii)	 	information relating to the provisions of, and negotiations
leading to, this Agreement and the other Transaction Documents

and includes written information and information transferred or obtained orally, visually,
electronically or by any other means;

31.2 Each of the Seller and the Purchaser shall (and shall ensure that each of its Representatives
shall) maintain Confidential Information in confidence and not disclose Confidential Information to
any person except (i) as this clause 31 permits or (ii) as the other party approves in writing.

31.3 Clause 31.2 shall not prevent disclosure by a party (or, as applicable, its Representatives)
to the extent it can demonstrate that:

	(a)	 	disclosure is required by law or by any stock exchange or any regulatory, governmental or
antitrust body (including any Tax authority and the US Securities and Exchanges Commission
(the SEC)) having applicable jurisdiction (provided that the disclosing party shall first
inform the other party of its intention to disclose such information, take into account the
reasonable comments of the other party and, in the case of filings with the SEC shall use its
reasonable endeavours to obtain confidential treatment in respect of any such disclosure);

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	(b)	 	disclosure is of Confidential Information which was lawfully in the possession of that party
or any of its Representatives (in either case as evidenced by written records) without any
obligation of secrecy prior to its being received or held;
	 
	(c)	 	disclosure is of Confidential Information which has previously been or becomes publicly
available other than through that party’s fault (or that of its Representatives);
	 
	(d)	 	disclosure is required for the purpose of any arbitral or judicial proceedings arising out of
this Agreement (or any other Transaction Document).

31.4 Each of the Seller and the Purchaser undertakes that it (and its Affiliates) shall only
disclose Confidential Information to Representatives if it is reasonably required for purposes
connected with this Agreement and only if the Representatives are informed of the confidential
nature of the Confidential Information.

31.5 Subject to the provisions of clause 31.3, if this Agreement terminates, each of the Seller and
the Purchaser shall as soon as reasonably practicable on written demand by the other party:

	(a)	 	destroy or return to that other party (at the option of the party so destroying or returning)
all written documents and other materials (including any note, analysis or memorandum (but
excluding any board or committee minutes) based on any Confidential Information) relating to
the other party and their Affiliates or this Agreement (including any Confidential
Information) which that other party (or its Representatives) has provided to such party (or
its Representatives), without keeping any copies of them,
	 
	(b)	 	any destruction of in accordance with clause 31.5(a) will be certified in writing to the
other party by an authorising officer supervising it; and
	 
	(c)	 	so far as it is practicable to do so, each of the Seller and the Purchasers shall take
reasonable steps to expunge such Confidential Information from any computer, word processor or
other device.

31.6 Notwithstanding the foregoing and any other provision in this Agreement, the parties (and each
employee, representative, or other agent) may disclose to any and all persons, without limitation
of any kind, the Tax treatment and Tax structure of the transaction and all materials of any kind
(including opinions or other Tax analyses) that are provided to the parties relating to such Tax
treatment and Tax structure, other than any information for which nondisclosure is reasonably
necessary in order to comply with applicable securities laws.

31.7 For the avoidance of doubt, nothing in this clause 31 shall prevent the use of Confidential
Information in accordance with those actions set out in paragraph 5 of Schedule 6 to this
Agreement.

32. Assignment

32.1 Subject to clause 32.2, unless the Seller and the Purchaser specifically agree in writing, no
person shall assign, transfer, charge or otherwise deal with all or any of its rights under this
Agreement nor grant, declare, create or dispose of any right or interest in it. Any purported
assignment in contravention of this clause 32 shall be void.

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32.2 The Purchaser (but not, for the avoidance of doubt, the Purchaser’s Parent) may (without
consent) assign the benefit of its rights pursuant to this Agreement (in whole or in part):

	(a)	 	to any member of the Purchaser Group (provided that if such assignee ceases to be a member of
the Purchaser Group (other than on a transfer to a third party purchaser for value) it shall
immediately upon such cessation assign such rights as were assigned to it to another member of
the Purchaser Group); and
	 
	(b)	 	by way of security to the Purchaser’s third party lenders (or an agent or trustee of such
lenders) in connection with the financing of the purchase of the Shares and/or the Businesses
(and the Seller agrees that, on or following any enforcement of such security, the Purchaser
or such Lenders (or their agent or trustee as the case may be) may further assign the benefit
of this Agreement to a purchaser for value of all or part of the Target Companies). The
Purchaser acknowledges and agrees that the rights conferred on any such assignee shall only be
exercisable at the same time as it exercises its security under such finance arrangements,

provided that:

	 	(i)	 	no such assignment shall operate to impose any additional
liability or increase the liability of the Seller pursuant to this Agreement;
	 
	 	(ii)	 	the Purchaser notifies the Seller in writing promptly upon it
exercising any right of assignment pursuant to this clause 32.2; and
	 
	 	(iii)	 	the Purchaser may not seek to assign, novate or otherwise
transfer any of its obligations pursuant to this Agreement which shall remain
the responsibility of the Purchaser notwithstanding any assignment of its rights
pursuant to this clause 32.2.

33. Transfer of assets

33.1 Nothing in this Agreement shall prevent the Target Companies, the Business Sellers and the
relevant members of the Seller Group from implementing or performing the Pre-Closing Transfer of
Assets, or taking any action necessary in connection with such Pre-Closing Transfer of Assets.

33.2 The Seller undertakes to indemnify, defend and hold harmless the Target Companies and each
member of the Purchaser Group from and against any and all Liabilities or Costs (other than Tax
which shall be governed exclusively by paragraph 2.1(d) of Schedule 11) suffered or incurred by any
Target Company, any member of the Purchaser Group or anyone connected to any Target Company or any
member of the Purchaser Group arising out of, as a result of, or in connection with the
implementation or performance of the Pre-Closing Transfer of Assets.

33.3 Without prejudice to any other rights and remedies of either the Purchaser or the Seller under
this Agreement, in the event that the Seller or any other member of the Seller Group, after
Closing, (for the purposes of this clause 33.3 the Holder) owns, leases or licences any asset
which, immediately prior to Closing, was used by a Target Company or any Business Seller or member
of the Seller Group in connection with the carrying out of the relevant Target Business, other than
any asset owned, leased or licensed by the Seller and/or any other member of the Seller Group which
is covered by the provisions of an executed

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 separation and transition agreement (where the
provisions of such separation and transition agreement shall apply in respect of that asset), and
the Purchaser gives the Seller a written request that the Holder transfers the relevant asset to
the Purchaser (or its designate), a Target Company or a Business Purchaser (as the Purchaser shall
so direct and being the Recipient) or if a member of the Seller Group becomes aware that such asset
exists, in each case within 24 months of the date of Closing, then the Seller or the relevant
member of the Seller Group shall:

	(a)	 	if the relevant asset was, immediately prior to the Closing, used exclusively or
predominantly by a Target Company, a Business Seller or a member of the Seller Group in the
carrying out of the relevant Target Business, do all such acts and things as may be necessary
to transfer all right interest and title in and to the relevant asset absolutely to the
Recipient for nil consideration; or
	 
	(b)	 	except as relates to IP, which is dealt with in Schedule 10, or Employees, or if the
Purchaser directs the Holder not to transfer the relevant asset absolutely, or until such
transfer is effected and if the relevant asset was, immediately prior to Closing, used, but
not exclusively or predominantly, by a Target Company, a Business Seller or a member of the
Seller Group in connection with the relevant Target Business in carrying out their respective
businesses, grant (or, if the owner is no long a member of the Seller Group, use best
endeavours to grant) to the Recipient a royalty-free, perpetual, transferable, irrevocable,
worldwide right and licence (with a right to sub-license to a member of the Purchaser’s Group
and transfer to a third party on a business sale) to use the relevant asset in the same
manner (in all material respects) as the relevant asset was so used immediately prior to
Closing,

provided that if any third party consent or approval is required for the transfer of, or the grant
of the licence in relation to, the relevant asset to be effective or lawful, then the Seller shall
or shall procure that such member of the Seller Group (as the case may be) shall use its best
endeavours to obtain that consent or approval as soon as reasonably practicable, upon which the
relevant asset shall be transferred to the Recipient or a licence shall be granted to the Recipient
as the case may be, in each case at no cost to any member of the Purchaser Group or to any Target
Company.

33.4 Without prejudice to any other rights and remedies of either the Purchaser or the Seller under
this Agreement, in the event that the Purchaser or the Target Companies or the Business Purchaser
or any other member of the Purchaser Group, after Closing, (for the purposes of this clause 33.4,
the Holder) owns, leases or licences any asset which, immediately prior to Closing, was used by a
member of the Seller Group exclusively or predominantly in connection with business other than the
relevant Target Business, other than any asset owned, leased or licensed by the Seller and/or any
other member of the Seller Group which is covered by the provisions of an executed separation and
transition agreement (where the provisions of such separation and transition agreement shall apply
in respect of that asset), and the Seller gives the Purchaser a written request that the Holder
transfers the relevant asset to the Seller or a member of the Seller Group (as the Seller shall so
direct) or the Purchaser becomes aware that such assets exists, in each case, within 24 months of
the date of Closing, then the Purchaser or the relevant member of the Purchaser Group shall do all
such acts and things as may be necessary to transfer the relevant asset absolutely to the Seller or
such member of the Seller Group for nil consideration.

33.5 For the avoidance of doubt, any costs or expenses incurred in connection with the Pre-Closing
Transfer of Assets under clause 33.1 shall be borne by the Seller.

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34. Non-Solicitation

34.1 Subject to clause 34.2, the Seller covenants with the Purchaser that for the period of 12
months following Closing, it will not solicit the services of, offer employment to or employ,
entice away or endeavour to entice away any officer, consultant or senior or managerial employee of
the Target Business or member of the Purchaser Group at the date of this Agreement whose departure
from a Target Company or the Businesses would, in the reasonable opinion of Purchaser, have an
adverse effect on the Target Business, with a view to inducing that person to leave such employment
or engagement (whether or not such person would commit any breach of his contract of employment or
engagement by reason of leaving the service of such company).

34.2 The restrictions in clause 34.1 shall not apply to: (i) any public advertisements for
employment placed by the Seller and not specifically targeted at persons employed or engaged by a
Target Company or a Business Purchaser; (ii) any person employed or engaged by a Target Company or
a Business Purchaser contacting the Seller on his or her own initiative without any direct or
indirect solicitation by or encouragement from the Seller; or (iii) any person employed or engaged
by a Target Company or Business Purchaser who ceases to be employed or engaged by a Target Company
or Business Purchaser prior to any restricted action under clause 34.1.

35. Further Assurances

35.1 Each of the Seller and the Purchaser shall, for a period of 24 months from the Closing Date,
execute (or procure the execution of) such further documents and do all such things as may be
required by law or be necessary to implement and give effect to this Agreement and the Transaction
Documents.

35.2 Each of the Seller and the Purchaser shall procure that its Affiliates comply with all
obligations under this Agreement which are expressed to apply to any such Affiliates.

36. Costs

36.1 Subject to clause 36.2 and except as otherwise provided in this Agreement (or any other
Transaction Document), the Seller and the Purchaser shall each be responsible for its own costs,
charges and other expenses (including those of its Affiliates) incurred in connection with the
Proposed Transactions.

36.2 The Purchaser or its Affiliates shall bear all stamp duty, notarisation fees or other
documentary transfer or transaction duties, and all stamp duty reserve Tax, stamp duty land Tax and
any other transfer Taxes (Transfer Taxes) including in each case any related interest or penalties
arising as a result of this Agreement or of any of the other Transaction Documents.

37. Notices

37.1 Any notice in connection with this Agreement shall be in writing in English and delivered by
hand, fax, registered post or courier using an internationally recognised courier company. A
notice shall be effective upon receipt and shall be deemed to have been received (i) at the time of
delivery, if delivered by hand, registered post or courier or (ii) at the time of transmission if
delivered by fax provided that in either case, where delivery occurs outside
Working Hours, notice shall be deemed to have been received at the start of Working Hours on the
next following Business Day.

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37.2 The addresses and fax numbers of the parties for the purpose of clause 37.1 are:

	 	 	 
	 
	 	 
	Seller
	 	 
	 
	 	 
	Address:

	 	REED ELSEVIER GROUP PLC
	 

	 	1-3 Strand
	 

	 	London
	 

	 	WC2N 5JR
	 
	 	 
	For the attention of:

	 	General Counsel
	 
	 	 
	Purchaser
	 	 
	 
	 	 
	Address:

	 	HMRH ACQUISITION CO.
	 

	 	2711 Centreville Road
	 

	 	Suite 400
	 

	 	City of Wilmington
	 

	 	County of New Castle
	 

	 	State of Delaware 19808
	 

	 	USA
	 
	 	 
	For the attention of:

	 	The President
	 
	 	 
	Copy to:

	 	Weil Gotshal Manges
	 

	 	c/o Mark Soundy & Simon Burrows
	 

	 	(REF: 70073.0006)
	 

	 	1 South Place
	 

	 	London
	 

	 	EC2M 2WG
	 
	 	 
	Purchaser’s Parent
	 	 
	 
	 	 
	Address:

	 	HOUGHTON MIFFLIN RIVERDEEP GROUP PLC
	 

	 	Styne House
	 

	 	Upper Hatch Street
	 

	 	Dublin 2, Ireland
	 
	 	 
	For the attention of:

	 	The President
	 
	 	 
	Copy to:

	 	Weil Gotshal Manges
	 

	 	c/o Mark Soundy & Simon Burrows
	 

	 	(REF: 70073.0006)
	 

	 	1 South Place
	 

	 	London
	 

	 	EC2M 2WG

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	Purchaser’s Ultimate Parent
	 	 
	 
	 	 
	Address:

	 	EDUCATION MEDIA AND PUBLISHING GROUP

LIMITED
	 

	 	c/o Styne House
	 

	 	Upper Hatch Street
	 

	 	Dublin 2, Ireland
	 
	 	 
	For the attention of:

	 	The President
	 
	 	 
	Copy to:

	 	Weil Gotshal Manges
	 

	 	c/o Mark Soundy & Simon Burrows
	 

	 	(REF: 70073.0006)
	 

	 	1 South Place
	 

	 	London
	 

	 	EC2M 2WG

38. Agent for Service of Process

38.1 The Purchaser shall at all times maintain an agent for service of process and any other
documents in proceedings in England or any other proceedings in connection with this Agreement.
Such agent shall be Law Debenture Corporate Services Limited currently of Fifth Floor 100 Wood
Street London EC2V 7EX and any claim form, judgment or other notice of legal process shall be
sufficiently served on the Purchaser if delivered to such agent at its address for the time being.
The Purchaser irrevocably undertakes not to revoke the authority of the above agent and if, for any
reason, the Seller requests the Purchaser to do so he shall promptly appoint another such agent
with an address in England and advise the Seller. If, following such a request, the Purchaser fails
to appoint another agent the Seller shall be entitled to appoint one on behalf of the Purchaser at
the expense of the Purchaser.

38.2 The Purchaser’s Parent shall at all times maintain an agent for service of process and any
other documents in proceedings in England or any other proceedings in connection with this
Agreement. Such agent shall be Law Debenture Corporate Services Limited currently of Fifth Floor
100 Wood Street London EC2V 7EX and any claim form, judgment or other notice of legal process shall
be sufficiently served on the Purchaser’s Parent if delivered to such agent at its address for the
time being. The Purchaser’s Parent irrevocably undertakes not to revoke the authority of the above
agent and if, for any reason, the Seller requests the Purchaser’s Parent to do so he shall promptly
appoint another such agent with an address in England and advise the Seller. If, following such a
request, the Purchaser’s Parent fails to appoint another agent the Seller shall be entitled to
appoint one on behalf of the Purchaser’s Parent at the expense of the Purchaser’s Parent.

38.3 The Purchaser’s Ultimate Parent shall at all times maintain an agent for service of process
and any other documents in proceedings in England or any other proceedings in connection with this
Agreement. Such agent shall be Law Debenture Corporate Services Limited currently of Fifth Floor
100 Wood Street London EC2V 7EX and any claim form, judgment or other notice of legal process shall
be sufficiently served on the Purchaser’s
Ultimate Parent if delivered to such agent at its address for the time being. The Purchaser’s
Ultimate Parent irrevocably undertakes not to revoke the authority of the above agent and if,

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for
any reason, the Seller requests the Purchaser’s Ultimate Parent to do so he shall promptly appoint
another such agent with an address in England and advise the Seller. If, following such a request,
the Purchaser’s Ultimate Parent fails to appoint another agent the Seller shall be entitled to
appoint one on behalf of the Purchaser’s Ultimate Parent at the expense of the Purchaser’s Ultimate
Parent.

39. Conflict with other Agreements

If there is any conflict between the terms of this Agreement and any other agreement entered in
connection with the Proposed Transactions this Agreement shall prevail (as between the parties to
this Agreement and as between any members of the Seller Group and any members of the Purchaser
Group) unless (i) such other agreement expressly states that it overrides this Agreement in the
relevant respect and (ii) the Seller and the Purchaser are either also parties to that other
agreement or otherwise expressly agree in writing that such other agreement shall override this
Agreement in that respect.

40. Whole Agreement

40.1 In this clause 40 the Relevant Parties shall mean the Seller, the Purchaser, each Designated
Seller and each Designated Purchaser, and each of them shall be a Relevant Party.

40.2 Save for the Confidentiality Agreement, which shall remain in force in accordance with its
terms, this Agreement and the other Transaction Documents together set out the whole agreement
between the Relevant Parties in respect of the sale and purchase of the Shares and the Businesses
and supersede any prior agreement (whether oral or written) relating to the Proposed Transactions.
It is agreed that:

	(a)	 	no Relevant Party shall have any claim or remedy in respect of any statement, representation,
warranty or undertaking made by or on behalf of any other Relevant Party (or any of its
Connected Persons) in relation to the Proposed Transactions which is not expressly set out in
this Agreement or any other Transaction Document;

	(b)	 	any terms or conditions implied by law in any jurisdiction in relation to the Proposed
Transactions are excluded to the fullest extent permitted by law or, if incapable of
exclusion, any right, or remedies in relation to them are irrevocably waived;

	(c)	 	the only right or remedy of a Relevant Party in relation to any provision of this Agreement
or any other Transaction Document shall be for breach of this Agreement or the relevant
Transaction Document; and

	(d)	 	except for any liability in respect of a breach of this Agreement or any other Transaction
Document, no Relevant Party (or any of its Connected Persons) shall owe any duty of care or
have any liability in tort or otherwise to any other Relevant Party (or its respective
Connected Persons) in relation to the Proposed Transactions

provided that this clause shall not exclude any liability for (or remedy in respect of) fraudulent
misrepresentation. Each Relevant Party agrees to the terms of this clause 40 on its own behalf and
as agent for each of its Connected Persons. For the purpose of this clause, Connected Persons
means (in relation to a Relevant Party) the officers, employees, agents and advisers of that
Relevant Party or any of its Affiliates.

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41. Waivers, Rights and Remedies

Except as expressly provided in this Agreement, no failure or delay by any party in exercising any
right or remedy relating to this Agreement or any of the Transaction Documents shall affect or
operate as a waiver or variation of that right or remedy or preclude its exercise at any subsequent
time. No single or partial exercise of any such right or remedy shall preclude any further
exercise of it or the exercise of any other remedy.

42. Counterparts

This Agreement may be executed in any number of separate counterparts, each of which is an original
but all of which taken together shall constitute one and the same instrument.

43. Variations

No amendment of this Agreement (or of any other Transaction Document) shall be valid unless it is
in writing and duly executed by or on behalf of all of the parties to it.

44. Invalidity

Each of the provisions of this Agreement and the other Transaction Documents is severable. If any
such provision is held to be or becomes invalid or unenforceable in any respect under the law of
any jurisdiction, it shall have no effect in that respect and the parties shall use all reasonable
efforts to replace it in that respect with a valid and enforceable substitute provision the effect
of which is as close to its intended effect as possible.

45. No Third Party Enforcement Rights

A person who is not a party to this Agreement shall have no right under any statutory provision to
enforce any of its terms.

46. Governing Law and Jurisdiction

46.1 This Agreement shall be governed by, and interpreted in accordance with, English law.

46.2 Except as expressly provided otherwise in this Agreement, the courts of England are to have
exclusive jurisdiction to settle any disputes which may arise in connection with this Agreement.
For such purposes each party irrevocably submits to the jurisdiction of the English courts, waives
any objections to the jurisdiction of those courts and irrevocably agrees that a judgment or order
of the English courts in connection with this Agreement is conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.

