TEMPORARY
WAIVER AND AMENDMENT, dated as of May 20, 2008 (this
“Temporary Waiver and Amendment”), among CAMBIUM
LEARNING, INC., a Delaware corporation and successor to VSS-Cambium
Merger Corp. (“Borrower”), VSS-CAMBIUM HOLDINGS,
LLC, a Delaware limited liability company
(“Holdings”), TCW/CRESCENT MEZZANINE PARTNERS
IV, L.P., as Administrative Agent, and the Required Note-Holders,
in each case listed on the signature pages hereto, to the Note
Purchase Agreement dated as of April 12, 2007 (as amended,
supplemented, amended and restated or otherwise modified from time
to time) (the “Purchase Agreement”) among
Borrower, Holdings, each purchaser from time to time party thereto
(collectively, the “Purchasers” and
individually, a “Purchaser”) and TCW/CRESCENT
MEZZANINE PARTNERS IV, L.P., as administrative agent (in such
capacity, “Administrative Agent”) for the
Purchasers. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the Purchase
Agreement.
WHEREAS,
Borrower has failed to timely deliver (i) consolidated
financial statements of Holdings for the fiscal year ended
December 31, 2007 (the “Audited Financial
Statements”) accompanied by an opinion of Ernst and Young
LLP, a management report, a narrative report and management’s
discussion and analysis as required by Section 8.1(a)(i) of
the Purchase Agreement and (ii) a Compliance Certificate and a
report by Ernst and Young LLP (the “E&Y
Certificate”) certifying that in the course of its
regular audit of the financial statements of Holdings and its
subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, Ernst and Young LLP obtained
no knowledge that any Default insofar as it relates to financial or
accounting matters has occurred as required by
Section 8.1(a)(iv) of the Purchase Agreement
(collectively, the Financial Reporting Defaults”). The
Financial Reporting Default constitute Events of Defaults under the
Purchase Agreement; and
WHEREAS,
at the request of the Issuer Parties, the Administrative Agent and
the Required Note-Holders have agreed to grant certain temporary
waivers and make certain amendments to the Purchase Agreement, but
only on the terms and conditions set forth in this
Amendment.
NOW,
THEREFORE, in consideration of the premises and covenants contained
herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as
follows:
Section 1. Temporary Waiver . Subject to the
satisfaction of the conditions set forth in Section 5 of this
Temporary Waiver and Amendment, (A) the Required Note-Holders
hereby temporarily waive the Financial Reporting Defaults and
extend the date upon which Borrower shall be required to deliver to
Administrative Agent and Purchasers the Audited Financial
Statements accompanied by an opinion of Ernst and Young LLP, a
management report, a narrative report and management’s
discussion and analysis, the Compliance Certificate, the E&Y
Certificate and the Monthly Reports, in each case to July 15,
2008 (the “Delivery Date”); provided,
however, that the delivery of any such documentation on or
before the Delivery Date shall not constitute a cure or waiver of
the Events of Default caused by the Financial Reporting Defaults
and that on or before the Delivery Date, Borrower, Holdings,
Administrative Agent and the Purchasers shall enter into an
amendment to the Purchase Agreement in form and substance
satisfactory to the Administrative Agent and the Purchasers and the
failure to enter into such
amendment shall
constitute an additional Event of Default under the Purchase
Agreement and (B) with respect to any other Defaults or Events
of Default set forth on Schedule I hereto, the Required
Note-Holders hereby temporarily waive until the Delivery Date such
Defaults or Events of Default.
Section 2. Amendment to the Purchase Agreement .
In connection with the temporary waiver, from the Effective Date
(as defined below) through the Delivery Date, the Purchase
Agreement shall be deemed modified to reflect the
following:
(i) Section 1.1
of the Purchase Agreement shall be amended to include the following
definition in its proper alphabetical order:
““
Existing Sponsor Loan Documents” shall mean the
documents evidencing those certain unsecured loans in aggregate
principal amount of $3,000,000 provided to Borrower by Sponsor
and/or its Controlled Investment Affiliates on or before the First
Amendment Effective Date.”
““
First Amendment Effective Date ” shall mean
May 20, 2008.”
““
Temporary Waiver and Amendment ” shall mean the
Temporary Waiver and Amendment which amends this Agreement, dated
as of the First Amendment Effective Date, among the Borrower,
Holdings, the Administrative Agent and the Purchasers party
thereto.”
(ii) Section 8.2(a)(xv)
of the Purchase Agreement shall be amended and restated as
follows:
“(xv)
unsecured Indebtedness of any Issuer Party in an aggregate amount
not to exceed $8.0 million at any time outstanding;
provided , however , that such Indebtedness shall be
evidenced by a note in form and substance as set forth in
Exhibit A to the Temporary Waiver and Amendment with
modifications, if any, to such terms not to be more adverse to the
Issuer Parties and the interest of the Purchasers than any other
Indebtedness incurred under this clause (xv) and outstanding
on the First Amendment Effective Date (including without limitation
the subordination of such Indebtedness to the Obligations) nor more
favorable to the creditors of any other Indebtedness of Company
than to Purchasers hereunder; provided , further ,
that such Indebtedness shall only accrue interest (including any
default interest) in the form of pay-in-kind interest and such
Indebtedness shall not have any sinking fund or other principal
payment and shall not be redeemable or prepayable without the prior
written consent of the Required Note-Holders”
Section 3. Amendment to Notes . In connection
with and in consideration of the temporary waiver set forth above,
from the date hereof through but excluding
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