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DEFINITIONS AND INTERPRETATION

1. Definitions. In this Agreement, the following words and expressions shall have the
following meanings:

Accounts means the carve-out accounts for the Target Business prepared in accordance with US GAAP
for the three years ended 31 December 2006, 31 December 2005 and 31 December 2004, each in the
Agreed Form;

Additional Locked Box Inter Company Debt means Inter Company Debt at the Locked Box Balance Sheet
Date in respect of the Target Business, other than Locked-Box Inter Company Debt;

Affiliate means, in relation to any party, any subsidiary or parent company of that party and
any subsidiary of any such parent company, in each case from time to time;

Affiliated Group means any affiliated group within the meaning of Code section 1504(a) or any
affiliated, consolidated, combined, unitary or other similar group defined under similar provisions
of state, local or foreign law;

Agreed Form means, in relation to a document, the form of that document as initialled on the
date of this Agreement for the purpose of identification by or on behalf of the Seller and the
Purchaser (in each case with such amendments as may be agreed in writing by or on behalf of the
Seller and the Purchaser);

Assumed Liabilities means all Assumed Business Debt, all Business Liabilities and all
Liabilities relating to the Business Properties, in each case excluding the Excluded Liabilities;

Benefit means any fees including directors’ fees or monitoring fees;

Business means, in relation to each Business Seller, any business carried on by that Business
Seller as at Closing which exclusively or predominantly forms part of the Target Business (but
excluding any Shares held by that Business Seller), and Businesses shall be construed accordingly;

Business Assets means, in relation to each Business, all the property, undertaking, rights and
assets of the relevant Business Seller relating exclusively or predominantly to that Business
including any assets falling into the categories of assets set out in Part A of Schedule 2 but
excluding the Excluded Assets;

Business Claims means the benefit of all rights and claims arising exclusively or
predominantly from the carrying on of any Business by a Business Seller (whether arising on, prior
to or after Closing) but excluding rights and claims to the extent that they relate to Taxation or
to any of the Excluded Assets or the Excluded Liabilities;

Business Consideration means the aggregate of the amounts set out in column 5 of Part B of
Schedule 1;

Business Contracts means, in relation to each Business Seller, all contracts, engagements,
licences, guarantees and other commitments to the extent that they relate to the Target Business
entered into by or on behalf of, or the benefit of which is held on trust for or has

-34-

 

been assigned to, that Business Seller prior to Closing (but excluding agreements, leases or other
documents relating to ownership or occupation of Business Properties);

Business Day means a day other than a Saturday or Sunday or public holiday in England and
Wales on which banks are open in London for general commercial business;

Business Goodwill means the goodwill relating to each Business, together with the exclusive
right for the relevant Business Purchaser to represent itself as carrying on such Business in
succession to the relevant Business Seller;

Business Information means, in relation to each Business, all information (in whatever medium
stored) owned and in the possession, power or control of a Business Seller to the extent that such
information relates exclusively or predominantly to that Business and is used in the management or
conduct of that Business, including information relating to: (a) products, employees, formulae,
designs, specifications, drawings, data, manuals instructions, (b) customer and supplier lists and
details, (c) all commercial relationships and project negotiations, (d) business plans and
forecasts, (e) all technical and other expertise and Confidential Information, (f) accounting and
Tax records and (g) correspondence, orders and enquiries;

Business Liabilities means, in relation to each Business, all Liabilities of the relevant
Business Seller (including Trade Creditors and Inter Company Payables other than Locked Box Inter
Company Debt) to the extent that they relate to the Business and/or the Business Assets (excluding
any Liabilities relating to any Business Properties), and Business Liability means any one of them;

Business Loose Plant and Equipment means, in relation to each Business, all the loose plant,
machinery, equipment, tooling, computer hardware, furniture and vehicles of the relevant Business
Seller (not being business fixtures and fittings) used exclusively for the purposes of that
Business;

Business Properties means the properties of the Business Sellers short particulars of which
are set out in Part B of Exhibit 4;

Business Purchasers means any member of the Purchaser Group established as a Designated
Purchaser of any Business pursuant to a Supplemental Agency Agreement, and Business Purchaser means
any one of them;

Business Sellers means the members of the Seller Group set out in column 1 of Part B of
Schedule 1 or any member of the Seller Group established as a Designated Seller of any Business
pursuant to a Supplemental Agency Agreement, and Business Seller means any one of them;

Capex Projects means, in relation to each Target Company or Business, the projects undertaken
by that Target Company or the relevant Business Seller to the extent that they relate to the
purchase, replacement, repair, refurbishment or improvement of, or addition to, any tangible fixed
assets owned or leased by that Target Company or Business Seller (in relation to the relevant
Business), including property, plant and equipment, furniture, fittings and furnishings and floor
coverings;

Capital Creditors means liabilities and accruals for work done in relation to Capex Projects
to the extent that they have not been paid prior to Closing (based upon evidence such as invoices,
evidence of work certified, quantity surveyor reports, licences, hours worked by

-35-

 

contractors and staff or other substantive evidence of purchase, replacement, repair,
refurbishment, improvement or addition);

Cash means all cash earned exclusively by the Businesses between the Locked Box Balance Sheet
Date and Closing and not taken into account in the Cash Pooling Balance;

Cash Pooling Balance means the balance (whether positive or negative) as at the Closing Date
of the operation of the cash pooling arrangement described in the definition of Permitted Leakage;

Claim means any claim for breach of the Warranties and/or any Tax Claim;

Closing means completion of the sale and purchase of the Shares, the Businesses and the
Business Assets relating to the Target Business in accordance with the provisions of this
Agreement;

Closing Date has the meaning given in clause 7.1;

COBRA means Public Law 99-272 Consolidated Omnibus Budget Reconciliation Act;

Code means the Internal Revenue Code of 1986, as amended;

Commitment Letter means the commitment letter from Credit Suisse Securities (US) LLC and
Lehman Brothers Commercial Bank (and certain of their affiliates) to the Purchaser relating to
certain senior credit facilities;

Condition has the meaning given in clause 3.1;

Confidentiality Agreement means the confidentiality agreement entered into between the Seller
and the Purchaser’s Parent dated 4 June 2007;

Confidential Information has the meaning given in clause 31.1;

Consideration means the aggregate of the amounts set out in column 5 of Parts A and B of
Schedule 1;

Costs means losses, damages, costs (including reasonable legal costs) and expenses (including
Taxation), in each case of any nature whatsoever;

Current US Benefit Plan means all material US Benefit Plans existing on the Closing Date which
provide benefits to the US Business Employees;

Data Room means the documents included in the data room, an index of which is attached to the
Disclosure Letter;

Debt Documentation means the Commitment Letter and the First Secured Interim Loan Agreement, the
Second Unsecured Interim Loan Agreement and the PIK Loan Facility;

Default Interest means interest at LIBOR plus 4%;

Designated Purchasers means the Share Purchasers and the Business Purchasers, and Designated
Purchaser means any one of them;

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Designated Sellers means the Share Sellers and the Business Sellers, and Designated Seller
means any one of them;

Disclosure Letter means the letter from the Seller to the Purchaser regarding information
relating to the Target Business, executed and delivered immediately before the signing of this
Agreement;

Equity Documentation means the underwriting agreement of even date herewith between the
Seller, the Purchaser’s Parent, Fletcher Group Limited, Cheyne Special Situations I Limited, Neruda
Limited, Davycrest Nominees Limited, FlinnHMR, LLC, Istithmar Education Corporation (Cayman), Urago
Limited, Trioc RD Limited and Torsby Overseas Limited;

ERISA means the Employee Retirement Income Security Act of 1974, as amended and the rules and
regulations promulgated thereunder;

ERISA Claim means a claim brought under this Agreement arising from or relating to a breach of
ERISA;

Exchange Rate means, with respect to a particular currency for a particular day, the spot rate
of exchange (the closing mid-point) for that currency into US dollars on such date as published in
the London edition of the Financial Times first published thereafter or, where no such rate is
published in respect of that currency for such date, at the rate quoted by HSBC as at the close of
business in London on such date;

Excluded Assets means, in relation to any Business, those properties, rights and assets
relating to that Business described in Part B of Schedule 2;

Excluded Liabilities means the Liabilities described in Part C of Schedule 2 and (i) any claim
by or on behalf of any UK Business Employees or US Business Employees or US Target Employees
arising from or in connection with their employment or its termination on or prior to the Closing
Date attributable to any action or failure to act by the Seller, any member of the Seller group or
the Target Companies on or prior to the Closing Date, (ii) any liability in relation to any
individual who does not become a Transferred Employee or an Affected Employee at any time, (iii)
any liability in relation to any Seller Plan, US Benefit Plan, US Retirement Plan and the Reed
Elsevier Pension Scheme incurred on or prior to the Locked Box Balance Sheet Date and (iv) claims
for workers compensation or for the type of benefits described in Section 3(1) of ERISA (whether or
not covered by ERISA) that are incurred on or prior to the Locked Box Balance Sheet Date by
Affected Employees or US Business Employees, including claims relating to COBRA coverage
attributable to “qualifying events” occurring on or prior to the Locked Box Balance Sheet Date with
respect of any Affected Employees or US Business Employees and their beneficiaries and dependents;

Exhibits means exhibits 1 to 4 of this Agreement, and Exhibit shall be construed accordingly;

Financial Debt means borrowings and indebtedness in the nature of borrowing (including by way
of acceptance credits, discounting or similar facilities, loan stocks, bonds, debentures, notes,
overdrafts or any other similar arrangements the purpose of which is to raise money) owed to any
banking, financial, acceptance credit, lending or other similar institution or organisation;

Financing Documentation means the Debt Documentation and the Equity Documentation;

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First Secured Interim Loan Agreement means the senior secured interim loan agreement, of even
date herewith, between, amongst others, the Purchaser, the Purchaser’s Parent, HMRH
Holdings Co., Credit Suisse, Cayman Islands Branch and the lenders and guarantors party to that
agreement;

First Longstop Date means Monday 23 June 2008;

Governmental Entity means any supra-national, national, state, municipal or local government
(including any subdivision, court, administrative agency or commission or other authority thereof)
or any quasi-governmental or private body exercising any regulatory, Taxing, importing or other
governmental or quasi-governmental authority, including the European Commission;

HMR Paper means common stock with a nominal value of US$0.001 in the Purchaser’s Parent or, if
the HMR Reorganisation has become effective prior to Closing, in the Purchaser’s Ultimate Parent;

HMR Reorganisation means the ongoing reorganisation involving the establishment of a new
Cayman Islands incorporated group holding company, the Purchaser’s Ultimate Parent, by way of a
scheme of arrangement under section 201 of the Irish Companies Act 1963, implemented substantially
in accordance with the terms of the applicable documentation in the Purchaser Information Pack;

HMR Topco means the Purchaser’s Parent or, following the HMR Reorganisation becoming
effective, the Purchaser’s Ultimate Parent;

IFRS means the International Financial Reporting Standards;

IP Assignment Agreement means the assignment of registered Owned IP and in the Agreed Form;

Indirect Tax means any value added, goods, sales or turnover Tax and any equivalent or similar
Tax arising in any jurisdiction but shall not, for the avoidance of doubt, include (i) any stamp
duty, notarisation fee or other documentary transfer or transaction duty or stamp duty reserve Tax,
stamp duty land Tax or any other similar Tax; or (ii) any deduction or withholding Tax or (iii)
state franchise Tax or employee withholding Tax;

Initial Notification has the meaning given in clause 3.3;

Intellectual Property Rights or IP means patents, trade marks, service marks, logos, get-up,
trade names, internet domain names, rights in designs, copyright (including rights in computer
software) and moral rights, database rights, semi-conductor topography rights, utility models,
rights in know-how, trade secrets, confidential information, and other intellectual property
rights, in each case whether registered or unregistered and all rights or forms of protection
having equivalent or similar effect anywhere in the world and registered includes registrations and
applications for registration and for the avoidance of doubt, each right capable of separate
ownership is to be regarded as a separate intellectual property right;

Inter Company Consideration means the equivalent amount in US dollars of the aggregate of the
amount owed by a member of the Seller Group to a Target Company in relation to the Target Business
at the Locked Box Balance Sheet Date less the amounts owed by a Target Company to a member of the
Seller Group in relation to the Target Business at the Locked Box Balance Sheet Date, in each case
as shown in the Locked Box Inter Company

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Spreadsheet, calculated using the Exchange Rate on the day
which is five Business Days prior to the Closing Date;

Inter Company Debt means Inter Company Payables and Inter Company Receivables, but for the
purposes of paragraphs 2 and 3 of Schedule 12 shall exclude all Locked Box Inter Company Debt and
Additional Locked Box Inter Company Debt;

Inter Company Payables means, in relation to any Target Company or Business, any amounts owed
by that Target Company or Business Seller in relation to the Business to any member of the Seller
Group (which is not an amount in respect of Tax), together with accrued interest, if any, up to the
date of Closing on the terms of the applicable debt including in respect of Inter Company Trading
Debt but excluding any amounts settled as a result of payment of the Cash Pooling Balance;

Inter Company Receivables means, in relation to each Target Company or Business, any amounts
owed to that Target Company or Business Seller in relation to the Business by any member of the
Seller Group (which is not an amount in respect of Tax), together with accrued interest, if any, up
to the date of Closing on the terms of the applicable debt including in respect of Inter Company
Trading Debt but excluding any amounts settled as a result of payment of the Cash Pooling Balance;

Inter Company Trading Debt means all amounts owed, outstanding or accrued in the ordinary
course of trading, including any Indirect Tax arising on such amounts, as between (i) any member of
the Seller Group and any Target Company or (ii) a Business Seller and any member of the Seller
Group (in the case of (ii), only to the extent that the relevant amount relates to the Business of
the relevant Business Seller) as at Closing in respect of inter-company trading activity and the
provision of services, facilities and benefits between them; for the avoidance of doubt, Inter
Company Trading Debt includes, where applicable, amounts owed in respect of salaries or other
employee benefits (including payroll Taxes thereon), insurance (including health and motor
insurance), pension and retirement benefit payments, management training and car rental payments
paid or management services provided between them up to Closing;

IT Systems means all the information and communications technologies used by the Target
Companies, and in relation to the Target Business and the Business Sellers, including without
limitation all hardware, Software, websites, communications systems and computer systems but
excluding networks generally available to the public;

Leakage means:

	(a)	 	the payment of any sum by any Target Company whether by way of distribution, dividend, return
of capital (whether by reduction of capital or redemption or purchase of shares) or otherwise
other than in respect of Tax;

	(b)	 	the transfer of any asset by any Target Company other than in respect of Tax;

	(c)	 	the indemnification or incurring of any liability by any Target Company other than in respect
of Tax;

	(d)	 	the payment of any costs, bonuses or other sums by any Target Company other than in respect
of Tax; or

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	(e)	 	any Tax paid by a Target Company or a Business Seller for which the Seller or any Affiliate
of the Seller (other than any Target Company) or Business Seller is primarily liable,

in each case to, on behalf of, or for the benefit of any Share Seller or Business Seller or, in the
case of (e), the Seller or any Affiliate of the Seller (except that all management and service
charges and recharges, to the extent that such charges and recharges are of a type and amount which
is reasonably consistent with ordinary practice in the 12 months prior to the date of this
Agreement, shall not constitute Leakage and shall continue to be payable in accordance with the
terms applying as at the date of this Agreement), save to the extent that any of the above actions
constitute Permitted Leakage;

Liabilities means all liabilities, duties and obligations of every description, whether
deriving from contract, common law, statute or otherwise, whether present or future, actual or
contingent or ascertained or unascertained and whether owed or incurred severally or jointly or as
principal or surety;

LIBOR means the display rate per annum of the offered quotation for deposits in sterling for a
period of one month which appears on the appropriate page of the Reuters Screen (or such other page
as the parties may agree) at or about 11.00 a.m. London time on the date on which payment of the
sum under this Agreement was due but not paid (except in relation to clause 2.1 where the rate
shall be as at the Closing Date, and clause 6.3 where the rate shall be as at the date on which the
Leakage was received by the Seller or its Representative, as appropriate);

Locked Box Balance Sheet means the unaudited balance sheet of the Target Business prepared in
accordance with IFRS as at 31 December 2006 and in the Agreed Form;

Locked Box Balance Sheet Date means 31 December 2006;

Locked Box Inter Company Debt means the amounts recorded in the Locked Box Inter Company
Spreadsheet in respect of the Inter Company Debt as at the Locked Box Balance Sheet Date in respect
of the Target Business;

Locked-Box Inter Company Spreadsheet means the spreadsheet in the Agreed Form setting out the
Inter Company Payables and the Inter Company Receivables as at the Locked Box Balance Sheet Date;

Management Accounts means the unaudited monthly management accounts including the income
statement and cash flow statement of the Target Business for the period ending on 31 May 2007;

Material Adverse Change means any event that has given rise or which, in the reasonable
opinion of the Seller, is likely to give rise to any material adverse change to the financial
condition or results of operations of Target Business, except for any change or event that has
arisen on account of, or results from:

	(a)	 	any changes generally affecting the industries or markets in which the Target Business
operates;

	(b)	 	any changes in economic or political conditions generally, including any changes in
macroeconomic factors, interest rates, general financial market conditions, war, terrorism or
hostilities; or

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	(c)	 	changes in the law, generally accepted accounting principles or official interpretations of
the foregoing;

Monthly Information Package has the meaning given in paragraph 5 of Schedule 6;

Non-Exclusive Information means information in the possession of members of the Seller Group
which does not relate exclusively or predominantly to the Target Business;

Non-Tax Claim means a Claim other than a Tax Claim;

Obligations means the obligations set out in Schedule 15;

Overall Objectives has the meaning given in clause 23.1;

Owned IP means the Registered Owned IP and other unregistered Intellectual Property Rights
owned by the Business Sellers and any member of the Seller Group that are used exclusively or
predominantly in relation to the Target Business other than the Target Company IP;

parent company means any company which holds a majority of the voting rights in another
company, or which is a member of another company and has the right to appoint or remove a majority
of its board of directors, or which is a member of another company and controls a majority of the
voting rights in it under an agreement with other members, in each case whether directly or
indirectly through one or more companies and, in relation to the Seller, also includes (but is not
limited to) Reed Elsevier Group PLC;

Pearson means Pearson PLC;

Pearson Closing Date means relevant date of the completion of each of the transactions contemplated
by the Pearson TSA;

Pearson SPA means the sale and purchase agreement entered into between the Seller and Pearson
for the sale and purchase of the shares and assets relating to the assessment and international
education business of Reed Elsevier, dated 4 May 2007;

Pearson Target Business means the assessment and international education business of the Seller
immediately prior to the signing of the Pearson SPA;

Pearson Target Companies means Harcourt Assessment Inc., Harcourt Assessment B.V., Les
Editions du Centre Pyschologie Appliquee SA, Harcourt Test Services GmbH, Harcourt Assessment
Sweden AB, Harcourt Education Limited, Heinemann Education Botswana Publishers (Pty) Limited,
Heinemann Publishers (Pty) Limited, Leading Edge Economics Pty Limited and Reed Publishing (NZ)
Limited;

Pearson TSA means the transitional services agreement to be entered into by Harcourt Education
Inc. and Pearson (or one of its Affiliates) relating to the provision of transitional services
between the Business and Pearson (or its Affiliates), details of which are set in the side letter
from the Seller to the Purchaser of even date herewith;

Permitted Encumbrances means security interests arising in the ordinary course of business or
by operation of law including security interests for Taxation and other governmental charges;

Permitted Leakage means:

-41-

 

	(a)	 	the operation of the Seller Group and Target Business cash pooling arrangements since the
Locked Box Balance Sheet Date in a manner consistent with ordinary and usual practice over the
twelve months preceding this Agreement under which any positive cash balances of the Target
Business will be pooled with the other cash resources of the Seller Group and the Seller Group
will make available to the Target
Business, sufficient cash to make good any negative cash balances in respect of the Target
Business on or after the Locked Box Balance Sheet Date; and
	 
	(b)	 	any Pre-Closing Transfer of Assets;

PIK Loan Facility means the unsecured pay-in-kind interim loan agreement, of even date herewith,
between, amongst others, the Purchaser, HMRH Holdings Co., the Purchaser’s Parent, Credit Suisse,
Cayman Islands Branch and the lenders party to that agreement;

Post-Closing Period means any Tax period or portion thereof beginning after the Closing Date;

Pre-Closing Period means any Tax period or portion thereof that is neither a Post-Closing
Period nor a Straddle Period;

Pre-Closing Transfer of Assets means any transfers of shares, assets or liabilities between
the Target Companies, the Business Sellers and other members of the Seller Group necessary to
ensure that either (i) all of the shares, assets and liabilities that exclusively or predominantly
relate to the Target Business are transferred to the appropriate entity so that such shares, assets
or liabilities may be transferred to a member of the Purchaser Group pursuant to and in accordance
with the terms of this Agreement or (ii) share, assets and liabilities that do not exclusively or
predominantly relate to the Target Business are transferred to the appropriate entity so that such
shares, assets or liabilities are not transferred to a member of the Purchaser Group pursuant to
and in accordance with the terms of this Agreement;

Properties means the Business Properties and the Target Company Properties;

Proposed Transactions means the transactions contemplated by the Transaction Documents;

Purchaser Clean Team means (a) no more than 12 members of the senior management of the
Purchaser who are not typically involved in the marketing and sales operations of the Purchaser’s
business that compete with the Target Business, and (b) the professional advisors of the Purchaser
Group, provided that all such senior management and advisors have entered into appropriate
confidentiality agreements with the Seller;

Purchaser Group means the Purchaser, the Purchaser’s Parent, the Purchaser’s Ultimate Parent
and their Affiliates from time to time;

Purchaser Information Pack means the set of documents provided by the Purchaser to the Seller
in the Agreed Form;

Purchaser Obligation means any representation, warranty, covenant, undertaking or indemnity
(including, without limitation, any covenant and/or undertaking to pay, refund or reimburse
pursuant to Schedule 11) given by the Purchaser to the Seller under this Agreement;

Purchaser’s Bank Account means the Purchaser’s bank account at Bank of America; account name:
Houghton Mifflin Company; account number 000045492008; SWIFT code

-42-

 

BOFAUS3N; ABA Number 026009593
(and/or such other account(s) as the Seller and Purchaser may agree in writing);

Purchaser Group Structure Chart means the structure chart of the Purchaser Group contained in
the Purchaser Information Pack;

Purchaser’s Guaranteed Obligations has the meaning given in clause 25.1;

Purchaser’s Parent means Houghton Mifflin Riverdeep Group PLC;

Purchaser’s Parent Articles means the Articles of Association of the Purchaser’s Parent in the
Purchaser Information Pack or as amended in accordance with Schedule 5;

Purchaser’s Ultimate Parent means Education Media and Publishing Group Limited, a company
incorporated in the Cayman Islands with number MC 188094;

Purchaser’s Ultimate Parent Articles means the Articles of Association of the Purchaser’s
Ultimate Parent in the Purchaser Information Pack or as amended in accordance with Schedule 5;

RBF Notes means loan notes to be issued by HMR Topco or one of its Affiliates and guaranteed
(on a primary obligor basis and not merely as surety) by HMR Topco and including (a) all terms and
conditions that are necessary to give effect to the terms set out in Schedule 17 in a customary
manner, and (b) such other terms and conditions as are customary for an instrument of this nature
(having regard to market practice), provided that in no event shall such instrument contain any
additional affirmative or negative covenants to those referred to in Schedule 17 or otherwise be
inconsistent with the terms set out in Schedule 17;

Records has the meaning given in clause 27.1;

Reed Elsevier Pension Scheme means the Reed Elsevier Pension Scheme established by a trust
teed and rules dated 19 October 2004 (as amended);

Registered Owned IP means the registered Intellectual Property Rights owned by the Business
Sellers, or any other member of the Seller Group and used exclusively or predominantly in relation
to the Target Business as set out in Exhibit 3;

Registered Target Company IP means the registered Intellectual Property Rights owned by the
Target Companies;

Regulatory Law means any law, statute, or regulation governing the merger control process in
any relevant jurisdiction;

Relevant Group means the Affiliated Group of which Reed Elsevier Holding Inc. is the common
parent;

Representatives means, in relation to a party, its respective Affiliates and the directors,
officers, employees, agents, advisers, accountants and consultants of that party and/or of its
respective Affiliates;

Retirement Benefit means any pension, lump sum or gratuity payable or prospectively or
contingently payable on or following retirement, leaving service, invalidity or death, but
excluding benefits provided under any arrangement the sole purpose of which is to provide

-43-

 

benefits
on the injury, accidental death or dismemberment or long-term or short-term disability of an
Employee;

Reverse Break Fee has the meaning given in clause 4.2;

Sales Bonus means a bonus to be paid in connection with the Proposed Transactions;

Second Secured Interim Loan Agreement means the second lien secured interim loan agreement, of
even date herewith, between, amongst others, the Purchaser, the Purchaser’s Parent, HMRH Holdings
Co., Credit Suisse, Cayman Islands Branch and the lenders and guarantors party to that agreement;

Second Request has the meaning given in clause 3.2;

Seller Group means the Seller and its Affiliates from time to time but excluding the Target
Companies;

Seller Guaranteed Obligation has the meaning given in clause 26.1;

Seller Obligation means any representation, warranty, covenant, undertaking or indemnity
(including, without limitation, any covenant and/or undertaking to pay, refund or reimburse
pursuant to Schedule 11) given by the Seller to the Purchaser under this Agreement;

Seller Plan means each scheme, fund, arrangement, plan or agreement under which any member of
the Seller Group provides, is (or could become) liable to provide or has agreed to provide (or to
which any member of the Seller Group contributes, is liable to contribute or has agreed to
contribute to the provision of) any Retirement Benefits for or in respect of any Employee or former
Employee and references to any Seller Plan shall be construed as also referring to its trustees,
fiduciaries, managers and administrators (as applicable).

Seller’s Bank Account means the Seller’s bank account at Citibank, N.A., 399 Park Avenue, New
York, NY; account name: Reed Elsevier Inc., account number 3838-7052; ABA# 021000089 (and/or such
other account(s) as the Seller and Purchaser may agree in writing);

Senior Equity Facility means the Senior Equity Facility Credit Agreement dated 21 December
2006 amongst Riverdeep Holdings Limited, the Lenders party thereto, Credit Suisse Securities (USA)
LLC, Citigroup Global Markets Limited and BNP Paribas, in the Agreed Form;

Senior PIK Loan Facility means the existing pay-in-kind loan agreement entered into by members
of the Purchaser Group in relation to the existing pay-in-kind loan facility of the Purchaser
Group;

Set of Shares means, in relation to a Share Seller, the shares comprising issued share capital
of any particular Target Company which are to be sold by that Share Seller under this Agreement;

Share Purchasers means any member of the Purchaser Group established as a Designated Purchaser
of any Shares pursuant to a Supplemental Agency Agreement, and Share Purchaser means any one of
them;

Share Sellers means the members of the Seller Group set out in column 1 of Part A of Schedule
1 and/or any member of

-44-

 

the Seller Group established as a Designated Seller of any Shares pursuant
to a Supplemental Agency Agreement, and Share Seller means any one of them;

Shares means the shares comprising the entire issued share capital of each of the Target Companies
set out opposite the names of the Share Sellers in column 2 of Part A of Schedule 1;

Software means all software used in connection with the business of a Target Company and/or
Target Business, including any computer programs, whether in source code or object code, whether
machine readable or otherwise, and firmware that relates to or is comprised in hardware, together
with all supporting documentation and materials necessary to enable a user to make full use of the
functionality of, or to administer effectively, such software and firmware;

Standard Agency Agreements means the agreements between the Seller and a Designated Seller or
between the Purchaser and a Designated Purchaser entered into prior to the execution of this
Agreement, appointing the Seller or the Purchaser as the Designated Seller’s or Designated
Purchaser’s agent respectively on the terms set out therein, and Standard Agency Agreement means
any one of them;

Stock means, in relation to each Business, all the raw materials, stocks, work-in-progress and
semi-finished and finished goods of the relevant Business Seller relating exclusively or
predominantly to that Business;

Straddle Period means any Tax period that includes (but does not end on) the Closing Date;

Subsidiaries means the companies details of which are set out in Exhibit 2 and Subsidiary
means any one of them;

subsidiary and subsidiaries means any company in relation to which another company is its
parent company;

Supplemental Agency Agreements means the agreements between the Seller, the Purchaser and
either a Designated Seller or Designated Purchaser to be entered into in the circumstances referred
to in Part B of Schedule 13 after the date of this Agreement (but in any case prior to or at
Closing), and Supplemental Agency Agreement means any of them;

Target Benefit Plan means those US Benefit Plans that are maintained or contributed to solely
by the Target Companies or to which the Target Companies are a party;

Target Business means the Harcourt education business, excluding, for the avoidance of doubt,
the Pearson Target Business;

Target Companies means (i) the companies the Shares of which are listed in column 2 of Part A
of Schedule 1 and details of which are set out in Exhibit 2 and (ii) the Subsidiaries, and Target
Company means any of them;

Target Company IP means the Registered Target Company IP and all other material unregistered
Intellectual Property Rights owned by the Target Companies and used in relation to the Target
Business;

-45-

 

Target Company Properties means the leasehold interests of the Target Companies brief
particulars of which are set out in Part A of Exhibit 4;

Target Sub-Group means, in relation to any Shares listed in column 2 of Part A of Schedule 1,
the Target Company whose Shares they comprise (and whose name is set out in that column) and all
Subsidiaries which are subsidiaries of that Target Company at Closing;

Tax or Taxes means all income, excise, gross receipts, ad valorem, sales, goods and services,
harmonized sales, use, employment, franchise, profits, gains, escheat, property, severance,
alternative, value added, business and occupation, license, excise, registration, estimated,
transaction, title, capital, premium, recording, inventory, business privilege, federal highway
use, commercial rent, environmental, transfer, use, abandoned property, transfer, property,
payroll, intangibles or other Taxes, fees, stamp Taxes, imposts, duties, charges, levies or
assessments in the nature of a Tax of any kind whatsoever (whether payable directly or by
withholding), together with any related interest and any penalties, surcharges, additions to Tax or
additional amounts imposed by any Governmental Entity, and any liability for any of the foregoing
payable by reason of contract, assumption, operation of law, Treasury Regulation section 1.1502-6
(or any predecessor or successor thereof of any analogous or similar provision under law) or
otherwise;

Tax Claim means any written claim with respect to Taxes made by any Tax authority or other
person that, if pursued successfully, could serve as the basis for a claim for indemnification of
the Purchaser or Seller, as the case may be, under paragraph 2 of Schedule 11 of this Agreement;

Tax Return means any return, declaration, report, claim for refund or information return or
statement relating to any Taxes, including any schedule or attachment thereto, and including any
amendment thereof;

Tax Warranties means the warranties set out in paragraph 1 of Schedule 11;

Third Party Assurances means all guarantees, indemnities, counter-indemnities and letters of
comfort of any nature given (i) to a third party by a Target Company in respect of any obligation
of a member of the Seller Group; and/or (as the context may require) (ii) to a third party by a
member of the Seller Group in respect of any obligation of a Target Company or in respect of any
Business Contract;

Third Party Claim has the meaning given in clause 10;

Third Party Consent has the meaning given in clause 12.4;

Third Party Right means any interest or equity of any person (including any right to acquire,
option or right of pre-emption or conversion) or any mortgage, charge, encumbrance, pledge, lien,
assignment, hypothecation, security interest, title retention or any other security agreement or
arrangement, or any agreement to create any of the above;

Trade Creditor means amount payable at Closing in respect of trade creditors by a Target
Company or, in relation to a Business, by the relevant Business Seller in connection with that
Business (including, in each case, any Inter Company Debt, customers and trade bills payable and
Capital Creditors);

Trade Debtors means amounts receivable at Closing in respect of trade debtors by a Target
Company or, in relation to a Business, by the relevant Business Seller in connection with that

-46-

 

Business (including, in each case, any Inter Company Debt, amounts recoverable, payments in
advance, trade bills recoverable, prepayments and accrued income);

Transaction Documents means this Agreement, the Disclosure Letter, the Standard Agency
Agreements, the Supplemental Agency Agreements and any other documents in Agreed Form;

Transfer Regulations means the Transfer of Undertakings (Protection of Employment) Regulations
2006;

Transitional Service means (in respect of services provided to the Target Business) any
significant service provided by any part of the Seller Group to the Target Business at Closing
which the Target Business cannot immediately provide for itself from its existing resources and at
immaterial Cost and (in relation to services provided to the Seller Group) any significant service
provided by any part of the Target Business to the Seller Group at Closing which the Seller Group
cannot immediately provide for itself from existing resources and at immaterial Cost;

UK Business means the Business carried on by the relevant Business Seller in the United
Kingdom;

UK Business Employee means each employee of the relevant Business Seller who is immediately
prior to Closing wholly or substantially engaged in the UK Business;

USA or US or United States means the United States of America;

US Benefit Plan means any bonus, incentive compensation, deferred compensation, Retirement
Benefit, stock purchase, stock option, stock ownership, stock appreciation rights, phantom stock,
leave of absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, worker’s compensation or other insurance, severance, separation or other
employee benefit plan, practice, policy or arrangement of any kind, whether written or oral, or
whether for the benefit of a single individual or more than one individual including, any Seller
Plan and including but not limited to, any “employee benefit plan” within the meaning of Section
3(3) of ERISA, existing at the Closing Date or prior thereto, established or to which contributions
have been made by the Seller Group, the Target Companies, or any predecessor of the foregoing, or
under which any Business Employee, or former employee of the Target Companies or any beneficiary
thereof has benefit rights, or for which the Target Companies may have liability;

US Business means the Business carried on by the relevant Business Seller(s) in the United
States;

US Business Employee means each employee of the relevant Business Sellers who is immediately
prior to Closing wholly or substantially engaged in the US Businesses;

US Employees means the employees of the relevant Target Companies immediately prior to
Closing;

US GAAP means generally accepted accounting principles of the United States;

US Retirement Plan means the Reed Elsevier US Salary Investment Plan, the Reed Elsevier US
Retirement Plan and Reed Elsevier US Supplemental Executive Retirement Plan;

VAT means value added tax and any similar sales or turnover tax;

-47-

 

Warranties means the warranties given pursuant to clause 8 and set out in Schedule 3 and the
Tax Warranties; and

Working Hours means 9.30 a.m. to 5.30 p.m. in the relevant location on a Business Day.

2. Interpretation. In this Agreement, unless the context otherwise requires:

	(a)	 	references to a person include any individual, firm, body corporate (wherever incorporated),
government, state or agency of a state or any joint venture, association,
partnership, works council or employee representative body (whether or not having separate
legal personality);

	(b)	 	headings do not affect the interpretation of this Agreement; the singular shall include the
plural and vice versa; and references to one gender include all genders;

	(c)	 	references to any English legal term or concept shall, in respect of any jurisdiction other
than England, be construed as references to the equivalent term or concept in that
jurisdiction;

	(d)	 	references to dollars or US$ of $ are references to the lawful currency from time to time of
the United States;

	(e)	 	for the purposes of applying a reference to a monetary sum expressed in sterling, an amount
in a different currency shall be deemed to be an amount in sterling translated at the Exchange
Rate at the relevant date (which in relation to a Claim, shall be the date of the receipt of
notice of that Claim under Schedule 4); and

	(f)	 	any reference in this Agreement to the Seller’s knowledge or any statement in this Agreement
qualified by the expression so far as the Seller is aware or to the best of the Seller’s
knowledge or to the extent that the Seller is aware or any similar expression shall be deemed
only to be made on the basis of the actual knowledge, at the date of this Agreement, of the
following persons and shall carry no requirement to make enquiries of any other person:

	 	 	 
	Name	 	Position
	 
	 	 
	Mark Armour

	 	Chief Financial Officer of Reed Elsevier Group PLC
	 
	 	 
	Steve Cowden

	 	General Counsel of Reed Elsevier Group PLC
	 
	 	 
	Ray Fagan

	 	Chief Financial Officer, Harcourt Education
	 
	 	 
	Henry Horbaczewski

	 	General Counsel of Reed Elsevier Group Inc.
	 
	 	 
	Michael Lavelle

	 	Global Controller, Harcourt Education
	 
	 	 
	Paul Miles

	 	Group Chief Accountant of Reed Elsevier Group PLC
	 
	 	 
	Paul Morton

	 	Head of Group Taxation of Reed Elsevier Group PLC
	 
	 	 
	Paul Richardson

	 	Group Treasurer of Reed Elsevier Group PLC

-48-

 

	 	 	 
	Name	 	Position
	 
	 	 
	Sybella Stanley

	 	Director of Corporate Finance of Reed Elsevier Group
PLC
	 
	 	 
	Patrick Tierney

	 	Chairman, Harcourt Education

	(g)	 	any reference in this Agreement to the Purchaser’s knowledge or any statement in this
Agreement qualified by the expression so far as the Purchaser is aware or to the best of the
Purchaser’s knowledge or to the extent that the Purchaser is aware or any similar expression
shall be deemed only to be made on the basis of:

	 	(i)	 	the actual knowledge, at the date of this Agreement, of the
following persons and shall carry no requirement to make enquiries of any other
person:

	 	 	 
	Name	 	Position
	 
	 	 
	Bill Bayers

	 	Senior Vice President and General Counsel,
Houghton Mifflin Company
	 
	 	 
	Jeremy Dickens

	 	President of Houghton Mifflin Riverdeep Group PLC
	 
	 	 
	Richard Fine

	 	Vice President, Corporate Development, Houghton

Mifflin Riverdeep Group PLC
	 
	 	 
	Gerald Hughes

	 	Executive Vice President and Chief Operating
Officer, Houghton Mifflin Company
	 
	 	 
	Tony Lucki

	 	President and Chief Executive Officer, Houghton
Mifflin Company
	 
	 	 
	Tony Mulderry

	 	Executive Vice President, Corporate Development,
Houghton Mifflin Riverdeep Group PLC
	 
	 	 
	Michael Muldowney

	 	Senior Vice President and Chief Financial
Officer, Houghton Mifflin Company
	 
	 	 
	Barry O’Callaghan

	 	Chairman and Chief Executive Officer, Houghton
Mifflin Riverdeep Group PLC
	 
	 	 
	Ciara Smyth

	 	Senior Vice President and Head of HR, Houghton
Mifflin Company

	 	(ii)	 	the actual knowledge, at the date of this Agreement, of Joanna
Bradshaw, Gates Bryant, Mike Dolan, Jim Kennedy, Sarah McAllister, Lois Novotny,
Ben Powell, Mike Quinn, Mike Smith, Clarence Thacker and Tom Waye arising from
their review of the documents in the Data Room;

	(h)	 	any phrase introduced by the terms including, include, in particular or any similar
expression shall be construed as illustrative and shall not limit the sense of the words
preceding those terms.

-49-

 

3. Enactments. Except as otherwise expressly provided in this Agreement, any express
reference to an enactment (which includes any legislation in any jurisdiction) includes references
to (i) that enactment as amended, consolidated or re-enacted by or under any other enactment before
or after the date of this Agreement; (ii) any enactment which that enactment re-enacts (with or
without modification); and (iii) any subordinate legislation (including regulations) made (before
or after the date of this Agreement) under that enactment, as amended, consolidated or re-enacted
as described in (i) or (ii) above, except to the extent that any of the matters referred to in (i)
to (iii) occurs after the date of this Agreement and increases or alters the liability of the
Seller or the Purchaser (or any person on whose behalf it is acting as agent pursuant to this
Agreement) under this Agreement.

4. Schedules and Exhibits. The Schedules and Exhibits comprise schedules and exhibits to
this Agreement and form part of this Agreement.

5. Inconsistencies. Where there is any inconsistency between the definitions set out in
this Schedule and the definitions set out in any clause or any other Schedule, then, for the
purposes of construing such clause or Schedule, the definitions set out in such clause or Schedule
shall prevail.

6. Recitals. The recitals to this Agreement are subject to the provisions of this
Agreement and do not impose any additional obligations on the parties over and above such
provisions.

-50-exv4w13

 

Exhibit 4.13

Reed Elsevier Group PLC

Pearson PLC

 

AMENDED AND RESTATED
 AGREEMENT

for the sale and purchase of the

shares and assets relating to the Assessment and

International Education Businesses of Reed Elsevier

 

21 May 2007

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	 	Page	 
	 	 	 
	 	 	 	 
	1.	 	Sale and Purchase
	 	 	1	 
	2.	 	Price
	 	 	2	 
	3.	 	Conditions to Closing
	 	 	3	 
	4.	 	Pre-Closing Undertakings
	 	 	6	 
	5.	 	No Leakage Undertaking
	 	 	7	 
	6.	 	Closing
	 	 	8	 
	7.	 	Good Faith
	 	 	8	 
	8.	 	Seller Warranties and Indemnity
	 	 	9	 
	9.	 	Purchaser Warranties
	 	 	10	 
	10.	 	Conduct of Purchaser Claims
	 	 	10	 
	11.	 	No Rights of Rescission or Termination
	 	 	11	 
	12.	 	Business Assets, Contracts and Liabilities
	 	 	11	 
	13.	 	Protection of the Purchaser’s Interests
	 	 	11	 
	14.	 	Business Properties
	 	 	14	 
	15.	 	Intellectual Property
	 	 	14	 
	16.	 	Brand Transition
	 	 	15	 
	17.	 	Business Employees
	 	 	15	 
	18.	 	Employees of Harcourt Assessment Inc.
	 	 	17	 
	19.	 	Employees’ Share Schemes
	 	 	18	 
	20.	 	Retirement Benefits
	 	 	19	 
	21.	 	Tax
	 	 	23	 
	22.	 	Insurance
	 	 	23	 
	23.	 	Payment of Inter Company Debt
	 	 	24	 
	24.	 	Separation and Transition
	 	 	24	 
	25.	 	Third Party Assurances
	 	 	26	 
	26.	 	Purchaser’s and Seller’s Guarantee
	 	 	27	 
	27.	 	Information, Records and Assistance Post-Closing
	 	 	28	 
	28.	 	Agency Structure
	 	 	29	 
	29.	 	Payments
	 	 	29	 
	30.	 	Announcements
	 	 	29	 
	31.	 	Confidentiality
	 	 	30	 
	32.	 	Assignment
	 	 	31	 
	33.	 	Transfer of assets
	 	 	31	 
	34.	 	Further Assurances
	 	 	33	 
	35.	 	Costs
	 	 	33	 
	36.	 	Notices
	 	 	33	 
	37.	 	Conflict with other Agreements
	 	 	34	 
	38.	 	Whole Agreement
	 	 	34	 
	39.	 	Waivers, Rights and Remedies
	 	 	35	 
	40.	 	Counterparts
	 	 	35	 
	41.	 	Variations
	 	 	35	 

-2-

 

	 	 	 	 	 	 	 
	Clause	 	 	 	Page	 
	 	 	 
	 	 	 	 
	42.	 	Invalidity
	 	 	35	 
	43.	 	No Third Party Enforcement Rights
	 	 	36	 
	44.	 	Governing Law and Jurisdiction
	 	 	36	 
	Definitions and Interpretation	 	 	37	 

EXHIBITS REFERRED TO IN THIS AGREEMENT

	 	 	 
	Description	 	 
	 
	 	 
	Exhibit 1

	 	Third Party Assurances
	Exhibit 2

	 	Information on Target Companies
	Part A:

	 	Details of the Target Companies
	Part B:

	 	Details of the subsidiaries of the Target Companies
	Exhibit 3

	 	Registered Owned IP
	Exhibit 4

	 	Properties
	Part A:

	 	Information on Target Company Properties
	Part B:

	 	Information on Business Properties
	Exhibit 5

	 	Employees: List of Key Managers

-3-

 

AGREEMENT

dated 4 May 2007

PARTIES:

	1.	 	REED ELSEVIER GROUP PLC of 1-3 Strand, London WC2N 5JR, UK (the Seller)
	 
	2.	 	PEARSON PLC of 80 Strand, London, WC2R 0RL UK (the Purchaser)

(together the parties).

RECITALS:

The parties have agreed that the transactions contemplated by this Agreement shall be completed (on
the terms of and subject to this Agreement) as soon as practicable save only where there is a
mandatory anti-trust restriction on closing. This Agreement provides, on the terms set out in
clause 3 and elsewhere in this Agreement, for the Purchaser to be responsible for obtaining all
necessary anti-trust approvals and accordingly for the Purchaser to bear all and any risk in
connection with any anti-trust approval not being obtained by the relevant dates set out in this
Agreement.

Words and expressions used in this Agreement shall be interpreted in accordance with Schedule 16.

IT IS AGREED:

1. Sale and Purchase 

1.1 The Seller (through the Share Sellers and the Business Sellers) shall sell, and the Purchaser
(through the Share Purchasers and the Business Purchasers) shall purchase, the Shares and the
Businesses on the terms set out in this Agreement.

1.2 Each Share Seller shall sell with Full Title Guarantee and free from all Third Party Rights,
and each Share Purchaser shall purchase, the particular Set of Shares for which it is identified as
the respective Share Seller or Share Purchaser in Part A of Schedule 1. Each Set of Shares shall
be sold with all rights attaching to them at Closing including the right to receive all
distributions and dividends declared, paid or made in respect of the relevant Shares after the
Locked Box Balance Sheet Date.

1.3 Each Business Seller shall sell with Full Title Guarantee and free from all Third Party Rights
other than Permitted Encumbrances, and each Business Purchaser shall purchase, the particular
Business for which it is identified as the respective Business Seller or Business Purchaser in Part
B of Schedule 1. Each Business shall be sold as a going concern with effect from Closing.

 

2. Price

2.1 At Assessment Closing the Purchaser shall pay to the Seller the Assessment Consideration in US
dollars in accordance with clause 29.

2.2 At Assessment Closing the Seller shall pay to the Purchaser the Assessment Inter Company
Consideration in US dollars in accordance with clause 29.

2.3 At ROW Education Closing the Purchaser shall pay to the Seller the ROW Education Consideration
in US dollars in accordance with clause 29.

2.4 At ROW Education Closing the Purchaser shall pay to the Seller the ROW Education Inter Company
Consideration in US dollars in accordance with clause 29.

2.5 At Australian Education Closing the Purchaser shall pay to the Seller the Australian Education
Consideration in US dollars in accordance with clause 29.

2.6 At New Zealand Education Closing the Purchaser shall pay to the Seller the New Zealand
Education Consideration in US dollars in accordance with clause 29.

2.7 At New Zealand Education Closing the Purchaser shall pay to the Seller the New Zealand
Education Inter Company Consideration in US dollars in accordance with clause 29.

2.8 At South African Education Closing the Purchaser shall pay to the Seller the South African
Education Consideration in US dollars in accordance with clause 29.

2.9

2.10 At South African Education Closing the Seller shall pay to the Purchaser the South African
Education Inter At Global Library Closing the Purchaser shall pay to the Seller the Global Library
Consideration in US dollars in accordance with clause 29.

2.11 The Consideration and the apportionment set out in Schedule 1 shall be adopted for all tax
reporting purposes.

2.12 Any payment made in satisfaction of a liability arising under a Seller Obligation or a
Purchaser Obligation, shall be made on the following basis:

	(a)	 	if it is specifically referable to any particular Set of Shares (or to any Target Company or
Target Companies in a particular Target Sub Group) or any particular Business or Business
Asset, it shall so far as possible adjust the price paid for the relevant Shares or Business
or Business Asset;
	 
	(b)	 	otherwise, it shall adjust the price for such Shares or Business as the Seller and the
Purchaser agree to be appropriate in the circumstances; or in the absence of such agreement it
shall adjust pro rata the price paid for the relevant Shares and that part of the price paid
for the relevant Business as is attributable to goodwill.

2.13 The Seller and the Purchaser shall, as soon as practicable after the relevant Closing (and in
any event within three months of such Closing), agree the proportion of the Business Consideration
to be allocated to each of the Business Assets save that, in the case of the Business Assets to be
sold by Reed International Books Australia Pty Limited and purchased by the Australian Business
Purchaser (as defined in Schedule 12A), the Seller and the Purchaser shall promptly after the date
of this Agreement (and in any event within 10

-2-

 

Business Days of the date of this Agreement), agree in writing the proportion of the Business
Consideration to be allocated to each of these Business Assets.

3. Conditions to Closing

3.1 To the extent that the Proposed Transactions require approval pursuant to the competition laws
of the United States under the Hart-Scott-Rodino Act, Assessment Closing shall be conditional on
all Governmental Entities being empowered to grant such approval having either:

	 	(i)	 	declined jurisdiction over the Proposed Transactions; or
	 
	 	(ii)	 	granted clearance, explicitly or through the expiration of the
applicable waiting period, either unconditionally or subject to conditions,
obligations, undertakings or modifications,

(the US Condition).

3.2 To the extent that the Proposed Transactions require approval pursuant to the competition laws
of South Africa under the Competition Act 89 of 1998 (as amended), South African Closing shall be
conditional on all Governmental Entities being empowered to grant such approval having either:

	 	(i)	 	declined jurisdiction over the Proposed Transactions; or
	 
	 	(ii)	 	granted clearance explicitly or, through the expiration of the
time period prescribed for their investigation, been deemed to have granted
clearance, in both cases either unconditionally or subject to conditions,
obligations, undertakings or modifications,

(the South African Condition).

3.3 For the avoidance of doubt, the Parties agree that none of the ROW Education Closing, the
Australian Closing or the New Zealand Closing is conditional on any merger control clearance being
received.

3.4 In the event that a Governmental Entity has issued a Request for Additional Information and
Documentary Material (Second Request) under the Hart-Scott-Rodino Act in relation to the
acquisition of the Assessment Business, the Purchaser shall:

	(a)	 	in the case of a Second Request, take all measures necessary during the initial waiting
period to limit the scope of such Second Request, and to certify substantial compliance with
such Second Request as soon as reasonably practicable after the date of receipt of such Second
Request (provided that the Seller shall also undertake to certify substantial compliance with
the Second Request directed to the Seller as soon as reasonably practicable and to otherwise
respond to and to seek to resolve promptly any requests for information, documents, data or
testimony made by any Relevant Competition Authority;
	 
	(b)	 	offer (and not withdraw) such undertakings to any Governmental Entity as are necessary to
ensure the fulfilment of the Conditions and the obligation in clause 3.6 below and shall do so
at the time necessary to ensure the fulfilment of the Conditions and the obligation in clause
3.6 below. For the avoidance of doubt, such undertakings

-3-

 

	 	 	may include any condition, obligation, undertaking or modification relating in any manner
whatsoever to (i) any undertaking, or any business, activities or assets of any
undertaking, that is controlled by the Purchaser or any member of the Purchaser Group or
(ii) to any Target Company, or any business, activities or assets of any Target Company.

3.5 The Purchaser shall have responsibility for making appropriate merger control notifications or
approaches (each an Initial Notification) to the relevant Governmental Entity in each of the
following countries:

(a) Australia;

(b) Germany;

(c) New Zealand;

(d) United States; and

(e) South Africa.

Where the Seller is obliged to make an Initial Notification in any of the jurisdictions set out in
sub-clauses (a) to (d) above, it will do so promptly.

3.6 Without limiting the obligations in clause 3.5 above, the Purchaser shall, at its own cost,
take, in order to consummate any and all of the transactions contemplated in this Agreement
(including, for the avoidance of doubt, transactions other than those relating to the Assessment
Business), all actions necessary:

	(a)	 	to secure clearance (including by the expiration or termination of any applicable waiting
period required by any Governmental Entity, including specifically such period under the
Hart-Scott-Rodino Act) of each such transaction by 31 December 2007, save that this period may
be extended to 31 January 2008 if, within a period of five Business Days before 31 December
2007, the Purchaser supplies to the Seller a written opinion from its US Antitrust Counsel
stating that US Antitrust Counsel reasonably expects that, to the extent that the US Condition
cannot be satisfied by 31 December 2007, it will be so satisfied by 31 January 2008; and
	 
	(b)	 	to resolve any objections asserted with respect to the acquisition of any of the Businesses
under any competition or antitrust law raised by any Governmental Entity, and to prevent the
entry of any court order, and to have vacated, lifted, reversed or overturned any decree,
judgment injunction or other order that would prevent, prohibit, restrict or delay the
Closing, including:

	 	(i)	 	executing settlements, undertakings, consent decrees,
stipulations or other agreements with any Governmental Entity;
	 
	 	(ii)	 	selling, divesting or otherwise conveying any or all assets or
categories of assets or businesses of the Purchaser; and
	 
	 	(iii)	 	agreeing to sell, divest or otherwise convey particular assets
or categories of assets or businesses of the Seller contemporaneously with or
subsequent to the Closing of the relevant Target Business(es).

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All such actions shall be taken within the time necessary to secure compliance with the obligation
in this clause 3.6. The obligation in this clause 3.6 shall be unconditional and shall not be
qualified by best efforts.

3.7 The Purchaser shall have responsibility for obtaining all consents, approvals or actions of any
Governmental Entity which are required to satisfy any relevant Condition or pursuant to its
obligations under clause 3.6 above, and shall take all steps necessary for that purpose (including
making appropriate submissions, notifications and filings). Each of the Purchaser and the Seller
shall (i) cooperate fully with each other and shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection with its preparation
of any filings or meetings or presentations to or for any Governmental Entity; and (ii) permit the
other party to review and incorporate the other party’s reasonable comments in any communication
given by it to Governmental Entity; provided, however, that Purchaser will control the form and
substance of any written submission to any Governmental Entity. Further, with respect to obtaining
consents, approvals or actions of any Governmental Entity which are required to satisfy any
relevant Condition pursuant to this clause 3.7:

	(a)	 	each of the Purchaser and the Seller will promptly notify the other party (and provide copies
or, in the case of non-written communications, details) of any such communication and shall do
so in relation to any communication in relation to any European regulator on the same day as
receipt of such communication and generally shall do so as soon as reasonably practicable,
except that the Purchaser and the Seller may designate portions of any such written or
non-written communications as being provided on an outside-counsel or
outside-antitrust-counsel basis only where such communications contain confidential
information;

	(b)	 	neither the Purchaser nor the Seller will independently participate in any meeting or face to
face discussion with any Governmental Entity in respect of any submissions, notifications,
filings, undertaking or other inquiry without giving the other party to this Agreement prior
notice of the meeting and, to the extent permitted by the relevant Governmental Entity, the
opportunity to attend;

	(c)	 	the Purchaser will provide to the Seller a copy of each communication with any Governmental
Entity promptly following the submission of such communication; and

	(d)	 	the Purchaser will regularly review with the Seller the progress of any notifications or
filings with a view to obtaining clearance from any Governmental Entity at the earliest
reasonable opportunity; and

	(e)	 	the Seller shall not initiate nor make any statements, offers, presentations or
representations to any Governmental Entity with respect to the Purchaser’s obligations under
clause 3.4, clause 3.5 and clause 3.6 of this Agreement or with respect to any other
structural or conduct remedy or clearance or approval from any Governmental Entity without the
prior consent of the Purchaser.

3.8 Except in respect of those jurisdictions set out in clause 3.5 above, the Purchaser shall not,
in relation to any of the transactions contemplated by this Agreement, prior to completion of that
transaction, make any merger notification or similar notification/filing with any Governmental
Entity which is not required as a matter of law or regulation in order to fulfil either the US
Condition or the South African Condition without prior consultation with the Seller as to the
making of it and to its form and content.

3.9 The Seller will cooperate fully with the Purchaser and will promptly provide:

-5-

 

	(a)	 	the Purchaser and any Governmental Entity with any information and documents reasonably
required for the purpose of making any submissions, notifications and filings to any such
Governmental Entity;

	(b)	 	the Purchaser’s outside counsel with any information and documents reasonably requested to
respond to any inquiry by a Governmental Entity, including documents submitted in connection
with the notification required by the Hart-Scott-Rodino Act; and

	(c)	 	the Purchaser or the Purchaser’s outside counsel with any information or assistance
reasonably required to assist in resolving any objections asserted with respect to the
acquisition of the businesses under any competition or anti-trust law raised by any
Governmental Entity, including information to enable the Purchaser to identify potential
divestments.

3.10 For the avoidance of doubt, once completion has taken place in relation to any transaction
contemplated by this Agreement, then nothing in this clause 3 shall impose any obligations on the
Purchaser in relation to that transaction or matters arising from that transaction, or prevent the
Purchaser from making any merger notification or filing or communication with any Governmental
Entity, without restriction, in relation to that transaction or matters arising from that
transaction.

3.11 The Conditions may only be waived by written agreement between the Seller and the Purchaser.

3.12 The parties will notify each other promptly upon becoming aware of any matter or issue which
may threaten, prevent or delay the timely fulfilment of any Condition.

3.13 The Purchaser shall notify the Seller promptly upon becoming aware that either of the
Conditions has been fulfilled.

3.14 The first Business Day in London on or by which the US Condition has been fulfilled (or waived
in accordance with clause 3.11) is the Assessment Date.

3.15 The first Business Day in London on or by which the South African Condition has been fulfilled
(or waived in accordance with clause 3.11) is the South African Education Date.

3.16 For the avoidance of doubt, the parties confirm that the acquisition of each of the Target
Businesses is not inter-conditional.

4. Pre-Closing Undertakings

4.1 From the date of this Agreement until Closing the Seller shall (except as may be approved by
the Purchaser) ensure that the Target Business is carried on, in all material respects, only in the
ordinary course, in substantially the same manner as previously conducted. In addition, from the
date of this Agreement until Closing, the Seller shall comply with the obligations set out in
Schedule 7.

4.2 The Seller and the Purchaser agree that they will establish a protocol governing the
Purchaser’s receipt of and access to information in the period between the date of this Agreement
and the obtaining of applicable merger control clearance in each relevant country

-6-

 

with a view to ensuring that such behaviour does not contravene any order, law, rule or regulation
governing the extent to which the Purchaser may have access to information concerning any Target
Business. The Seller and the Purchaser agree that no term of this Agreement shall be construed so
as to require the contravention of any order, law, rule or regulation governing the extent to which
the Purchaser may have access to information concerning any Target Business in the period between
the signing of this Agreement and the obtaining of applicable merger control clearance in each
relevant country.

4.3 In no event shall Schedule 7 be construed to permit the Purchaser to direct the affairs of any
Target Business prior to Closing in respect of such Target Business.

4.4 From the date of this Agreement to Closing upon reasonable prior written notice, the Seller,
the Target Companies and the Business Sellers (in relation to the Businesses) shall, and shall each
cause its subsidiaries, officers, directors, employees and representatives to, afford the officers,
employees and those of the representatives of the Purchaser who have a bona-fide reason to access
information belonging to the Target Companies or the Business Sellers (in relation to the
Businesses) (e.g., (without limitation) to obtain information in furtherance of permissible
pre-closing integration planning) reasonable access, consistent with applicable law, at all
reasonable times to its officers, employees, representatives, properties, offices, and other
facilities and to all books and records, and shall furnish the Purchaser with all financial,
operating and other data and information as the Purchaser, through its officers, employees or
representatives, may from time to time reasonably request in writing. Notwithstanding the
foregoing and save as expressly contemplated by the parties pursuant to this Agreement, for example
to prepare divesture arrangements which the Purchaser reasonably considers appropriate in order to
enable it to satisfy the Conditions, any such investigation or consultation shall be conducted in
such a manner as not to interfere unreasonably with the business or operations of the Target
Business or otherwise result in any significant interference with the prompt and timely discharge
by such employees of their normal duties. Neither the Seller nor the Target Companies nor the
Business Sellers shall be required to provide access to or to disclose information where such
access or disclosure would jeopardize the attorney-client privilege of the Target Companies or the
Business Sellers or contravene any law, rule, regulation, order, judgment, decree or binding
agreement entered into prior to the date of this Agreement. All disclosed information will be
subject to Clause 31 (Confidentiality) of this Agreement.

5. No Leakage Undertaking

5.1 Other than any Permitted Leakage, the Seller undertakes to the Purchaser that during the period
from the Locked Box Balance Sheet Date to and including the Closing Date neither it nor any of its
Affiliates has received or will receive, has agreed to receive or will agree to receive, or has the
right to receive or will have the right to receive, any Leakage or Benefit from any Target Company.

5.2 Save in respect of tax, the Seller warrants and undertakes that since the Locked Box Balance
Sheet Date no Target Company has paid nor has become or will become obliged to pay any third party
costs relating to the Proposed Transaction.

5.3 In the event of any Leakage to the Seller or any of its Representatives (other than any
Permitted Leakage) during the period from the Locked Box Balance Sheet Date to and including the
Closing Date, then the Seller shall on demand by the Purchaser pay to the relevant Target Company
(or as the Purchaser directs) an amount in cash equal to such

-7-

 

Leakage received by it (other than
any tax) plus an amount equal to the total interest that
would accrue on a deposit of an amount equal to such
Leakage, made on the date on which it was
received by the Seller or its Representative as appropriate, and which carries interest (accrued
daily) at LIBOR.

6. Closing

6.1 Assessment Closing shall take place at the London offices of the Seller’s lawyers on the third
Business Day after the Assessment Date (the Assessment Closing Date). ROW Education Closing shall
take place at the London offices of the Seller’s lawyers on the tenth Business Day after the date
of this Agreement (the ROW Education Closing Date). South African Education Closing shall take
place at the London offices of the Seller’s lawyers on the third Business Day after the South
African Education Date (the South African Education Closing Date). Australian Education Closing
shall take place at the London offices of the Seller’s lawyers on the Australian Education Closing
Date. New Zealand Education Closing shall take place at the London offices of the Seller’s lawyers
on the New Zealand Education Closing Date Global Library Closing shall take place at the London
offices of the Seller’s lawyers on the third Business Day after the later of:

	(a)	 	the Assessment Date; or
	 
	(b)	 	the clearance of the Proposed Transactions (to the extent that UK competition law applies to
the Proposed Transactions, and whether unconditionally or subject to conditions) by the UK
Office of Fair Trading or the UK Competition Commission,

(the Global Library Closing Date).

6.2 At Assessment Closing, ROW Education Closing, South African Education Closing, Australian
Education Closing, New Zealand Education Closing and Global Library Closing, each of the Seller and
the Purchaser shall deliver or perform (or ensure that there is delivered or performed) all those
documents, items and actions respectively listed in relation to that party or any of its Affiliates
in Schedule 8 that are relevant to the Assessment Business, ROW Education Business, the South
African Education Business, the Australian Education Business , the New Zealand Education Business
and the Global Libarary Business as appropriate.

6.3 Subject to the limits contained herein, each of the parties shall take, or cause to be taken,
all appropriate action, do or cause to be done all things necessary, proper or advisable under the
applicable law in the relevant jurisdiction, and execute and deliver such documents and other
papers as may be required to consummate the Proposed Transactions at the times contemplated.

7. Good Faith

The parties agree to act in good faith to give effect to the following provisions of this
Agreement, and shall not seek to avoid the intent of such provisions:

	(a)	 	clause 4.4 (Pre-Closing Undertakings);
	 
	(b)	 	clause 16 (Brand Transition);

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	(c)	 	clause 24 (Separation and, Transition);
	 
	(d)	 	clause 33 (Transfer of Assets);
	 
	(e)	 	clause 34 (Further Assurances);
	 
	(f)	 	Schedule 8 (Closing Arrangements); and
	 
	(g)	 	Schedule 9 (Business Contracts).

8. Seller Warranties and Indemnity

8.1 The Seller warrants to the Purchaser as at the date of this Agreement in the terms of the
Warranties. The Warranties are given subject to the limitations set out in Schedule 5 and the
limitations set out in the Tax Covenant insofar as they are expressed to apply to the Tax
Warranties.

8.2 The Seller further warrants to the Purchaser that the Warranties contained in paragraphs
1.2(b), 1.2(c), 1.2(e) and 1.3 of Part A of Schedule 3 will be true and accurate at Closing as if
they had been repeated at Closing.

8.3 None of the limitations in Schedule 5 or the Tax Covenant shall apply to any Claim which arises
(or to the extent that it is increased) as a consequence of fraud or fraudulent misrepresentation
or criminal offence with respect to tax by any director, officer or employee of any member of the
Seller Group.

8.4 The Seller agrees to indemnify the Purchaser and any member of the Purchaser Group against any
liability arising from any breach by Harcourt Assessment Inc (or otherwise by the Assessment
Business) of, or any penalty imposed in relation to, any State Testing Contract (Relevant Liability
or Penalty) that occurred prior to the date of this Agreement, except to the extent that such
Relevant Liability or Penalty was provided for in the Locked Box Balance Sheet. The parties agree
that any Relevant Liability or Penalty that occurs during the period between the date of this
Agreement and the Assessment Closing Date shall be borne by the parties equally, and the parties
agree to ensure that all reasonable steps are taken to mitigate any such Relevant Liability or
Penalty

8.5 The parties agree that any amounts owed by the Seller pursuant to clause 8.4 shall first be
reduced by both:

	(a)	 	any payments received after the Locked Box Balance Sheet Date (and not reflected in the
Locked Box Balance Sheet as an asset) in connection with the historic testing contract with
the State of Virginia (whether such payments are received before or after any claim pursuant
to clause 8.4); and
	 
	(b)	 	the amount of the aggregate provisions in the Locked Box Balance Sheet which have, at the
time the claim in relation to such amounts has been made by the Purchaser pursuant to clause
8.4, been released following any settlement, judgement by the relevant state or other formal
determination (in accordance with the relevant

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	 	 	consistent accounting practice), so long as not
previously applied in reducing any other payment made or which would otherwise have been made
under this clause 8.4.

9. Purchaser Warranties

9.1 The Purchaser warrants to the Seller as at the date of this Agreement in the terms of the
warranties set out in Schedule 6.

9.2 Neither the Purchaser nor any Designated Purchaser shall be liable for any claim for breach of
any warranty set out in Schedule 6 if and to the extent that the Seller is aware at the date of
this Agreement as a result of full, clear and accurate disclosure by the Purchaser (i) of the fact
or circumstances which is the subject matter of the claim and (ii) that the fact or circumstance
could reasonably be expected to amount to such claim.

10. Conduct of Purchaser Claims

If the Purchaser or any Designated Purchaser becomes aware of any claim or potential claim by a
third party (a Third Party Claim), or of any other matter or circumstance, which might result in a
Non-Tax Claim being made, the Purchaser shall:

	(a)	 	promptly give notice of the Third Party Claim or other matter or circumstance to the Seller,
including all reasonable information relating to such Third Party Claim or other matter or
circumstance, but the failure so to notify the Seller will not relieve the Seller of any
liability that it may have to the Purchaser, except to the extent that the Seller demonstrates
that the defence of such Third Party Claim or other matter or circumstance is prejudiced by
the Purchaser’s failure to give such notice;

	(b)	 	not (and ensure that each member of the Purchaser Group shall not) admit liability or make
any agreement or compromise in relation to the Third Party Claim without prior written
approval of the Seller;

	(c)	 	(subject to the Purchaser or the relevant member of the Purchaser Group being indemnified by
the Seller against all reasonable out of pocket costs and expenses incurred in respect of that
Third Party Claim) ensure that it and each member of the Purchaser Group shall:

	 	(i)	 	take such action as the Seller may reasonably request to avoid,
resist, dispute, appeal, compromise or defend the Third Party Claim;
	 
	 	(ii)	 	allow the Seller (if it elects to do so) to assume primary
conduct of all proceedings and/or negotiations arising in connection with the
Third Party Claim in consultation with the Purchaser and/or the relevant member
of the Purchaser Group; and
	 
	 	(iii)	 	provide such information and assistance as the Seller may
reasonably require in connection with the preparation for and conduct of any
proceedings and/or negotiations relating to the Third Party Claim.

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11. No Rights of Rescission or Termination

Neither the Purchaser nor any Designated Purchaser shall be entitled to rescind or terminate this
Agreement in any circumstances whatsoever (whether before or after Closing). This shall not
exclude any liability for (or remedy in respect of) fraudulent misrepresentation.

12. Business Assets, Contracts and Liabilities

12.1 Nothing in this Agreement or any Transaction Document shall operate to transfer any of the
Excluded Assets to the Purchaser (or any Business Purchaser) or make the Purchaser (or any Business
Purchaser) liable for any of the Excluded Liabilities, save that clause 14 shall apply in relation
to the Business Properties and clause 2 and Schedule 13 shall apply in relation to Inter Company
Debt. For the avoidance of doubt, the Seller Group shall (i) retain any and all Excluded
Liabilities and (ii) indemnify the Purchaser and each of its Affiliates against any and all such
Excluded Liabilities and any and all Costs suffered or incurred by any of them as a result of such
Excluded Liabilities.

12.2 Each Business Purchaser shall, save as otherwise provided in this Agreement, from Closing (i)
assume and discharge when due any and all Assumed Liabilities of the Business Seller (including
obligations arising under the Business Contracts, except to the extent that such obligation arises
from a breach of the relevant Business Contract that occurs prior to the Locked Box Balance Sheet
Date) relating to the relevant Business and (ii) (save in respect of any Assumed Liability in
respect of which the Seller has agreed to indemnify the Purchaser, or otherwise expressly for the
Seller’s account under this Agreement) indemnify the Seller and each of its Affiliates against any
and all such Assumed Liabilities and any and all Costs suffered or incurred by any of them as a
result of any such Assumed Liabilities or any failure to perform and discharge any obligations
arising under the Business Contracts, except to the extent that such obligation arises from a
breach of the relevant Business Contract that occurs prior to the Locked Box Balance Sheet Date.

12.3 After Closing, the Purchaser shall at its cost execute and deliver all such further documents
and/or take such other action as the Seller may reasonably request in order to effect the release
and discharge in full of the relevant member of the Seller Group from any Assumed Liabilities or
the assumption by the Purchaser (or a Designated Purchaser) as the primary obligor in respect of
any Assumed Liabilities in substitution for the relevant member of the Seller Group (in each case
on a non-recourse basis to any member of the Seller Group).

12.4 The provisions of Schedule 9 shall apply if and to the extent that the benefit and/or burden
of any of the Business Contracts and Business Claims cannot be assigned or transferred to the
Purchaser or the relevant Designated Purchaser except by an agreement of novation or without
obtaining a consent, approval, waiver or the like to the assignment or transfer from a third party
(such agreement of novation or consent, a Third Party Consent).

13. Protection of the Purchaser’s Interests

13.1 In this clause:

	(a)	 	Competing Business means a business, other than a Permitted Business, which is carried on
within the Protected Territories and which wholly or partly competes or proposes to compete
with the Assessment Business, the ROW Education Business, 

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	 	 	the South African Education
Business, the Australian Education Business,
the New Zealand Education Business or the Global
Library Business or any part of them, as appropriate;

	(b)	 	Permitted Business means: (i) any trade or business of a type carried on at the date of this
Agreement by (aa) any member of the Seller Group (other than, subject to (bb), a Business
Seller) or (bb) any Business Seller, (other than the Businesses); and (ii) any trade or
business of the Harcourt Education Division;

	(c)	 	Protected Territories means United Kingdom, the United States of America, the Netherlands,
France, Germany, Sweden, South Africa, Botswana, Australia and Canada;

	(d)	 	Recognised Investment Exchange means any body of persons which is a recognised investment
exchange for the purpose of the Financial Services and Markets Act 2000;

	(e)	 	Restricted Goods or Services means goods or services of the same type or substantially the
same type as, or competitive with, any goods or services supplied by or to a Target Company
or, in relation to the Businesses, a Business Seller, at Closing (in relation to the
Assessment Business, the ROW Education Business, the South African Education Business, the
Australian Education Business, the New Zealand Education Business or the Global Library
Business, as appropriate), but excluding goods and services supplied by or to the Seller
Group as part of the Permitted Business; and

	(f)	 	references to acting directly or indirectly include (without prejudice to the generality of
that expression) acting alone or on behalf of any other person or jointly with or through or
by means of any other person, or procuring a parent, subsidiary, or associated company to so
act.

13.2 Competition

The Seller covenants with the Purchaser that until the expiration of 12 months from Closing, it
shall not directly or indirectly carry on or be engaged or interested in a Competing Business save
that it may hold for investment:

	(a)	 	up to 3% of any class of securities quoted or dealt in on a Recognised Investment Exchange;
and
	 
	(b)	 	up to 20% of any class of securities not so quoted or dealt.

The restriction in this clause 13.2 shall not affect or prohibit the Seller or any of its
Affiliates from acquiring (or holding subsequent to an acquisition) any shares in a company or
other undertaking if those activities contribute less than 10% of that company’s or undertaking’s
consolidated annual sales.

13.3 Customers

The Seller covenants with the Purchaser that until the expiration of 12 months from Closing, it
shall not directly or indirectly accept orders for, or supply or cause orders to be accepted for,
or cause to be supplied, Restricted Goods or Services to any person who, to its knowledge, at any
time during the 12 months up to and including Closing:

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	(a)	 	was provided with such Restricted Goods or Services by a Target Company or, in relation to
the Businesses, a Business Seller; or

	(b)	 	was negotiating with a Target Company or, in relation to the Businesses, a Business Seller,
in relation to orders for such Restricted Goods or Services,

for the purpose of offering to that person such Restricted Goods or Services.

13.4 The Seller covenants with the Purchaser that until the expiration of 12 months from Closing,
it shall not directly or indirectly solicit, canvass or approach or endeavour to solicit,
canvass or approach or cause to be solicited, canvassed or approached any person who, to its
knowledge, at any time during the 12 months up to and including Closing:

	(a)	 	was provided with Restricted Goods or Services by a Target Company or, in relation to the
Businesses, a Business Seller; or

	(b)	 	was negotiating with a Target Company or, in relation to the Businesses, a Business Seller,
in relation to orders for or the supply of Restricted Goods or Services,

for the purpose of offering to that person such Restricted Goods or Services.

13.5 Suppliers

The Seller covenants with the Purchaser that until the expiration of 12 months from Closing, it
shall not directly or indirectly solicit, canvass or approach or endeavour to solicit, canvass or
approach or cause to be solicited, canvassed or approached for the purpose of obtaining the supply
of Restricted Goods or Services, any person who, to its knowledge, supplied a Target Company or
Target Business with any such goods or services at any time during the 12 months prior to Closing,
where it is reasonably likely that such soliciting, canvassing or approaching would, if successful,
materially prejudice the ability of a Target Company or the Businesses to procure or the terms on
which it is able to procure, the supply of such Restricted Goods or Services.

13.6 Employees

Subject to clause 13.7, the Seller covenants with the Purchaser that until the expiration of 12
months from Closing, it shall not directly or indirectly solicit or entice away or endeavour to
solicit or entice away or cause to be solicited or enticed away from a Target Company or the
Businesses, exclusively or predominantly in relation to the Assessment Business, the ROW Education
Business, the South African Education Business, the Australian Education Business, the New Zealand
Education Business or the Global Library Business, as appropriate, any person who is, and was at
Closing, employed or directly or indirectly engaged by a Target Company or the Businesses, whose
departure from a Target Company or the Businesses would have a material adverse effect on the
Target Business, with a view to inducing that person to leave such employment or engagement
(whether or not such person would commit a breach of his contract of employment or engagement by
reason of leaving).

13.7 The restrictions in clause 13.6 shall not apply to: (i) any public advertisements for
employment placed by the Seller and not specifically targeted at persons employed or engaged by a
Target Company or a Business Purchaser; (ii) any person employed or engaged by a Target Company or
a Business Purchaser contacting the Seller on his or her own initiative without any direct or
indirect solicitation by or encouragement from the Seller; or (iii) any person employed or engaged
by a Target Company or Business Purchaser who ceases

-13-

 

to be employed or engaged by a Target Company
or Business Purchaser otherwise than in connection with any restricted action prohibited under
clause 13.6.

13.8 Severability

Each of the restrictions set out in sub-clauses 13.2(a), 13.2(b), 13.3(a), 13.3(b), 13.4(a)
13.4(b), 13.5 and 13.6 of this Agreement is separate and severable and, in the event of any such
restriction (including the defined expressions in clause 13.1) being determined as unenforceable in
whole or in part for any reason, such unenforceability shall not affect the enforceability of the
remaining restrictions or, in the case of part of a restriction being
unenforceable, the remainder of that restriction. The restrictions in sub-clauses 13.2 shall be
deemed to be separate and severable in relation to each of the Protected Territories.

13.9 The restrictions entered into by the Seller in sub-clauses 13.2(a), 13.2(b), 13.3(a), 13.3(b),
13.4(a) 13.4(b), 13.5 and 13.6 are given to the Purchaser for itself and for a Target Company or
Target Business and the Seller agrees that it will at the request and cost of the Purchaser enter
into a further agreement with a Target Company or Target Business whereby it will accept
restrictions corresponding to the restrictions in this Agreement (or such of them as the Purchaser
in its absolute discretion shall deem appropriate).

14. Business Properties

Notwithstanding any other provisions of this Agreement, the provisions of Schedule 10 shall apply
in respect of the Business Properties and to the extent that reference is made in Schedule 10, its
provisions shall apply to certain Target Company Properties.

15. Intellectual Property 

15.1 Save as provided for in clause 16, nothing in this Agreement shall give to the Purchaser Group
any rights (including IP) in the names of “Reed”, “Reed Elsevier”, “Elsevier” or “Harcourt” or any
name or mark incorporating any of them (Excluded IP), whether as Target Company IP, Owned IP or
otherwise. All such rights owned by the Seller Group shall continue to vest solely in the Seller
Group.

15.2 Subject to clause 15.1, the Seller will procure that the Target Companies and the Business
Purchasers have at the relevant Closing rights to the IP of the Seller Group to the extent that
such rights are needed for the conduct of the Target Business as at the date of this Agreement.

15.3 The Seller shall procure that any material Intellectual Property Rights that are used
exclusively or predominantly in relation to the Target Business other than the Target Company IP
and which are owned by a member of the Seller Group (other than the Business Sellers or a Target
Company) are transferred to the Purchaser at Closing.

15.4 Subject to clause 15.1, the provisions of Schedule 11 shall apply in respect of the use of IP
by the Purchaser Group and by the Seller Group after Closing.

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16. Brand Transition

16.1 The Purchaser shall procure that:

	(a)	 	as soon as reasonably practicable in each relevant jurisdiction after the Closing Date, the
name of any Target Company which consists of or incorporates any of the words “Reed”, “Reed
Elsevier”, “Elsevier” or “Harcourt” is changed to a name which does not include such word or
words, or any name which is substantially or confusingly similar;

	(b)	 	Subject to clauses 16.3 and 16.4 as soon as reasonably practicable after the Closing Date and
in any event within 6 months afterwards, the Target Companies and the Businesses shall cease
to use or display any trade or service name or mark, business
name, logo or domain name used or held by any member of the Seller Group or any mark, name
or logo which is substantially or confusingly similar to any of them.

16.2 On or as soon as possible after Closing, the Purchaser and the Seller shall send out a joint
notice in the Agreed Form to an agreed list of the suppliers, customers and clients of the Target
Business advising them of the transfer of the Target Business.

16.3 The Purchaser and the Target Companies shall be entitled to continue to use the Excluded IP on
any products;

	(a)	 	held by or on behalf of the Target Business; or
	 
	(b)	 	received pursuant to orders made by or on behalf of the Target Business; or
	 
	(c)	 	in the process of being printed or published by or on behalf of the Target Business and in
respect of which discontinuing the use of the Excluded IP is not reasonably achievable;
in each case on or before Closing; or
	 
	(d)	 	returned to the Target Business any time after Closing,

until such stock of products is sold, used or otherwise disposed of or written off as obsolete.

16.4 Subject to clause 16.3 the Purchaser and Reed Publishing (NZ) Ltd shall cease to use the name
“Reed” as soon as practicable after receiving clearance from the New Zealand Commerce Commission or
after such clearance becomes unnecessary.

17. Business Employees

17.1 The relevant Business Purchaser shall:

	(a)	 	Except in relation to Business Employees employed in the US, make offers of employment to the
relevant Business Employees on terms and conditions (which shall include treating any period
of service with any member of the Seller Group as if it were service with the Business
Purchaser and an assumption of all accrued and pro rata leave entitlements) which are no less
favourable taken as a whole than those on which each such Business Employee was employed by
the relevant member of the Seller Group immediately prior to the Closing Date (subject to any
requirements of local law in the relevant jurisdiction);

-15-

 

	(b)	 	except in relation to Business Employees employed in the US, include in its offers of
employment a condition that in accepting such offer, the employment of an accepting Business
Employee with the relevant member of the Seller Group will terminate by mutual agreement and
where those Business Employees accept such offers of employment, the Seller will ensure that
they are released from employment with the relevant member of the Seller Group with effect
from the close of business on the Closing Date or on the date of acceptance of employment with
the Business Purchaser, if later;

	(c)	 	make offers of employment to each relevant Business Employee employed by the US Global
Library Business in the US as of the Education Closing Date, including any such individuals on
approved leave of absence (including maternity and paternity
leave, vacation, sick leave, short-term or long-term disability leave of absence) from US
Global Library Business on the Education Closing Date (the US Transferred Employees),
provided, however, that an individual on a long-term disability leave from the US Global
Library Business on the Education Closing Date shall become a US Transferred Employee upon
his or her return to active employment, on terms and conditions (which shall include
treating any period of service, and including any period of service with a predecessor
entity, but only to the extent such predecessor service was credited as service for purpose
of the relevant Current US Benefit Plans, for purposes of eligibility and vesting, but not
for benefit accrual with respect to any defined benefit scheme with any member of the
Seller Group as if it were service with the Business Purchaser) which, until the 1-year
anniversary of the Education Closing Date, are comparable in the aggregate to those terms
and conditions on which US Transferred Employees were employed by the US Global Library
Business immediately before Closing (save that the relevant Business Purchaser shall not be
required to provide a particular level of pension, death or retirement benefits after the
Closing Date), provided, however, that the value of such retirement benefits shall be
included in determining the “comparable in the aggregate” standard referred to above;

	(d)	 	indemnify the Seller or the relevant member of the Seller Group against the costs associated
with the Business Employees’ employment after Closing and the termination of the Business
Employees’ employment with the relevant member of the Seller Group;

	(e)	 	provide the offer letters or with respect to the US Transferred Employees offer letter or
other communications (i) to the Seller for review and comment by no later than 10 Business
Days before Closing; and (ii) to the Business Employees for consideration by no later than 8
Business Days before Closing and the Seller shall provide to the Purchaser for its review and
comment, copies of all communications to Business Employees regarding the transactions
contemplated pursuant to this Agreement;

	(f)	 	in relation to Business Employees employed in the US, be responsible for any liability
arising under the Worker Adjustment and Retraining Notification Act (the WARN Act) for actions
that the relevant Business Purchaser takes on or after the Closing Date. The parties hereto
intend that the Purchaser will pursuant to this clause 17.1(f) be responsible for actions
taken during the 90-day period following the Closing Date that give rise to any such liability
as a result of aggregating such actions with actions taken by the Seller Group prior to the
Closing Date. The Purchaser hereby indemnifies the Seller Group against and agrees to hold
the Seller Group harmless from any and all damages incurred or suffered by the Seller Group or
any other member of the Seller Group with respect to liabilities and obligations described in
this clause 17.1(f); and

-16-

 

	(g)	 	in relation to Business Employees employed in the US, for a period of not less than one (1)
year from and after the Closing Date, provide to the relevant Business Employees who accept
its offers of employment as of the Closing Date, redundancy/severance policies of the Seller
Group that were provided to such employees as of the Closing Date (the Severance Policies).
In the event that the relevant Business Purchaser shall terminate the employment of any such
Business Employee within such one-year period, the Purchaser will pay to such Business
Employee not less than the full amount to which such Business Employee would have been
entitled under the applicable Severance Policy had such policy continued to be applicable with
respect to the Business Employee, it being agreed that, for purposes of determining such
amount, the Purchaser will credit such Business Employee with
his or her years of employment with the Seller Group plus the term of his or her employment
with the Purchaser.

17.2 The Purchaser shall provide the Seller with such information as the Seller may reasonably
request in writing as is necessary for the Seller or any of the Business Sellers to comply with any
legal requirement (whether statutory or pursuant to any written agreement with any trade union or
other employee body) in relation to the Proposed Transactions to consult with or inform the
Business Employees (or any of them), a relevant trade union or any other employee representatives.

17.3 The Purchaser shall be indemnified against claims made by or on behalf of Employees according
to the provisions found at Schedule 4.

18. Employees of Harcourt Assessment Inc.

18.1 The relevant Share Purchaser shall cause Harcourt Assessment Inc. to continue the employment
of each US Business Employee employed by Harcourt Assessment Inc. on the Assessment Closing Date,
including any such individuals on approved leave of absence (including maternity and paternity
leave, vacation, sick leave, short-term or long-term disability leave of absence) from Harcourt
Assessment Inc. on the Assessment Closing Date (the US Affected Employees), provided, however, that
an individual on a long-term disability leave from Harcourt Assessment, Inc. on the Assessment
Closing Date shall become an Affected Employee upon his or her return to active employment, on
terms and conditions (which shall include treating any period of service, and including any period
of service with a predecessor entity, but only to the extent such predecessor service was credited
as service for purpose of the relevant Current US Benefit Plans, for purposes of eligibility and
vesting, but not for benefit accrual with respect to any defined benefit scheme with any member of
the Seller Group as if it were service with the Share Purchaser) which, until the 1-year
anniversary of the Assessment Closing Date, are comparable in the aggregate to those terms and
conditions on which Affected Employees were employed by Harcourt Assessment Inc. immediately before
Closing (save that the relevant Share Purchaser shall not be required to provide a particular level
of pension, death or retirement benefits after the Closing Date), provided, however, that the value
of such retirement benefits shall be included in determining the “comparable in the aggregate”
standard referred to above.

18.2 The Seller shall retain, and the relevant Share Purchaser shall have no responsibility for,
any and all liabilities that have arisen or may arise with respect to (i) any Seller Plan or US
Benefit Plan that is not an Assessment Benefit Plan (as such term is herein defined), and (ii) any
former US Business Employee or former employee who is not a US Affected Employee.

-17-

 

18.3 Without limiting the scope of clause 18.2, the Seller shall assume and be responsible for (i)
claims for workers compensation or for the type of benefits described in Section 3(1) of ERISA
(whether or not covered by ERISA) that are incurred on or prior to the Assessment Closing Date by
US Affected Employees, and (ii) claims relating to COBRA coverage attributable to “qualifying
events” occurring on or prior to the Assessment Closing Date with respect of any US Affected
Employees and their beneficiaries and dependents. The relevant Share Purchaser shall be
responsible for (i) disability benefits and workers compensation benefits for US Affected Employees
for claims incurred after the Assessment Closing Date, and (ii) claims relating to COBRA coverage
attributable to “qualifying events” occurring after the Assessment Closing Date with respect to US
Affected Employees and their beneficiaries and dependents. Reed Elsevier Inc. shall, in accordance
with past practice, continue to charge
its standard allocation approximating the costs relating to such claims to Harcourt Assessment Inc.
to the extent that these are incurred after the Locked Box Balance Sheet Date but prior to the
Assessment Closing Date. For purposes of this clause 18.3, a medical/dental claim shall be
considered incurred when the medical services are rendered or medical supplies are provided, and
not when the condition arose; provided that claims relating to a hospital confinement that
commences on or prior to the Assessment Closing Date but continues thereafter shall be treated as
incurred on or prior to the Assessment Closing Date if the injury or condition giving rise to the
claim occurs on or prior to the Assessment Closing Date. A disability or workers compensation
claim shall be considered incurred on or prior to the Assessment Closing Date if the injury or
condition giving rise to the claim occurs on or prior to the Assessment Closing Date.

18.4 No Employee Rights: Termination/Modification of Plans. The provisions of clause 18
are solely for the benefit of the respective parties to this agreement and nothing in this clause
18, express or implied, shall confer upon any Affected Employee, or legal representative or
beneficiary thereof, any rights or remedies, including any right to employment or continued
employment for any specified period, or compensation or benefits of any nature or kind whatsoever
under this Agreement. Nothing in this clause 18, expressed or implied, shall be construed to
prevent Purchaser from terminating or modifying to any extent or in any respect any benefit plan
that the Purchaser may establish or maintain.

19. Employees’ Share Schemes

19.1 Where the Purchaser or any member of the Purchaser Group is responsible for withholding income
tax and/or social security contributions, to be accounted for to the revenue authorities in any
jurisdiction, resulting from, or otherwise in connection with, the participation by any of the
Employees in any employees’ share scheme operated by the Seller or any member of the Seller Group:

	(a)	 	the Seller shall provide the Purchaser in a timely manner with sufficient information to
enable the Purchaser or the relevant member of the Purchaser Group to fulfil its obligations
to the revenue authorities in any jurisdiction;

	(b)	 	the Seller shall withhold from any amount to be paid to any Employee pursuant to any employee
share scheme sufficient to reimburse the Purchaser or the relevant member of the Purchaser
Group for such withholding of income tax and/or social security contributions and, subject to
paragraph 5 of Part B of Schedule 12A, shall pay or procure the payment of such amount to the
Purchaser in a timely manner (and in any event no later than five Business Days before the
date on which the 

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	 	 	Purchaser or the relevant member of the Purchaser Group is obliged to
account for such amount to the revenue authorities in any jurisdiction); and

	(c)	 	subject to paragraph 5 of Part B of Schedule 12A, the Seller shall pay to the Purchaser, by
way of an adjustment to the Consideration, an amount equal to all employer’s social security
contributions for which the Purchaser or any member of the Purchaser Group becomes liable as a
result of the participation by any of the Employees in any employees’ share scheme operated by
the Seller or any member of the Seller Group, in a timely manner (and in any event no later
than five Business Days before the date on which the Purchaser or the relevant member of the
Purchaser Group is obliged to account for such amount to the revenue authorities in any
jurisdiction), provided that the Seller shall not be obliged to make any such payment
unless the aggregate of all amounts owed pursuant to this clause 19.1(c) is greater than
US$20,000.

19.2 For the purposes of this Agreement, a Share Scheme Payment shall mean:

	(a)	 	any payment made by any Target Company or by any member of the Purchaser Group in respect of
which the Seller is liable to make a payment under clause 19.1(b) or (c); and/or

	(b)	 	any award of shares or grant of options made by any Target Company under an employees share
scheme operated by the Seller or the Seller Group; and/or

	(c)	 	any other award of, grant, contribution or event in respect of which the Seller is liable to
make a payment under clause 19.1(b) or (c); and/or

	(d)	 	the exercise by any Employee of an option or other right to acquire shares granted by the
Seller or any member of the Seller’s Group prior to the Closing Date.

19.3 The Seller will make all necessary returns of information relating to the participation by any
of the Employees in any employees’ share scheme operated by the Seller or any member of the Seller
Group to the revenue authorities in any relevant jurisdiction within the appropriate time limits.

20. Retirement Benefits

20.1 United Kingdom

	(a)	 	The Seller will use all reasonable endeavours to procure that prior to the Closing Date, Reed
Elsevier (UK) Limited amends the rules of the Reed Elsevier Pension Scheme to reapportion the
debt that would arise under section 75 of the Pensions Act 1995 (as amended) on an employer
cessation event (within the meaning of regulation 6(4) of the Occupational Pension Scheme
(Employer Debt) Regulations 1995) occurring in relation to any of the Target Companies so that
such Target Companies are liable for no more than a nominal amount.

	(b)	 	Subject to paragraph 5 of Part B of Schedule 12A, the Seller undertakes to the Purchaser and
the Target Companies from time to time to pay to the Purchaser a sum equal to the full amount
of any liability or costs arising on or after the Closing

-19-

 

	 	 	Date which the Purchaser or any
Target Company or any of their Associated or Connected Persons may on or after Closing
sustain, incur or pay (to the extent any liability is not the result of any act or omission of
the Purchaser, any pension scheme or arrangement established by the Purchaser or any Target
Company after the Closing Date) in respect of:

	 	(i)	 	any order, direction or notice made by the Pensions Regulator
which requires the Purchaser, any Target Company or any person Connected with or
Associated with the Purchaser or any Target Company to contribute to any
retirement benefits plan in which the Seller operates or participates; make a
payment to the Board of the Pension Protection Fund; or provide financial
support in relation to any retirement benefits plan in which the Seller operates
or participates (including without limitation a contribution notice or a
financial support direction under the Pension Act 2004);
	 
	 	(ii)	 	any debt which becomes due from any Target Company under section
75 or section 75A of the Pensions Act 1995 in respect of cessation of
participation in the Reed Elsevier Pension Scheme;
	 
	 	(iii)	 	the termination and/or winding-up of the Reed Elsevier Pension
Scheme;
	 
	 	(iv)	 	any liability in respect of Employees or former Employees of the
Target Companies to the extent any such liability relates to a Seller Plan
operated in the UK in respect of their service prior to the Closing Date;
	 
	 	(v)	 	any other costs, expenses, damages, compensation, fines and other
losses and liabilities which may be incurred to the extent any such claim
relates to a Seller Plan operated in the UK or arising in relation to the
participation of the Target Companies in the relevant Seller Plan.

20.2 For the purposes of this Agreement, a Pension Funding Payment shall mean:

	(a)	 	any amount paid, sustained or incurred by the Purchaser or any Target Company or by their
Associated Persons or Connected Persons in respect of which the Seller is liable to make a
payment under clause 20.1; and/or

	(b)	 	any other award, grant, contribution or event in respect of which the Seller is liable to
make a payment under clause 20.1.

20.3 United Kingdom

The Purchaser shall ensure that the Employees of the Target Companies in the UK shall have the same
access to and rights under the relevant Purchaser UK Retirement Plans, in respect of their service
with the Purchaser Group on and after the Closing Date, as an ordinary employee hired by the
Purchaser Group in the UK on or after the Closing Date and performing the same or similar work.

20.4 United States

	(a)	 	The Seller (or an Affiliate of the Seller) shall use all reasonable endeavours to procure
that, as of the Closing Date:

	 	(i)	 	each Employee’s accrued benefits or account balances within the
US Retirement Plans at the Closing Date shall vest in full; and

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	 	(ii)	 	the participation of each Employee, and all service credits and
benefit accruals under any US Retirement Plan shall cease.

	(b)	 	Subject to clause 20.4(c) and paragraph 5 of Part B of Schedule 12A, the Seller (or an
Affiliate of the Seller) shall retain all liabilities with respect to the US Retirement Plans
arising on and after the Closing Date, and undertakes to the Purchaser and the Target
Companies that it shall indemnify them for any losses which may arise as a result of any
claims brought by any Employee with respect to the US Retirement Plans.
	 
	(c)	 	The relevant Share Purchaser, the relevant Business Purchaser and the Sellers will take all
actions necessary, upon the request of either an Affected Employee or a Transferred Employee,
to facilitate a direct transfer of an eligible rollover distribution
(as defined in section 401(a)(31) of
the Code), including up to two (2)
plan loans, and will consider
accepting one additional loan if
this can be accomplished without
significant changes to the
administrative process of the plan,
from the Reed Elsevier US Salary
Investment Plan to the Pearson
Retirement Plan, which includes a
tax-qualified cash or deferred
arrangement within the meaning of
section 401(k) of the Code,
sponsored by an Affiliate of the
relevant Share Purchaser or relevant
Business Seller.

20.5 Netherlands

	(a)	 	Prior to the Closing Date, the Seller will use all reasonable endeavours to procure that the
trustee board of the SPEO will allow the Target Companies that are affiliated with SPEO as at
the closing Date to remain affiliated with the SPEO for a period ending 6 months from the
Closing Date (the Termination Date);
	 
	(b)	 	The Purchaser shall use all reasonable endeavours to procure that as from the Termination
Date a pension scheme is established which shall provide benefits for service on and from the
Closing Date that are at least as favourable overall as those provided by the SPEO at the
Termination Date.
	 
	(c)	 	The Seller shall use all reasonable endeavours to procure that, as from the Termination Date:

	 	(i)	 	those persons who are eligible to participate in or who already
participate in the SPEO at the Closing Date and who are ill and unfit for work
within the meaning of article 7:629 of the Dutch Civil Code at the Termination
Date, will continue to participate in the SPEO as long as and insofar as they
are ill and unfit for work within the meaning of article 7:629 of the Dutch
Civil Code or (partly) disabled in the meaning of the SPEO and not eligible to
become a member of the Purchaser’s pension scheme established under subsection
(b); and
	 
	 	(ii)	 	those persons who are members of the SPEO at the Closing Date and
in receipt of an early retirement pension under terms of the SPEO, will remain a
member of the SPEO for so long as they are entitled to receive early retirement
benefits from the SPEO.

	(d)	 	The Purchaser shall account for all liabilities arising in relation to the Employees’
continued participation in the SPEO on and after the Closing Date including any liabilities
arising in relation to the period of continued participation in the SPEO of persons under
clauses 20.5(c)(i) and (ii) above. For the avoidance of doubt this shall

-21-

 

	 	 	not include any
liabilities relating to Employees’ pre-Closing service in the SPEO, except to the extent that
any such liabilities are increased as a result of any act or omission of the Purchaser Group
including, for the avoidance of doubt, any salary increases granted by the Purchaser Group on
or after the relevant Closing Date.

20.6 Rest of World

	(a)	 	The Seller (or an Affiliate of the Seller) shall retain all liabilities with respect to each
defined contribution Seller Plan in the Rest of the World unless there is a requirement under
the relevant local laws that a transfer to the Purchaser is required in which case clause
20.6(b) applies.

	(b)	 	Where required to do so under relevant local laws, the Seller shall use its reasonable
endeavours to procure that a transfer of assets (which may include an assignment, partial
assignment or reissue of an insurance contract) is offered to Employees with effect on and
from the Closing Date in respect of each funded defined contribution Seller Plan in the Rest
of World, such transfer to be of an amount equal to the value of the past service benefits as
at the Closing Date of each relevant Employee to an appropriate plan nominated or established
by the Purchaser, calculated as an amount equal to that part of the fund which, in the opinion
of an actuary appointed by the Seller, stands to the credit of each relevant Employee. The
Seller and Purchaser shall each use their reasonable endeavours to obtain such consents or
approvals as are required from the relevant Employees and/or any regulatory authorities in
connection with the transfer.

	(c)	 	Subject to clause 20.6(b) the Seller undertakes to the Purchaser and the Target Companies
that it shall indemnify them for any claims or losses which may arise in relation to the
relevant Seller Plan in respect of their past service prior to the Closing Date.

20.7 General

	(a)	 	Any indemnities given by the Seller under this clause 20 shall be subject to the time limits
or other limits on liability in respect of Pensions Claims or Non-Tax Claims (as applicable)
set out at Schedule 5.
	 
	(b)	 	The Seller shall indemnify the Purchaser and the Target Companies in respect of:

	 	(i)	 	any payments made by the Target Companies or the Businesses
between the Locked Box Balance Sheet Date and the date of this Agreement (both
dates inclusive) which are in excess of the contribution rates or amounts set
out in respect of the Seller Plans which are applicable to the Target Companies
or the Businesses on the following basis:

	 	(A)	 	the Target Companies in the UK on the basis of the schedule
of contributions applicable to the period with effect on and from 6 April
2007 in respect of the Reed Elsevier Pension Scheme;
	 
	 	(B)	 	the Target Companies in the Netherlands on the basis of the
contributions rate set out in Section 9 of the Pearson Information Pack dated
30 March 2007 in respect of the SPEO as revealed in the Disclosure Letter;

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	 	(C)	 	the US Target and relevant Businesses in the US on the
basis of any amounts which are in excess of the annual lump sum contribution
of US$85 million paid into the Reed Elsevier US Retirement Plan in March
2007;
	 
	 	(D)	 	the relevant Target Companies and Businesses on the basis
of the contributions rate specified in the rules of the relevant defined
contribution Sellers Plan in each jurisdiction (the contribution rates in
this clause 20.7(b) referred to as the Relevant Contribution Rates ); and

	 	(ii)	 	any other payments made by or additional obligations assumed by
the Target Companies and Businesses between the Locked Box Balance Sheet
Date and the date of this Agreement (both dates inclusive) in respect of pensions
or retirement benefits or obligations, other than (i) any of those payments
referred to in sub-paragraph (b)(i) above or (ii) any obligations assumed in
respect of the benefits provided in the relevant Seller Plans as disclosed in the
Disclosure Letter (save where an additional payment is required in respect of the
exercise of a discretion by the relevant Target Companies and/or Business) or
(iii) the amounts paid or payable prior to the date of this Agreement consistent
with the Relevant Contribution Rates (as applicable) or (iv) as otherwise
disclosed in the Disclosure Letter.

21. Tax

21.1 The provisions of Schedule 12A and Schedule 12B shall apply from Closing in relation to
taxation.

21.2 The Tax Covenant shall come into effect at Closing.

22. Insurance

22.1 From the date of this Agreement until (and including) the Closing Date, members of the Seller
Group and the Target Companies shall continue in force all policies of insurance maintained by them
in respect of the Target Business.

22.2 From and after the Closing, all insurance cover arranged in relation to the Target Companies
by the Seller Group (whether under policies maintained with third party insurers or other members
of the Seller Group) shall cease. With respect to events or circumstances relating to the Business
Assets, the assets owned or used by the Target Companies, the Assumed Liabilities, the Employees or
the Target Companies that occurred or existed prior to the Closing Date that are covered by
occurrence-based third party insurance policies maintained by the Seller Group’s occurrence-based
insurance policies and any workers’ compensation insurance policies and/or comparable workers’
compensation self-insurance, state or country programs (collectively, the Pre-Closing Insurance),
the Purchaser may make such claims as are permitted under such policies and programs, and the
Seller shall provide reasonable assistance to the Purchaser or take such actions as may reasonably
be required in connection with the tendering of such claims to the applicable insurers under such
Pre-Closing Insurance and provide the Purchaser with the proceeds paid with respect to such claims.

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22.3 With respect to any open claims against the Seller Group’s insurance policies relating to the
Business Assets, the assets owned or used by the Target Companies, the Assumed Liabilities, the
Employees or the Target Companies prior to Closing, the expected proceeds of which are reflected as
an asset on the Locked Box Balance Sheet, the Seller shall (i) use its reasonable efforts to pursue
such claims and obtain such expected proceeds, and (ii) remit any net proceeds it realises from
such claims to the Purchaser upon full and final settlement of such claims.

23. Payment of Inter Company Debt

The provisions of Schedule 13 shall apply in respect of the payment of Inter Company Debt.

24. Separation and Transition

24.1 Objectives

	(a)	 	Each party agrees to develop a reasonable set of procedures and arrangements for:

	 	(i)	 	the separation of assets, contracts and employees in connection
with the transactions contemplated by this Agreement;
	 
	 	(ii)	 	any transitional arrangements or services, to the extent
necessary for the carrying out the business of the Target Companies, the Target
Business and the Seller Group in the manner (in all material respects) in which
such business was carried out immediately prior to execution of this Agreement,

which aim to minimise any disruption to, ensure continuity of the business or and service
and support to, and avoid any material adverse impact upon, the Seller Group, the Purchaser
Group, the Target Companies and the Target Business (as applicable) as a result of the
transaction contemplated by this Agreement (the Overall Objectives).

	(b)	 	The arrangements agreed by the parties to achieve the Overall Objectives shall incorporate
the following areas of business activity as appropriate and the principles set out in Schedule
15:

	 	(i)	 	the Business Assets and the Excluded Assets, and anything
equivalent relating to the Target Companies, as well as the Employees;
	 
	 	(ii)	 	historical data and other content used by the Target Companies,
the Target Business and/or by the Seller Group, a plan for its migration or
copying or other access to permit its continued use;
	 
	 	(iii)	 	IT Systems and/or other desktops, hardware, software, software
products, systems, computer and telecommunications networks (local and wide
area), infrastructure and peripherals, email, online products or services, web
or internet/intranet sites and domain names, product or other content, customer
or other databases, sales and marketing systems, content delivery systems,
distribution and/or warehousing systems, enterprise resource planning systems,
production management and scheduling systems, links to transactional systems,
hosted, managed or outsourced services (including

-24-

 

	 	 	 	without limitation online
testing), business continuity and/or disaster recovery, and/or services and
support in relation to each of the foregoing;

	 	(iv)	 	functions such as legal, accounting (including without limitation
accounts receivable, accounts payable and credit control), human resources
(including without limitation information, pensions other than with respect to
the US Business Employees, benefits and payroll), sales, marketing and public
relations, tax, insurance, real estate, premises, shared services and service or
other centres, and other office functions; and
	 
	 	(v)	 	any other item or thing, services or support provided or used by
or for the Target Companies and/or the Target Business immediately prior to the
relevant Closing which materially affects the Overall Objectives.

	(c)	 	Each party agrees that its respective group shall, unless otherwise expressly agreed between
the parties, bear the cost of developing and implementing the requirements ascribed to that
group in achieving the Overall Objectives save that the Transitional Services to be provided
under the agreement may be charged in an “at cost” manner consistent with historic amounts
recharged by the Seller Group for such service immediately prior to the relevant Closing or,
if such service is not recharged immediately prior to the relevant Closing, at cost.

	(d)	 	Each party shall act in good faith to the other and co-operate with and assist the other (and
any relevant third party) as regards achieving the Overall Objectives.

	(e)	 	The arrangements agreed by the parties for the Transitional Services to achieve the Overall
Objectives shall incorporate the following:

	 	(i)	 	specifications, quantity thresholds, and service levels (in each
case based on those as at the relevant Closing Date);
	 
	 	(ii)	 	changes to the service, security and other requirements to be
complied with;
	 
	 	(iii)	 	provisions relating to intellectual property, third party
consents and similar approvals, access and information, audit and inspection,
payment, termination, liability, indemnities and warranties, in each case as
customary in relation to such arrangements;
	 
	 	(iv)	 	provisions dealing with force majeure and other circumstances in
which it may not be possible to provide the relevant Transitional Services; and
	 
	 	(v)	 	a provision dealing with maximum aggregate liability whether for
damages, breach of contract, negligence or otherwise which shall be limited to
two times the annual charge for the relevant Transitional Services subject to an
agreed de minimis in line with that maximum liability and any customary
exclusions to that maximum liability.

24.2 Process

	(a)	 	The Seller shall provide to the Purchaser, as soon as practicable following the date of
execution of this Agreement and in any event no later than 60 days following the date of
execution of this Agreement and subject to applicable law and regulation:

-25-

 

	 	(i)	 	a high-level description of significant assets, contracts and
employees used to run the Target Companies and/or the Target Business
immediately prior to execution of this Agreement together with an executive
summary of the proposed way in which the Overall Objectives might be achieved in
respect of those assets, contracts and employees;
	 
	 	(ii)	 	a draft master separation and transition agreement (with local
statements of work); and
	 
	 	(iii)	 	a proposed work-plan designed to enable the parties to finalise
the separation and transition agreement (and local statements of work),

in each case which reflects the principles set out in Schedule 15.

	(b)	 	Each party agrees to negotiate in good faith to enter into a separation and transition
agreement based on the draft provided by the Seller as envisaged under clause 24.2(a)(ii) as
soon as practicable following receipt of the draft.

	(c)	 	During the period commencing on the first Closing Date and ending on the date on which the
parties enter into a separation and transition agreement, the parties agree to provide
Transitional Services in relation to the relevant Target Business(es) in accordance with the
Overall Objectives and the provisions of this clause 24 and Schedule 15.

24.3 This clause 24.3 shall only apply to the Properties to the extent that they are not otherwise
dealt with under the terms of Schedule 10 and in the event of any conflict between the terms of
this Clause and the provisions of Schedule 10 shall prevail.

25. Third Party Assurances

25.1 The Purchaser shall use all reasonable endeavours to ensure that as soon as reasonably
practicable after Closing each member of the Seller Group is released in full from all Third Party
Assurances listed in Part A of Exhibit 1 given by it in respect of obligations of any Target
Company or relating to any Business Contract. In addition, the Purchaser shall use its reasonable
efforts to ensure that, as soon as reasonably practicable after becoming aware of any other Third
Party Assurance in respect of any obligations of any Target Company or relating to any Business
Contract, each member of the Seller Group is released in full from such Third Party Assurance.
Pending release of any Third Party Assurance referred to in this clause 25, the Purchaser shall
indemnify the Seller and each of its Affiliates against any and all Costs arising after Closing
under or by reason of that Third Party Assurance.

25.2 The Seller shall use all reasonable endeavours to ensure that as soon as reasonably
practicable after Closing each Target Company is released in full from all third party assurances,
guarantees, indemnities, counter-indemnities or letters of comfort of any nature given by it
otherwise than in respect of the obligations of any Target Company or relating to the Target
Business. Pending release of any such assurances referred to in this sub-clause 25.2, the Seller
shall indemnify the Purchaser and each of its Affiliates against any and all Costs arising after
Closing under or by reason of such assurance.

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26. Purchaser’s and Seller’s Guarantee

26.1 Seller’s Guarantee

	(a)	 	The Seller unconditionally and irrevocably guarantees to the Purchaser and the Designated
Purchasers the due and punctual performance and observance by each of the Designated Sellers
of all of their respective obligations (including any liabilities to pay damages arising out
of or in connection with this Agreement) under or pursuant to the Transaction Documents (the
Seller Guaranteed Obligations) and hereby agrees to indemnify the Purchaser and the Designated
Purchasers in respect of the full amount of any sum payable (including any liability to pay
damages) by each Designated Seller under or pursuant to the Transaction Documents.

	(b)	 	Without prejudice to the rights of the Purchaser against the Seller or any of the Designated
Sellers, the Seller shall be a primary obligor and shall be deemed a principal debtor in
respect of its obligations (including the Seller Guaranteed Obligations) under this Agreement
and not a surety.

	(c)	 	The Purchaser may enforce its rights against the Seller without first exercising any rights
or remedies against the relevant Designated Seller.

	(d)	 	The Seller’s liability to the Purchaser under this clause 26.1 shall not be discharged,
impaired or affected by:

	 	(i)	 	any legal limitation, disability or incapacity or other
circumstances relating to any of the Designated Sellers or any change in the
members or status of any of the Designated Sellers or any other person;
	 
	 	(ii)	 	any variation of any of the terms of this Agreement or of any of
the Seller Guaranteed Obligations;
	 
	 	(iii)	 	any time, waiver or consent granted to or composition with any
of the Designated Sellers or any other person;
	 
	 	(iv)	 	the bankruptcy, liquidation or dissolution of any of the
Designated Sellers or the appointment of a receiver, administrative receiver or
administrator of any of the Designated Seller’s assets or any other insolvency
proceeding relating to any of the Designated Sellers or any change of control of
any of the Designated Sellers or any other matter affecting the obligation of
any of the Designated Sellers to perform any Seller Guaranteed Obligation;
	 
	 	(v)	 	any unenforceability, illegality or invalidity of any obligation
of any person under this Agreement; or
	 
	 	(vi)	 	any other matter which, but for this clause, would reduce,
vitiate or affect the obligations of the Seller in respect of the Seller
Guaranteed Obligations.

26.2 Purchaser’s Guarantee

	(a)	 	The Purchaser unconditionally and irrevocably guarantees to the Seller and the Designated
Sellers the due and punctual performance and observance by each of the
Designated Purchasers of all of their respective obligations (including any liabilities to
pay damages arising out of or in connection with this Agreement) under or pursuant to the
Transaction Documents (the Purchaser Guaranteed Obligations) and 

-27-

 

	 	 	hereby agrees to indemnify
the Seller and the Designated Sellers in respect of the full amount of any sum payable
(including any liability to pay damages) by each Designated Purchaser under or pursuant to
the Transaction Documents.

	(b)	 	Without prejudice to the rights of the Seller against the Purchaser or any of the Designated
Purchasers, the Purchaser shall be a primary obligor and shall be deemed a principal debtor in
respect of its obligations (including the Purchaser Guaranteed Obligations) under this
Agreement and not a surety.

	(c)	 	The Seller may enforce its rights against the Purchaser without first exercising any rights
or remedies against the relevant Designated Purchaser.

	(d)	 	The Purchaser’s liability to the Seller under this clause 26.2 shall not be discharged,
impaired or affected by:

	 	(i)	 	any legal limitation, disability or incapacity or other
circumstances relating to any of the Designated Purchasers or any change in the
members or status of any of the Designated Purchasers or any other person;
	 
	 	(ii)	 	any variation of any of the terms of this Agreement or of any of
the Purchaser Guaranteed Obligations;
	 
	 	(iii)	 	any time, waiver or consent granted to or composition with any
of the Designated Purchasers or any other person;
	 
	 	(iv)	 	the bankruptcy, liquidation or dissolution of any of the
Designated Purchasers or the appointment of a receiver, administrative receiver
or administrator of any of the Designated Purchaser’s assets or any other
insolvency proceeding relating to any of the Designated Purchasers or any change
of control of any of the Designated Purchasers or any other matter affecting the
obligation of any of the Designated Purchasers to perform any Purchaser
Guaranteed Obligation;
	 
	 	(v)	 	any unenforceability, illegality or invalidity of any obligation
of any person under this Agreement; or
	 
	 	(vi)	 	any other matter which, but for this clause, would reduce,
vitiate or affect the obligations of the Purchaser in respect of the Purchaser
Guaranteed Obligations.

27. Information, Records and Assistance Post-Closing

27.1 Save as provided elsewhere in the Agreement, for 7 years following the Closing Date (and, to
the extent required by law, for up to 11 years following the Closing Date in relation to Harcourt
Test Services and its Subsidiaries and Reed Elsevier Deutschland GmbH), each member of the
Purchaser Group shall provide the Seller (at the Seller’s expense) and each member of the Seller
Group shall provide the Purchaser (at the Purchaser’s expense) with reasonable access at reasonable
times to (and the right to take copies of) the books, accounts, customer lists and all other
records (including records relating to tax) that are required by law
to be kept (for so long as such records are required to be kept by law) and held by it after
Closing to the extent that they relate to the Target Business and to the period up to Closing (the
Records). This obligation is subject to the provisions of clause 31 (Confidentiality).

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27.2 For 7 years following the Closing Date (and, to the extent required by law, for up to 11 years
following the Closing Date in relation to Harcourt Test Services and its Subsidiaries and Reed
Elsevier Deutschland GmbH), no member of the Purchaser Group and no member of the Seller Group
shall dispose of or destroy any of the Records without first giving the Seller or the Purchaser, as
the case may be, at least 2 months’ notice of its intention to do so and giving the Seller or the
Purchaser (as the case may be) a reasonable opportunity to remove and retain any of them (at the
Seller’s or Purchaser’s expense, as the case may be).

27.3 Each member of the Purchaser Group shall (at the Seller’s expense) and each member of the
Seller Group shall (at the Purchaser’s expense) also give such assistance to any member of the
Seller Group or the Purchaser Group as the Seller or Purchaser (as the case may be) may reasonably
request in relation to any third party proceedings by or against any member of the Seller Group or
the Purchaser Group (as the case may be) so far as they relate to the Target Business, including
proceedings relating to employees’ claims or taxation.

28. Agency Structure

Save in respect of clause 26 (Purchaser’s and Seller’s Guarantee) each of the Seller and the
Purchaser agrees that it is entering into this Agreement on its own behalf as principal and as
agent on behalf of the Designated Sellers or (as the case may be) the Designated Purchasers on the
basis set out in Schedule 14.

29. Payments

29.1 Any payment to be made pursuant to this Agreement by the Purchaser (or any member of the
Purchaser Group) shall be made to the Seller’s Bank Account. The Seller agrees to pay each member
of the Seller Group that part of each payment to which it is entitled.

29.2 Any payment to be made pursuant to this Agreement by the Seller (or any member of the Seller
Group) shall be made to the Purchaser’s Bank Account or, in the case of any payment to any Target
Company, to such account as the Purchaser may nominate. The Purchaser agrees to pay each member of
the Purchaser Group that part of each payment to which it is entitled.

29.3 Payment under clause 29.1 and 29.2 shall be in immediately available funds by electronic
transfer on the due date for payment. Receipt of the amount due shall be an effective discharge of
the relevant payment obligation.

29.4 If any sum due for payment in accordance with this Agreement is not paid on the due date for
payment, the person in default shall pay Default Interest on that sum from but excluding the due
date to and including the date of actual payment calculated on a daily basis.

30. Announcements

30.1 Until the last Closing Date, neither the Seller nor the Purchaser (nor any of their respective
Affiliates) shall make any announcement or issue any circular in connection with the existence or
subject matter of this Agreement (or any other Transaction Document) without the prior written
approval of the other (such approval not to be unreasonably withheld or delayed).

-29-

 

30.2 The restriction in clause 30.1 shall not apply to the extent that the announcement or circular
is required by law, by any stock exchange or any regulatory or supervisory body or authority of
competent jurisdiction, whether or not the requirement has the force of law. If this exception
applies, the party making the announcement or issuing the circular shall use its reasonable efforts
to consult with the other party in advance as to its form, content and timing.

31. Confidentiality

31.1 For the purposes of this clause 31, Confidential Information means:

	 	(i)	 	(in relation to the obligations of the Purchaser) any information
received or held by the Purchaser (or any of its Representatives) relating to
the Seller Group or, prior to Closing, any of the Target Companies and/or the
Businesses; or
	 
	 	(ii)	 	(in relation to the obligations of the Seller) any information
received or held by the Seller (or any of its Representatives) relating to the
Purchaser Group or, following Closing, any of the Target Companies and/or the
Businesses; and
	 
	 	(iii)	 	information relating to the provisions of, and negotiations
leading to, this Agreement and the other Transaction Documents

and includes written information and information transferred or obtained orally, visually,
electronically or by any other means;

31.2 Each of the Seller and the Purchaser shall (and shall ensure that each of its Representatives
shall) maintain Confidential Information in confidence and not disclose Confidential Information to
any person except (i) as this clause 31 permits or (ii) as the other party approves in writing.

31.3 Clause 31.2 shall not prevent disclosure by a party or its Representatives to the extent it
can demonstrate that:

	(a)	 	disclosure is required by law or by any stock exchange or any regulatory, governmental or
antitrust body (including any tax authority) having applicable jurisdiction (provided that the
disclosing party shall first inform the other party of its intention to disclose such
information and take into account the reasonable comments of the other party);

	(b)	 	disclosure is of Confidential Information which was lawfully in the possession of that party
or any of its Representatives (in either case as evidenced by written records) without any
obligation of secrecy prior to its being received or held;

	(c)	 	disclosure is of Confidential Information which has previously become publicly available
other than through that party’s fault (or that of its Representatives);

	(d)	 	disclosure is required for the purpose of any arbitral or judicial proceedings arising out of
this Agreement (or any other Transaction Document).

31.4 From the date of this Agreement to the relevant Closing Date, the Seller will not and will
cause its Affiliates and its and their officers, directors, employees, representatives and agents
not to initiate, solicit or encourage, directly or indirectly, any proposal or offer from a

-30-

 

third party to acquire all or part of either the Assessment Business, the ROW Education Business, the
South African Education Business, the Australian Education Business, the New Zealand Education
Business or the Global Library Business (an Alternative Proposal) or provide any confidential
information or data to any person in connection with or relating to any Alternative Proposal.

31.5 Each of the Seller and the Purchaser undertakes that it (and its Affiliates) shall only
disclose Confidential Information to Representatives if it is reasonably required for purposes
connected with this Agreement and only if the Representatives are informed of the confidential
nature of the Confidential Information.

31.6 If this Agreement terminates, the Purchaser shall as soon as practicable on request by the
Seller:

	(a)	 	return to the Seller all written documents and other materials relating to the Seller, any
Target Company, any Business or this Agreement (including any Confidential Information) which
the Seller (or its Representatives) have provided to the Purchaser (or its Representatives)
without keeping any copies of them;
	 
	(b)	 	destroy all information or other documents derived from such Confidential Information; and
	 
	(c)	 	so far as it is practicable to do so, expunge such Confidential Information from any
computer, word processor or other device.

31.7 Notwithstanding the foregoing and any other provision in this Agreement, the parties (and each
employee, representative, or other agent) may disclose to any and all persons, without limitation
of any kind, the tax treatment and tax structure of the transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to the parties relating to such tax
treatment and tax structure, other than any information for which nondisclosure is reasonably
necessary in order to comply with applicable securities laws.

32. Assignment

Except as provided in this clause 32 or unless the Seller and the Purchaser specifically agree in
writing, no person shall assign, transfer, charge or otherwise deal with all or any of its rights
under this Agreement nor grant, declare, create or dispose of any right or interest in it. Any
purported assignment in contravention of this clause 32 shall be void.

33. Transfer of assets

33.1 Nothing in this Agreement shall prevent the Target Companies, the Business Sellers and the
relevant members of the Seller Group from implementing or performing the Pre-Closing Transfer of
Assets, or taking any action necessary in connection with such Pre-Closing Transfer of Assets.

33.2 The Seller undertakes to indemnify, defend and hold harmless the Target Companies and each
member of the Purchaser Group from and against any and all Liabilities or Costs (other than tax)
suffered or incurred by any Target Company, any member of the Purchaser Group or anyone connected
to any Target Company or any member of the Purchaser Group

-31-

 

arising out of, as a result of, or in
connection with the implementation or performance of the Pre-Closing Transfer of Assets, excluding
the UK Global Library Transfer.

33.3 Without prejudice to any other rights and remedies of either the Purchaser or the Seller under
this Agreement, in the event that the Seller or any other member of the Seller Group, after the
relevant Closing, (for the purposes of this clause 33.3 the Holder) owns, leases or licences any
asset which, immediately prior to Closing, was used by a Target Company or Business Seller in
connection with the carrying out of the relevant Target Business, other than any asset owned,
leased or licensed by the Seller and/or any other member of the Seller Group which is covered by
the provisions of an executed separation and transition agreement (where the provisions of such
separation and transition agreement shall apply in respect of that asset), and the Purchaser gives
the Seller a written request that the Holder transfers the relevant asset to the Purchaser, a
Target Company or a Business Purchaser (as the Purchaser shall so direct and being the Recipient)
within 12 months of the date of Closing, then the Seller or the relevant member of the Seller Group
shall:

	(a)	 	if the relevant asset was, immediately prior to the relevant Closing, used exclusively or
predominantly by a Target Company or a Business in the carrying out of the relevant Target
Business, do all such acts and things as may be necessary to transfer the relevant asset
absolutely to the Recipient for nil consideration; or

	(b)	 	except as relates to IP, which is dealt with in Schedule 11, or Employees, or if the
Purchaser directs the Holder not to transfer the relevant asset absolutely, or until such
transfer is effected and if the relevant asset was, immediately prior to the relevant Closing,
used, but not exclusively or predominantly, by a Target Company or Business Seller in
connection with the relevant Target Business in carrying out their respective businesses,
grant (or, if the owner is no long a member of the Seller Group, use best endeavours to grant)
to the Recipient a royalty-free, perpetual, irrevocable, worldwide right and licence (with a
right to sub-license to a member of the Purchaser’s Group whilst it remains as such) to use
the relevant asset in the same manner (in all material respects) as the relevant asset was so
used immediately prior to the relevant Closing,

provided that if any third party consent or approval is required for the transfer of, or the grant
of the licence in relation to, the relevant asset to be effective or lawful, then the Seller shall
or shall procure that such member of the Seller Group (as the case may be) shall use its best
endeavours to obtain that consent or approval as soon as reasonably practicable, upon which the
relevant asset shall be transferred to the Recipient or a licence shall be granted to the Recipient
as the case may be.

33.4 Without prejudice to any other rights and remedies of either the Purchaser or the Seller under
this Agreement, in the event that the Purchaser or the Target Companies or the Business Purchaser
or any other member of the Purchaser Group, after the relevant Closing,
(for the purposes of this clause 33.4, the Holder) owns, leases or licences any asset which,
immediately prior to Closing, was used by a member of the Seller Group exclusively or predominantly
in connection with business other than the relevant Target Business, other than any asset owned,
leased or licensed by the Seller and/or any other member of the Seller Group which is covered by
the provisions of an executed separation and transition agreement (where the provisions of such
separation and transition agreement shall apply in respect of that asset), and the Seller gives the
Purchaser a written request that the Holder transfers the relevant asset to the Seller or a member
of the Seller Group (as the Seller shall so direct) within 12 months of the date of Closing, then
the Purchaser or the relevant member of the Purchaser Group shall do all such acts and things as
may be necessary to transfer the relevant asset absolutely to the Seller or such member of the
Seller Group for nil consideration.

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33.5 For the avoidance of doubt, any costs or expenses incurred in connection with the transfer of
the relevant assets (excluding transfer taxes) under clause 33.1 shall be borne by the Seller.

34. Further Assurances

34.1 Each of the Seller and the Purchaser shall, for a period of 12 months from the Closing Date,
execute (or procure the execution of) such further documents as may be required by law or be
necessary to implement and give effect to this Agreement.

34.2 Each of the Seller and the Purchaser shall procure that its Affiliates comply with all
obligations under this Agreement which are expressed to apply to any such Affiliates.

35. Costs

35.1 Subject to clause 35.2 and except as otherwise provided in this Agreement (or any other
Transaction Document), the Seller and the Purchaser shall each be responsible for its own costs,
charges and other expenses (including those of its Affiliates) incurred in connection with the
Proposed Transactions.

35.2 Save as provided in clause 35.2 the Purchaser or its Affiliates shall bear all stamp duty,
notarisation fees or other documentary transfer or transaction duties, and all stamp duty reserve
tax, stamp duty land tax and any other transfer taxes (Transfer Taxes) including in each case any
related interest or penalties arising as a result of this Agreement or of any of the other
Transaction Documents.

35.3 The Seller shall on demand by the Purchaser pay to the Purchaser an amount equal to Transfer
Taxes borne by any Designated Purchaser to the extent that such Transfer Taxes arise or are
increased as a result of the Locked Box Inter Company Debt or Inter Company Debt being left
outstanding at Closing where such Transfer Taxes would not have arisen or been increased had there
been no Locked Box Inter Company Debt or Inter Company Debt (such payment being treated, so far as
possible, as an adjustment to the price paid by the Purchaser in accordance with clause 2.12),
provided that the Purchaser shall use its best endeavours to assist the Seller in minimising such
additional Transfer Taxes.

36. Notices

36.1 Any notice in connection with this Agreement shall be in writing in English and delivered by
hand, fax, registered post or courier using an internationally recognised courier company. A
notice shall be effective upon receipt and shall be deemed to have been received (i) at the time of
delivery, if delivered by hand, registered post or courier or (ii) at the time of transmission if
delivered by fax provided that in either case, where delivery occurs outside Working Hours, notice
shall be deemed to have been received at the start of Working Hours on the next following Business
Day.

36.2 The addresses and fax numbers of the parties for the purpose of clause 36.1 are:

-33-

 

	 	 	 
	Seller
	 	 
	 
	 	 
	Address:

	 	REED ELSEVIER GROUP PLC
	 

	 	1-3 Strand
	 

	 	London
	 

	 	WC2N 5JR
	 
	 	 
	For the attention of:

	 	General Counsel
	 
	 	 
	Purchaser
	 	 
	 
	 	 
	Address:

	 	PEARSON PLC
	 

	 	80 Strand
	 

	 	London
	 

	 	WC2R 0RL UK
	 
	 	 
	For the attention of:

	 	The Company Secretary
	 
	 	 
	With a copy to:

	 	General Counsel
	 
	 	 
	 

	 	and
	 
	 	 
	 

	 	James Palmer
	 

	 	Herbert Smith LLP
	 

	 	Exchange House
	 

	 	Primrose Street
	 

	 	London
	 

	 	EC2A 2HS

37. Conflict with other Agreements

37.1 If there is any conflict between the terms of this Agreement and any other agreement entered
in connection with the Proposed Transactions this Agreement shall prevail (as between the parties
to this Agreement and as between any members of the Seller Group and any members of the Purchaser
Group) unless (i) such other agreement expressly states that it overrides this Agreement in the
relevant respect and (ii) the Seller and the Purchaser are either
also parties to that other agreement or otherwise expressly agree in writing that such other
agreement shall override this Agreement in that respect.

38. Whole Agreement

38.1 In this clause 38 the Relevant Parties shall mean the Seller, the Purchaser, each Designated
Seller and each Designated Purchaser, and each of them shall be a Relevant Party.

38.2 Save for the non-solicitation provisions in the Confidentiality Agreement, which shall remain
in force in accordance with its terms, this Agreement and the other Transaction Documents together
set out the whole agreement between the Relevant Parties in respect of the sale and purchase of the
Shares and the Businesses and supersede any prior agreement (whether oral or written) relating to
the Proposed Transactions. It is agreed that:

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	(a)	 	no Relevant Party shall have any claim or remedy in respect of any statement, representation,
warranty or undertaking made by or on behalf of any other Relevant Party (or any of its
Connected Persons) in relation to the Proposed Transactions which is not expressly set out in
this Agreement or any other Transaction Document;

	(b)	 	any terms or conditions implied by law in any jurisdiction in relation to the Proposed
Transactions are excluded to the fullest extent permitted by law or, if incapable of
exclusion, any right, or remedies in relation to them are irrevocably waived;

	(c)	 	the only right or remedy of a Relevant Party in relation to any provision of this Agreement
or any other Transaction Document shall be for breach of this Agreement or the relevant
Transaction Document; and

	(d)	 	except for any liability in respect of a breach of this Agreement or any other Transaction
Document, no Relevant Party (or any of its Connected Persons) shall owe any duty of care or
have any liability in tort or otherwise to any other Relevant Party (or its respective
Connected Persons) in relation to the Proposed Transactions

provided that this clause shall not exclude any liability for (or remedy in respect of) fraudulent
misrepresentation. Each Relevant Party agrees to the terms of this clause 38 on its own behalf and
as agent for each of its Connected Persons. For the purpose of this clause, Connected Persons
means (in relation to a Relevant Party) the officers, employees, agents and advisers of that
Relevant Party or any of its Affiliates.

39. Waivers, Rights and Remedies

Except as expressly provided in this Agreement, no failure or delay by any party in exercising any
right or remedy relating to this Agreement or any of the Transaction Documents shall affect or
operate as a waiver or variation of that right or remedy or preclude its exercise at any subsequent
time. No single or partial exercise of any such right or remedy shall preclude any further
exercise of it or the exercise of any other remedy.

40. Counterparts

This Agreement may be executed in any number of separate counterparts, each of which is an original
but all of which taken together shall constitute one and the same instrument.

41. Variations

No amendment of this Agreement (or of any other Transaction Document) shall be valid unless it is
in writing and duly executed by or on behalf of all of the parties to it.

42. Invalidity

Each of the provisions of this Agreement and the other Transaction Documents is severable. If any
such provision is held to be or becomes invalid or unenforceable in any respect under the law of
any jurisdiction, it shall have no effect in that respect and the parties shall use all

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reasonable
efforts to replace it in that respect with a valid and enforceable substitute provision the effect
of which is as close to its intended effect as possible.

43. No Third Party Enforcement Rights

A person who is not a party to this Agreement shall have no right under any statutory provision to
enforce any of its terms.

44. Governing Law and Jurisdiction

44.1 This Agreement shall be governed by, and interpreted in accordance with, English law.

44.2 Except as expressly provided otherwise in this Agreement, the courts of England are to have
exclusive jurisdiction to settle any disputes which may arise in connection with this Agreement.
For such purposes each party irrevocably submits to the jurisdiction of the English courts, waives
any objections to the jurisdiction of those courts and irrevocably agrees that a judgment or order
of the English courts in connection with this Agreement is conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.

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DEFINITIONS AND INTERPRETATION

1. Definitions. In this Agreement, the following words and expressions shall have the
following meanings:

Additional Locked Box Inter Company Debt means Inter Company Debt at the Locked Box Balance Sheet
Date in respect of the Assessment Business or the Education Business, as appropriate, other than
Locked-Box Inter Company Debt;

Affected Employee has the meaning given to it in clause 18;

Affiliate means, in relation to any party, any subsidiary or parent company of that party and any
subsidiary of any such parent company, in each case from time to time;

Agreed Form means, in relation to a document, the form of that document as initialled on the date
of this Agreement for the purpose of identification by or on behalf of the Seller and the Purchaser
(in each case with such amendments as may be agreed in writing by or on behalf of the Seller and
the Purchaser);

Assessment Business means the assessment business carried on as at the date of this Agreement by
Reed International Books Australia Pty Limited and by Reed Elsevier Canada Inc and the following
Target Companies: Harcourt Assessment Inc, Ordinate Corporation and Edformation Inc, Harcourt
Assessment BV, Berkhout Nijmegen BV, Harcourt Assessment BVBA, Les Editions du Centre de
Psychologie Appliquee SA, Harcourt Test Services GmbH, Harcourt Assessment AB,;

Assessment Closing means completion of the sale and purchase of the Shares, the Business and the
Business Assets relating to the Assessment Business in accordance with the provisions of this
Agreement;

Assessment Closing Date has the meaning given in clause 6.1;

Assessment Consideration means the amount set out in column 6 of Part 1 of Part A of Schedule 1 and
column 6 of Part 1 of Part B of Schedule 1;

Assessment Date has the meaning given to it in clause 3.14;

Assessment Inter Company Consideration means the equivalent amount in US dollars of the aggregate
of the amounts owed by a member of the Seller Group to a Target Company in relation to the
Assessment Business at the Locked Box Balance Sheet Date less the amounts owed by a Target Company
to a member of the Seller Group in relation to the Assessment Business at the Locked Box Balance
Sheet Date, in each case as shown in the Locked-Box Inter Company Spreadsheet, calculated using the
Exchange Rate on the day immediately prior to the Assessment Closing Date;

Assignment Property has the meaning given in Schedule 10;

Associated Person and Connected Person shall (except for the purposes of Clause 36.2) have the
meanings attributed to them by the Pensions Act 2004 and Associated and Connected shall be
construed accordingly;

Assumed Liabilities means all Assumed Business Debt, all Business Liabilities and all Liabilities
relating to the Business Properties, in each case excluding the Excluded Liabilities;

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Australian Education Business means the education business carried on as at the date of this
Agreement by Reed International Books Australia Pty Limited and Leading Edge Economics Pty Limited;

Australian Education Closing means completion of the sale and purchase of the Shares, the Business
and the Business Assets relating to the Australian Education Business, in accordance with the
provisions of this Agreement;

Australian Education Closing Date means the ROW Education Closing Date;

Australian Education Consideration means the aggregate of the amounts shown in column 6 of Part 4
of Part A of Schedule 1 and column 6 of Part 3 of Part B of Schedule 1;

Benefit means any fees including directors’ fees or monitoring fees;

Budgeting Agreement means the agreement made between Harcourt Education Limited (1) and Elsevier
Limited (2) relating to the apportionment of costs between the two companies of the operation of
the Rushden Property;

Business means, in relation to each Business Seller, any business carried on by that Business
Seller as at Closing which exclusively or predominantly forms part of the Target Business (but
excluding any Shares held by that Business Seller), and Businesses shall be construed accordingly;

Business Assets means, in relation to each Business, all the property, undertaking, rights and
assets of the relevant Business Seller relating exclusively or predominantly to that Business
(including, for the avoidance of doubt, deferred tax assets relating exclusively or predominantly
to that Business), including any assets falling into the categories of assets set out in Part A of
Schedule 2 but excluding the Excluded Assets;

Business Claims means the benefit of all rights and claims arising exclusively or predominantly
from the carrying on of any Business by a Business Seller (whether arising on, prior to or after
Closing) but excluding rights and claims to the extent that they relate to taxation or to any of
the Excluded Assets or the Excluded Liabilities;

Business Consideration means the aggregate of the amounts set out in column 6 of Part B of Schedule
1;

Business Contracts means, in relation to each Business Seller, all contracts, engagements,
licences, guarantees and other commitments to the extent that they relate to the Target Business
entered into by or on behalf of, or the benefit of which is held on trust for or has been assigned
to, that Business Seller prior to Closing (but excluding agreements, leases or other documents
relating to ownership or occupation of Business Properties);

Business Day means a day other than a Saturday or Sunday or public holiday in England and Wales on
which banks are open in London for general commercial business;

Business Employees means those employees of the relevant Business Sellers who are immediately prior
to Closing wholly or substantially engaged in the Businesses;

Business Goodwill means the goodwill relating to each Business, together with the exclusive right
for the relevant Business Purchaser to represent itself as carrying on such Business in succession
to the relevant Business Seller;

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Business Information means, in relation to each Business, all information in respect of which the
relevant Business Seller has a right to transfer possession to a member of the Purchaser Group to
the extent that such information relates exclusively or predominantly to that Business;

Business Liabilities means, in relation to each Business, all Liabilities of the relevant Business
Seller (including Trade Creditors and Inter Company Payables) to the extent that they relate to the
Business and/or the Business Assets (excluding any Liabilities relating to any Business
Properties), and Business Liability means any one of them;

Business Loose Plant and Equipment means, in relation to each Business, all the loose plant,
machinery, equipment, tooling, computer hardware, furniture and vehicles of the relevant Business
Seller (not being business fixtures and fittings) used exclusively for the purposes of that
Business;

Business Properties means the properties of the Business Sellers short particulars of which are set
out in Part B of Exhibit 4;

Business Purchasers means the members of the Purchaser Group set out in column 3 of Part B of
Schedule 1 or any member of the Purchaser Group established as a Designated Purchaser of any
Business pursuant to a Supplemental Agency Agreement, and Business Purchaser means any one of them;

Business Sellers means the members of the Seller Group set out in column 1 of Part B of Schedule 1
or any member of the Seller Group established as a Designated Seller of any Business pursuant to a
Supplemental Agency Agreement, and Business Seller means any one of them;

Capital Creditors means liabilities and accruals for work done in relation to Capex Projects to the
extent that they have not been paid prior to Closing (based upon evidence such as invoices,
evidence of work certified, quantity surveyor reports, licences, hours worked by contractors and
staff or other substantive evidence of purchase, replacement, repair, refurbishment, improvement or
addition);

Capex Projects means, in relation to each Target Company or Business, the projects undertaken by
that Target Company or the relevant Business Seller to the extent that they relate to the purchase,
replacement, repair, refurbishment or improvement of, or addition to, any tangible fixed assets
owned or leased by that Target Company or Business Seller (in relation to the relevant Business),
including property, plant and equipment, furniture, fittings and furnishings and floor coverings;

Cash means all cash earned exclusively by the Businesses between the Locked Box Balance Sheet Date
and Closing and not taken into account in the Cash Pooling Amount;

Cash Pooling Amount means the balance (whether positive or negative) as at the Closing Date of the
operation of the cash pooling arrangement described in the definition of Permitted Leakage after
taking account of interest;

Claim means any claim for breach of the Warranties, any Pensions Claim or any claim under the Tax
Covenant;

Closing means Assessment Closing and/or ROW Education Closing and/or the South African Closing
and/or Australian Closing and/or New Zealand Closing and/or Global Library Closing, as appropriate;

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Closing Date means the Assessment Closing Date and/or the ROW Education Closing Date and/or the
South African Education Closing Date, and/or the Australian Education Closing Date and/or the New
Zealand Education Closing Date and/or the Global Library Closing Date as appropriate;

COBRA means Public Law 99-272 Consolidated Omnibus Budget Reconciliation Act;

Code means the Internal Revenue Code of 1986, as amended;

Conditions means the conditions the US Condition and/or the South African Condition, as
appropriate;

Confidential Information has the meaning given in clause 31.1;

Confidentiality Agreement means the confidentiality agreement entered into between Reed Elsevier
PLC and the Purchaser dated 23 March 2007;

Consideration means the Assessment Consideration and/or the Education Consideration and/or the
South African Education Consideration and/or the Australian Education Consideration and/or the New
Zealand Education Consideration, as appropriate;

Costs means losses, damages, costs (including reasonable legal costs) and expenses (including
taxation), in each case of any nature whatsoever;

Data Protection Laws means:

(a) all applicable laws, regulations, regulatory requirements and/or codes of practice in
connection with the processing of personal data including, but not limited to, the Data Protection
Act 1998;

(b) all relevant European data protection and privacy laws including, but not limited to, Directive
95/46/EC on the processing of personal data and the free movement of such data; and

(c) all other applicable overseas data protection and privacy legislation;

Default Interest means interest at LIBOR plus 4%;

Designated Purchasers means the Share Purchasers and the Business Purchasers, and Designated
Purchaser means any one of them;

Designated Sellers means the Share Sellers and the Business Sellers, and Designated Seller means
any one of them;

Disclosure Letter means the letter from the Seller to the Purchaser regarding information relating
to the Target Business, executed and delivered immediately before the signing of this Agreement;

Education Business means the ROW Education Business, the South African Education Business, the
Australian Education Business and the New Zealand Education Business;

Employees means:

	(a)	 	the employees of the relevant Target Companies immediately prior to Closing; and

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	(b)	 	the Business Employees;

ERISA means the Employee Retirement Income Security Act of 1974, as amended and the rules and
regulations promulgated thereunder;

Exchange Rate means, with respect to a particular currency for a particular day, the spot rate of
exchange (the closing mid-point) for that currency into US dollars on such date as published in the
London edition of the Financial Times first published thereafter or, where no such rate is
published in respect of that currency for such date, at the rate quoted by HSBC as at the close of
business in London on such date;

Excluded Assets means, in relation to any Business, those properties, rights and assets relating to
that Business described in Part B of Schedule 2;

Excluded Liabilities means the Liabilities described in Part C of Schedule 2;

Exhibits means exhibits 1 to 5 to this Agreement, and Exhibit shall be construed accordingly;

Financial Debt means borrowings and indebtedness in the nature of borrowing (including by way of
acceptance credits, discounting or similar facilities, loan stocks, bonds, debentures, notes,
overdrafts or any other similar arrangements the purpose of which is to raise money) owed to any
banking, financial, acceptance credit, lending or other similar institution or organisation;

Full Title Guarantee means with the benefit of the implied covenants set out in Part 1 of the Law
of Property (Miscellaneous Provisions) Act 1994 when a disposition is expressed to be made with
full title guarantee;

GH Transfer means the proposed transfer of assets relating exclusively or predominantly to the
Greenwood Heinemann business from Harcourt Education Limited to Reed Elsevier (UK) Ltd.;

Global Library Business means the US Global Library business carried on by Reed Elsevier Inc. as at
the date of this Agreement and the UK Global Library business acquired by Reed Elsevier (UK)
Limited from Harcourt Education Limited pursuant to the UK Global Library Business Transfer;

Global Library Closing means the completion of the sale and purchase of the Business and the
Business Assets relating to the Global Library Business in accordance with the provisions of this
Agreement;

Global Library Closing Date has the meaning given in clause 6.1;

Global Library Consideration means the amount set out in column 6 of Part 2 of Part B of Schedule
1;

Governmental Entity means any supra-national, national, state, municipal or local government
(including any subdivision, court, administrative agency or commission or other authority thereof)
or any quasi-governmental or private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority, including the European Union;

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Harcourt Education Division means the entire education business carried on by the Seller Group
under the “Harcourt” name at the date of this Agreement, excluding the Education Business;

2004 Income Statement Accounts means the income statement for each of the Assessment Business and
the Education Business for the year ending 31 December 2004 and annexed to the Disclosure Letter;

2005 Income Statement Accounts means the income statement for each of the Assessment Business and
the Education Business for the year ending 31 December 2005 and annexed to the Disclosure Letter;

2006 Income Statement Accounts means the income statement for each of the Assessment Business and
the Education Business for the year ending 31 December 2006 and annexed to the Disclosure Letter;

Income Statement Accounts means the 2004 Income Statement Accounts, the 2005 Income Statement
Accounts and the 2006 Income Statement Accounts;

Indirect Tax means any value added, goods, sales or turnover tax and any equivalent or similar tax
arising in any jurisdiction but shall not, for the avoidance of doubt, include (i) any stamp duty,
notarisation fee or other documentary transfer or transaction duty or stamp duty reserve tax, stamp
duty land tax or any other similar tax; or (ii) any deduction or withholding tax or (iii) state
franchise tax or employee withholding tax.

Intellectual Property Rights or IP means patents, trade marks, service marks, logos, get-up, trade
names, internet domain names, rights in designs, copyright (including rights in computer software)
and moral rights, database rights, semi-conductor topography rights, utility models, rights in
know-how and other intellectual property rights, in each case whether registered or unregistered
and all rights or forms of protection having equivalent or similar effect anywhere in the world and
registered includes registrations and applications for registration and for the avoidance of doubt,
each right capable of separate ownership is to be regarded as a separate intellectual property
right;

Inter Company Debt means Inter Company Payables and Inter Company Receivables, but for the purposes
of paragraphs 2 and 3 of Schedule 13 shall exclude all Locked Box Inter Company Debt and Additional
Locked Box Inter Company Debt;

Inter Company Payables means, in relation to any Target Company or Business, any amounts owed by
that Target Company or Business Seller in relation to the Business to any member of the Seller
Group (which is not an amount in respect of tax or group relief), together with accrued interest,
if any, up to the date of Closing on the terms of the applicable debt including in respect of Inter
Company Trading Debt;

Inter Company Receivables means, in relation to each Target Company or Business, any amounts owed
to that Target Company or Business Seller in relation to the Business by any member of the Seller
Group (which is not an amount in respect of tax or group relief), together with accrued interest,
if any, up to the date of Closing on the terms of the applicable debt including in respect of Inter
Company Trading Debt;

Inter Company Trading Debt means all amounts owed, outstanding or accrued in the ordinary course of
trading, including any Indirect Tax arising on such amounts, as between (i) any member of the
Seller Group and any Target Company or (ii) a Business Seller and any member of the Seller Group
(in the case of (ii), only to the extent that the relevant amount

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relates to the Business of the relevant Business Seller) as at Closing in respect of inter-company
trading activity and the provision of services, facilities and benefits between them; for the
avoidance of doubt, Inter Company Trading Debt includes, where applicable, amounts owed in respect
of salaries or other employee benefits (including payroll taxes thereon), insurance (including
health and motor insurance), pension and retirement benefit payments, management training and car
rental payments paid or management services provided between them up to Closing;

IT Systems means all the information and communications technologies used by the Target Companies,
and in relation to the Target Business and the Business Sellers, including without limitation all
hardware, Software, websites, communications systems and computer systems but excluding networks
generally available to the public;

Key Managers means those employees of the Target Business or the Target Companies whose names are
set out in Exhibit 5;

Leakage means:

	(a)	 	the payment of any sum by any Target Company whether by way of distribution, dividend, return
of capital (whether by reduction of capital or redemption or purchase of shares) or otherwise;
	 
	(b)	 	the transfer of any asset by any Target Company;
	 
	(c)	 	the indemnification or incurring of any liability by any Target Company;
	 
	(d)	 	the payment of any costs, bonuses or other sums by any Target Company; or
	 
	(e)	 	the waiver of any amount owed to a Target Company by the Seller or any of its
Representatives;

in each case to, on behalf of, or for the benefit of any Share Seller or Business Seller (except
that all management and service charges and recharges consistent with the financial projections for
the Target Business for the financial year to 31 December 2007 delivered to the Purchaser on 17 and
20 April 2007 shall not constitute Leakage and shall continue to be payable in accordance with the
terms applying as at the date of this Agreement), save to the extent that any of the above actions
constitute Permitted Leakage;

Liabilities means all liabilities, duties and obligations of every description, whether deriving
from contract, common law, statute or otherwise, whether present or future, actual or contingent or
ascertained or unascertained and whether owed or incurred severally or jointly or as principal or
surety;

LIBOR means the display rate per annum of the offered quotation for deposits in sterling for a
period of one month which appears on the appropriate page of the Reuters Screen (or such other page
as the parties may agree) at or about 11.00a.m. London time on the date on which payment of the sum
under this Agreement was due but not paid (except in relation to clauses 2.1, 2,2, 2.3, 2.4 and 2.5
where the rate shall be as at the Assessment Closing Date, the ROW Education Closing Date, the
South African Education Closing Date, the Australian Education Closing Date, the New Zealand
Education Closing Date and the Global Library Closing Date respectively, and clause 5.3 where the
rate shall be as at the date on which the Leakage was received by the Seller or its Representative,
as appropriate);

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Locked Box Balance Sheet means the unaudited balance sheet of the Assessment Business and the
unaudited balance sheet of the Education Business as at 31 December 2006;

Locked Box Balance Sheet Date means 31 December 2006;

Locked Box Inter Company Debt means the amounts recorded in the Locked Box Balance Sheet in respect
of the Inter Company Debt as at the Locked Box Balance Sheet Date in respect of the Assessment
Business or the Education Business, as appropriate;

Locked-Box Inter Company Spreadsheet means the spreadsheet in the Agreed Form setting out the Inter
Company Payables and the Inter Company Receivables as at the Locked Box Balance Sheet Date;

Management Accounts means the unaudited income statement and cash flow statement of the Assessment
Business, and the unaudited income statement and cash flow statement of the Education Business, in
each case for the period commencing on the 1 January 2007 and ending on 31 March 2007;

Material Adverse Change shall mean any material adverse change on the financial condition or
results of operations of either the Assessment Business or the Education Business, in each case
taken as whole, except for any change or event that has arisen on account of, or results from:

	(a)	 	any changes generally affecting the industries or markets in which the relevant Target
Business operates;

	(b)	 	any changes in economic or political conditions generally, including any changes in
macroeconomic factors, interest rates, general financial market conditions, war, terrorism or
hostilities; or

	(c)	 	changes in the law, generally accepted accounting principles or official interpretations of
the foregoing;

New Zealand Education Business means the education business carried on as at the date of this
Agreement by the following Target Companies: Reed Publishing (NZ) Limited, Harcourt (NZ) Limited,
Harcourt Education (NZ) and Heinemann Education (NZ) Limited;

New Zealand Education Closing means completion of the sale and purchase of the Shares, the Business
and the Business Assets relating to the New Zealand Education Business, in accordance with the
provisions of this Agreement;

New Zealand Education Closing Date means the ROW Education Closing Date;

New Zealand Education Consideration means the amount shown in column 6 of Part 5 of Part A of
Schedule 1;

New Zealand Education Inter Company Consideration means the equivalent amount in US dollars of the
aggregate of the amounts owed by a Target Company to a member of the Seller in relation to the New
Zealand Education Business at the Locked Box Balance Sheet Date less the amounts owed by a member
of the Seller Group to a Target Company in relation to the New Zealand Education Business at the
Locked Box Balance Sheet Date, in each case as shown in the Locked-Box Inter Company Spreadsheet,
calculated using the Exchange Rate on the day immediately prior to the New Zealand Education
Closing Date;

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Non-Exclusive Information means information in the possession of members of the Seller Group which
does not relate exclusively or predominantly to the Target Business;

Non-Tax Claim means a Claim other than a Tax Claim and shall include, for avoidance of any doubt,
any claim made under clause 20.1(b)(iv) and (v) of this Agreement and clause 20.7(b);

Overall Objectives has the meaning given in clause 24.1;

Owned IP means the Registered Owned IP and other material unregistered Intellectual Property Rights
owned by the Business Sellers that are used exclusively or predominantly in relation to the Target
Business other than the Target Company IP;

parent company means any company which holds a majority of the voting rights in another company, or
which is a member of another company and has the right to appoint or remove a majority of its board
of directors, or which is a member of another company and controls a majority of the voting rights
in it under an agreement with other members, in each case whether directly or indirectly through
one or more companies and, in relation to the Seller, also includes (but is not limited to) Reed
Elsevier PLC and Reed Elsevier N.V.;

Pensions Claims means any claim made under clause 20.1(b)(i) to (iii) of this Agreement;

Pensions Funding Payment has the meaning given in clause 20.2;

Permitted Encumbrances means security interests arising in the ordinary course of business or by
operation of law including security interests for taxation and other governmental charges;

Permitted Leakage means:

	(a)	 	the operation of the Seller Group and Target Business cash pooling arrangements since the
Locked Box Balance Sheet Date in a manner consistent with ordinary and usual practice over the
twelve months preceding this Agreement under which any positive cash balances of the Target
Business will be pooled with the other cash resources of the Seller Group and the Seller Group
will make available to the Target Business sufficient cash to make good any negative cash
balances in respect of the Target Business together with any interest in relation to such
positive or negative cash balances;
	 
	(b)	 	any Pre-Closing Transfer of Assets; and
	 
	(c)	 	any foreign exchange swap contracts entered into in the ordinary course of business between
Elsevier Finance S.A. and Reed International Books Australia Pty Limited (in relation to the
Business or Reed Publishing (NZ) Limited;

Pre-Closing Transfer of Assets means any transfers of shares, assets or liabilities between the
Target Companies, the Business Sellers and other members of the Seller Group that are consented to
by the Purchaser (such consent not to be unreasonably withheld or delayed) necessary to ensure that
all of the shares, assets and liabilities that exclusively or predominantly relate to the
Assessment Business, the ROW Education Business the South African Education Business, the
Australian Education Business, the New Zealand Education Business or the UK Global Library Business
transfer to the Purchaser at Assessment Closing, ROW Education Closing South African Closing,
Australian Education Closing, New Zealand Education Closing or UK Global Library Business Closing
respectively, and no other assets,

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or liabilities or shares transfer, including, but not limited to, the GH Transfer and the UK Global
Library Business Transfer;

Properties means the Business Properties and the Target Company Properties;

Proposed Transactions means the transactions contemplated by the Transaction Documents;

Purchaser Group means the Purchaser and its Affiliates from time to time;

Purchaser Obligation means any representation, warranty, undertaking or indemnity (including any
covenant to pay, refund or reimburse pursuant to the Tax Covenant) given by the Purchaser to the
Seller under this Agreement;

Purchaser’s Bank Account means the Purchaser’s bank account at HSBC Bank plc, 8 Canada Square,
Canary Wharf, London E14 5HQ, account name Pearson plc; account number 37773764; sort code 40-05-15
(and/or such other account(s) as the Seller and Purchaser may agree in writing);

Purchaser UK Retirement Plans means any plan, scheme, fund or arrangement which provides Retirement
Benefits for or in respect of the employees of the Purchaser Group in the UK immediately before the
Closing Date.

Records has the meaning given in clause 27.1;

Registered Owned IP means the registered Intellectual Property Rights owned by the Business Sellers
and used exclusively or predominantly in relation to the Target Business as set out in Exhibit 3;

Registered Target Company IP means the registered Intellectual Property Rights owned by the Target
Companies;

relief has the meaning given in Schedule 12A;

Replies to Enquiries means the written replies of the legal advisers to the Seller, and the
Designated Sellers to the enquiries raised by or on behalf of the Purchaser and the Designated
Purchasers in respect of the Properties;

Representatives means, in relation to a party, its respective Affiliates and the directors,
officers, employees, agents, advisers, accountants and consultants of that party and/or of its
respective Affiliates;

Rest of World means all jurisdictions in which the Businesses are operated, save for US, UK and
Netherlands;

Retirement Benefit means any pension, lump sum or gratuity payable or prospectively or contingently
payable on or following retirement, leaving service, invalidity or death, but excluding benefits
provided under any arrangement the sole purpose of which is to provide benefits on the injury,
accidental death or dismemberment or long-term or short-term disability of an Employee;

Reed Elsevier Pension Scheme means the Reed Elsevier Pension Scheme established by a trust teed and
rules dated 19 October 2004 (as amended);

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ROW Education Business means the education business carried on as at the date of this Agreement by
the following Target Companies: Harcourt Education Ltd and Heinemann Education Botswana Publishers
(Pty) Ltd;

ROW Education Closing means completion of the sale and purchase of the Shares, the Business and the
Business Assets relating to the ROW Education Business, in accordance with the provisions of this
Agreement;

ROW Education Closing Date has the meaning given in clause 6.1;

ROW Education Consideration means the aggregate of the amounts shown in column 6 of Part 2 of Part
A of Schedule 1;

ROW Education Inter Company Consideration means the equivalent amount in US dollars of the
aggregate of the amounts owed by a Target Company to a member of the Seller Group in relation to
the ROW Education Business at the Locked Box Balance Sheet Date less the amounts owed by a member
of the Seller Group to a Target Company in relation to the ROW Education Business at the Locked Box
Balance Sheet Date, in each case as shown in the Locked-Box Inter Company Spreadsheet, calculated
using the Exchange Rate on the day immediately prior to the ROW Education Closing Date;

Seller Group means the Seller and its Affiliates from time to time but excluding the Target
Companies;

Seller Obligation means any representation, warranty, undertaking or indemnity (including any
covenant to pay, refund or reimburse pursuant to the Tax Covenant and any payment in respect of a
Share Scheme Payment, a Pension Funding Payment or Transfer Tax (as such term is used in clause
35)) given by the Seller to the Purchaser under this Agreement;

Seller Plan means each scheme, fund, arrangement, plan or agreement under which any member of the
Seller Group provides, is (or could become) liable to provide or has agreed to provide (or to which
any member of the Seller Group contributes, is liable to contribute or has agreed to contribute to
the provision of) any Retirement Benefits for or in respect of any Employee or former Employee and
references to any Seller Plan shall be construed as also referring to its trustees, fiduciaries,
managers and administrators (as applicable).

Seller’s Bank Account means the Seller’s bank account at National Westminster Bank plc, 1 Princes
Street, London; account name Reed Elsevier (UK) Limited; account number 140-00-40022552; sort code
60-00-01 (and/or such other account(s) as the Seller and Purchaser may agree in writing);

Set of Shares means, in relation to a Share Seller, the shares comprising issued share capital of
any particular Target Company which are to be sold by that Share Seller under this Agreement;

Share Purchasers means the members of the Purchaser Group set out in column 3 of Part A of Schedule
1 and/or any member of the Purchaser Group established as a Designated Purchaser of any Shares
pursuant to a Supplemental Agency Agreement, and Share Purchaser means any one of them;

Share Sellers means the members of the Seller Group set out in column 1 of Part A of Schedule 1
and/or any member of the Seller Group established as a Designated Seller of any Shares pursuant to
a Supplemental Agency Agreement, and Share Seller means any one of them;

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Share Scheme Payment has the meaning given in clause 19.2;

Shares means the shares comprising the entire issued share capital of each of the Target Companies
set out opposite the names of the Share Sellers in column 2 of Part A of Schedule 1;

Shrinkwrap Software means third party software sold in a standard configuration and readily
available to the public on standard terms and conditions;

Software means all software used in connection with the business of a Target Company and/or Target
Business, including Shrinkwrap Software and firmware that relates to or is comprised in hardware,
together with all supporting documentation and materials necessary to enable a user to make full
use of the functionality of, or to administer effectively, such software and firmware;

South African Condition has the meaning given in clause 3.2;

South African Education Business means the education business carried on as at the date of this
Agreement by Heinemann Publishers (Pty) Ltd;

South African Education Closing means completion of the sale and purchase of the Shares, the
Business and the Business Assets relating to the South African Education Business, in accordance
with the provisions of this Agreement;

South African Education Date has the meaning given in clause 3.15;

South African Education Closing Date has the meaning given in clause 6.1;

South African Education Consideration means the amount shown in column 6 of Part 3 of Part A of
Schedule 1;

South African Education Inter Company Consideration means the equivalent amount in US dollars of
the aggregate of the amounts owed by a member of the Seller Group to a Target Company in relation
to the South African Education Business at the Locked Box Balance Sheet Date less the amounts owed
by a Target Company to a member of the Seller Group in relation to the South African Education
Business at the Locked Box Balance Sheet Date, in each case as shown in the Locked-Box Inter
Company Spreadsheet, calculated using the Exchange Rate on the day immediately prior to the South
African Education Closing Date;

SPEO means the defined benefit pension scheme in the Netherlands;

Standard Agency Agreements means the agreements between the Seller and a Designated Seller or
between the Purchaser and a Designated Purchaser entered into prior to the execution of this
Agreement, appointing the Seller or the Purchaser as the Designated Seller’s or Designated
Purchaser’s agent respectively on the terms set out therein, and Standard Agency Agreement means
any one of them;

State Testing Contracts means contracts entered into between Harcourt Assessment Inc. (or otherwise
by the Assessment Business) and certain states in the United States in relation to the development
and administration of educational tests against certain state standards;

Stock means, in relation to each Business, all the raw materials, stocks, work-in-progress and
semi-finished and finished goods of the relevant Business Seller relating exclusively or
predominantly to that Business;

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Subsidiaries means the companies details of which are set out in Exhibit 2 and Subsidiary means any
one of them;

subsidiary and subsidiaries means any company in relation to which another company is its parent
company;

Supplemental Agency Agreements means the agreements between the Seller, the Purchaser and either a
Designated Seller or Designated Purchaser to be entered into in the circumstances referred to in
Part B of Schedule 14 after the date of this Agreement (but in any case prior to or at Closing),
and Supplemental Agency Agreement means any of them;

Target Business means the Assessment Business, the Education Business and the Global Library
Business;

Target Companies means (i) the companies the Shares of which are listed in column 2 of Part A of
Schedule 1 and details of which are set out in Exhibit 2 and (ii) the Subsidiaries, and Target
Company means any of them;

Target Company IP means the Registered Target Company IP and all other material unregistered
Intellectual Property Rights owned by the Target Companies and used in relation to the Target
Business;

Target Company Properties means the leasehold interests of the Target Companies brief particulars
of which are set out in Part A of Exhibit 4;

Target Sub-Group means, in relation to any Shares listed in column 2 of Part A of Schedule 1, the
Target Company whose Shares they comprise (and whose name is set out in that column) and all
Subsidiaries which are subsidiaries of that Target Company at Closing;

tax and taxation have the meanings given in the Tax Covenant;

tax authority has the meaning given in the Tax Covenant;

Tax Claim means a claim for a breach of any of the Tax Warranties or a claim under the Tax
Covenant;

Tax Covenant means the covenants relating to tax set out in Part B of Schedule 12A and in Schedule
12B;

Tax Warranties means the warranties set out in Part A of Schedule 12A and in Schedule 12B;

Third Party Assurances means all guarantees, indemnities, counter-indemnities and letters of
comfort of any nature given (i) to a third party by a Target Company in respect of any obligation
of a member of the Seller Group; and/or (as the context may require) (ii) to a third party by a
member of the Seller Group in respect of any obligation of a Target Company or in respect of any
Business Contract;

Third Party Claim has the meaning given in clause 10;

Third Party Consent has the meaning given in clause 12.4;

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Third Party Right means any interest or equity of any person (including any right to acquire,
option or right of pre-emption or conversion) or any mortgage, charge, encumbrance, pledge,
lien, assignment, hypothecation, security interest, title retention or any other security agreement
or arrangement, or any agreement to create any of the above;

Trade Creditor means amount payable at Closing in respect of trade creditors by a Target Company
or, in relation to a Business, by the relevant Business Seller in connection with that Business
(including, in each case, any Inter Company Debt, customers and trade bills payable and Capital
Creditors);

Trade Debtors means amounts receivable at Closing in respect of trade debtors by a Target Company
or, in relation to a Business, by the relevant Business Seller in connection with that Business
(including, in each case, any Inter Company Debt, amounts recoverable, payments in advance, trade
bills recoverable, prepayments and accrued income);

Transaction Documents means this Agreement, the Disclosure Letter, the Standard Agency Agreements,
the Supplemental Agency Agreements and any other documents in Agreed Form;

Transitional Service means (in respect of services provided to the Target Business) any significant
service provided by any part of the Seller Group to the Target Business at Closing which the Target
Business cannot immediately provide for itself from its existing resources and at immaterial Cost
and (in relation to services provided to the Seller Group) any significant service provided by any
part of the Target Business to the Seller Group at Closing which the Seller Group cannot
immediately provide for itself from existing resources and at immaterial Cost;

UK Global Library Business Transfer means the proposed transfer of assets relating exclusively
or predominantly to the Global Library business from Harcourt Education Limited to Reed Elsevier
(UK) Limited;

USA or US or United States means the United States of America;

US Antitrust Counsel means Crowell and Moring;

US Benefit Plan means any bonus, incentive compensation, deferred compensation, Retirement Benefit,
stock purchase, stock option, stock ownership, stock appreciation rights, phantom stock, leave of
absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, worker’s compensation or other insurance, severance, separation or other
employee benefit plan, practice, policy or arrangement of any kind, whether written or oral, or
whether for the benefit of a single individual or more than one individual including, any Seller
Plan and including but not limited to, any “employee benefit plan” within the meaning of Section
3(3) of ERISA, existing at the Assessment Closing Date or prior thereto, established or to which
contributions have been made by the Seller Group, the Target Companies, or any predecessor of the
foregoing, or under which any US Business Employee, or former employee of the Target Companies or
any beneficiary thereof has benefit rights, or for which the Target Companies may have liability;

US Business Employee means each Employee of the Target Companies performing services in the United
States;

US Condition has the meaning given in clause 3.1;

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US Retirement Plan means the Reed Elsevier US Retirement Plan, the Reed Elsevier US Salary
Investment Plan and the Reed Elsevier US Supplemental Executive Retirement Plan;

US Sellers means Harcourt Inc and Reed Elsevier Inc;

US Target means Harcourt Assessment Inc;

Warranties means the warranties given pursuant to clause 7 and set out in Schedule 3 and the Tax
Warranties; and

Working Hours means 9.30am to 5.30pm in the relevant location on a Business Day.

2. Interpretation. In this Agreement, unless the context otherwise requires:

	(a)	 	references to a person include any individual, firm, body corporate (wherever incorporated),
government, state or agency of a state or any joint venture, association, partnership, works
council or employee representative body (whether or not having separate legal personality);

	(b)	 	headings do not affect the interpretation of this Agreement; the singular shall include the
plural and vice versa; and references to one gender include all genders;

	(c)	 	references to any English legal term or concept shall, in respect of any jurisdiction other
than England, be construed as references to the equivalent term or concept in that
jurisdiction;

	(d)	 	references to sterling or pounds sterling or £ are references to the lawful currency from
time to time of England;

	(e)	 	for the purposes of applying a reference to a monetary sum expressed in sterling, an amount
in a different currency shall be deemed to be an amount in sterling translated at the Exchange
Rate at the relevant date (which in relation to a Claim, shall be the date of the receipt of
notice of that Claim under Schedule 5); and

	(f)	 	any reference in this Agreement to the Seller’s knowledge or any statement in this Agreement
qualified by the expression so far as the Seller is aware or to the best of the Seller’s
knowledge or to the extent that the Seller is aware or any similar expression shall be deemed
only to be made on the basis of the actual knowledge, at the date of this Agreement, of the
following persons and shall carry no requirement to make enquiries of any other person:

	 	 	 
	Name	 	Position
	 
	 	 
	Mark Armour

	 	Chief Financial Officer of Reed Elsevier Group PLC
	 
	 	 
	Steve Cowden

	 	General Counsel of Reed Elsevier Group PLC
	 
	 	 
	Ian Fraser

	 	HR Director of Reed Elsevier Group PLC
	 
	 	 
	Paul Miles

	 	Group Chief Accountant of Reed Elsevier Group PLC
	 
	 	 
	Paul Morton

	 	Head of Group Taxation of Reed Elsevier Group PLC

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	Name	 	Position
	 
	 	 
	Paul Richardson

	 	Group Treasurer of Reed Elsevier Group PLC
	 
	 	 
	Sybella Stanley

	 	Director of Corporate Finance of Reed Elsevier Group PLC
	 
	 	 
	Patrick Tierney

	 	Chairman, Harcourt Education Limited

	(g)	 	any reference in this Agreement to the Purchaser’s knowledge or any statement in this
Agreement qualified by the expression so far as the Purchaser is aware or to the best of the
Purchaser’s knowledge or to the extent that the Purchaser is aware or any similar expression
shall be deemed only to be made on the basis of the actual knowledge, at the date of this
Agreement, of the following persons and shall carry no requirement to make enquiries of any
other person:

	 	 	 
	Name	 	Position
	 
	 	 
	Robin Freestone

	 	Chief Financial Officer of Pearson plc
	 
	 	 
	Phillip Hoffman

	 	Executive Vice President and Head of Corporate Finance of
Pearson plc
	 
	 	 
	Steve Dowling

	 	President and CEO of Pearson School Companies
	 
	 	 
	John Fallon

	 	CEO of Pearson Education Asia, Europe, Middle East and
Africa
	 
	 	 
	Victoria Martin

	 	Associate Director, Corporate Finance and Strategy Group
	 
	 	 
	Andy Moss

	 	Executive, Corporate Finance and Strategy Group

	(h)	 	any phrase introduced by the terms including, include, in particular or any similar
expression shall be construed as illustrative and shall not limit the sense of the words
preceding those terms.

3. Enactments. Except as otherwise expressly provided in this Agreement, any express
reference to an enactment (which includes any legislation in any jurisdiction) includes references
to (i) that enactment as amended, consolidated or re-enacted by or under any other enactment before
or after the date of this Agreement; (ii) any enactment which that enactment re-enacts (with or
without modification); and (iii) any subordinate legislation (including regulations) made (before
or after the date of this Agreement) under that enactment, as amended, consolidated or re-enacted
as described in (i) or (ii) above, except to the extent that any of the matters referred to in (i)
to (iii) occurs after the date of this Agreement and increases or alters the liability of the
Seller or the Purchaser (or any person on whose behalf it is acting as agent pursuant to this
Agreement) under this Agreement.

4. Schedules and Exhibits. The Schedules and Exhibits comprise schedules and exhibits to
this Agreement and form part of this Agreement.

5. Inconsistencies. Where there is any inconsistency between the definitions set out in
this Schedule and the definitions set out in any clause or any other Schedule, then, for the
purposes of construing such clause or Schedule, the definitions set out in such clause or Schedule
shall prevail.

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6. Recitals. The recitals to this Agreement are subject to the provisions of this Agreement
and do not impose any additional obligations on the parties over and above such provisions.

-53-

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