AMENDMENT NO. 1 TO ESCROW AGREEMENT
Exhibit 10.2
AMENDMENT NO. 1 TO ESCROW AGREEMENT
This Amendment No. 1 is made as of September 20, 2010 (this “Amendment”) to the Escrow
Agreement, dated as of December 8, 2009 (the “Escrow Agreement”), by and among Xxxxx Fargo
Bank, National Association (the “Escrow Agent”), Cambium Learning Group, Inc.
(“Holdco”), Voyager Learning Company (“Voyager”), Vowel Representative, LLC
(“Stockholders’ Representative”) and Xxxxxxx X. Xxxxxxx. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to them in the Escrow Agreement.
WHEREAS, Section 7 of the Escrow Agreement provides that the Escrow Agreement may be amended
by an instrument signed in writing Holdco, the Stockholders’ Representative and the Escrow Agent;
and
WHEREAS, Holdco, the Stockholders’ Representative and the Escrow Agent desire that certain
amendments to the Agreement be made as set forth herein.
NOW, THEREFORE, for 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:
1. Amendments.
(a) Section 3.3(c) of the Escrow Agreement is hereby deleted in its entirety and replaced with
the following:
“(c) If there exists a 280G Escrow Fund Balance on the 280G Termination Date
or the date Holdco received the 280G Insurance Policy Notice, as the case
may be, Holdco shall give written notice (the “Holdco 280G Payment
Notice”) to the Escrow Agent and the Stockholders’ Representative within
ten (10) Business Days after such date directing the Escrow Agent to pay to
(A) Holdco an amount equal to the lesser of $1,133,000 and the 280G Escrow
Fund Balance (such lesser amount, the “Holdco 280G Payment Amount”),
and (B) the Rights Agent the amount, if any, of the 280G Escrow Fund Balance
(including all interest, dividends or profit on or proceeds or other income
earned thereon) after giving effect to the payment of the 280G Excess Amount
(the amount to be paid to the Right Agents pursuant to
Section 3.3(b) or this Section 3.3(c), as the case may be,
the “280G Returned Amount”), and the Stockholders’ Representative
shall have the right, within ten (10) Business Days after receipt of the
Holdco 280G Payment Notice, to object to the calculations set forth in the
Holdco 280G Payment Notice, by written notice delivered to the Escrow Agent
and Holdco (a “280G Objection Notice”), solely on account of a
mathematical error. On the date that is eleven (11) Business Days after
receipt by the Escrow Agent of the Holdco 280G Payment Notice, unless the
Escrow Agent
has received a 280G Objection Notice from the Stockholders’
Representative in accordance with the preceding sentence, the Escrow Agent shall pay (x) Holdco from the 280G Escrow Fund
the Holdco 280G Payment Amount, and (y) to the extent any amounts remain in
the 280G Escrow Account after the making of the Holdco 280G Payment Amount,
the Rights Agent from the 280G Escrow Fund the entire amount remaining in
the 280G Escrow Account including all interest, dividends or profit on or
proceeds or other income earned thereon. If the Escrow Agent shall have
received a 280G Objection Notice, the Escrow Agent shall delay the payment
of any funds in the 280G Escrow Fund until such 280G Objection Notice is
resolved in accordance with Section 3.7 of this Agreement.
Notwithstanding anything to the contrary set forth in this Section
3.3(c), if Holdco fails to deliver the Holdco 280G Payment Notice within
the time period contemplated above in this paragraph, then the Stockholders’
Representative shall have the right, but not the obligation, to deliver such
Holdco 280G Payment Notice, whereupon Holdco shall have the same objection
rights as are contemplated in this paragraph for the Stockholders’
Representative.”
(b) Section 3.6(c) of the Escrow Agreement is hereby deleted in its entirety and replaced with
the following:
“(c) Subsequent CVR Payment. If any funds remain in the CVR Escrow
Account after any payments required to be made from the CVR Escrow Fund
pursuant to Section 3.6(b) (or if no such payments are required to
be made, then, June 8, 2011), then, to the extent such funds are subject to
an Objection Notice, they shall remain in the CVR Escrow Account until such
Objection Notice(s) is/are resolved in accordance with Section 3.7
of this Agreement. Upon the later of (x) resolution of the last such
Objection Notice(s) in accordance with this Agreement, and (y) the SBT
Contingency Payment Date, all such funds then remaining in the CVR Escrow
Account shall be paid to the Rights Agent for further payment pursuant to
the CVR Agreement (if any, the “Subsequent CVR Payment Amount”),
except to the extent any such funds were subject to an Objection Notice, and
the resolution of such Objection Notice provided for the payment of such
subject funds to Holdco, in which case, such subject funds shall be paid to
Holdco in accordance with the applicable Award. Any payment notice given in
connection with directing any such further payment will include the name of
each bank to which such payments shall be made, account name at such bank,
account number at the bank to which such payments shall be made, ABA routing
number of such bank and any further credit instructions for payment to such
account.”
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(c) Section 3.7(d) of the Escrow Agreement is hereby deleted in its entirety and replaced with
the following:
“(d) Except as may be required by Law, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder
without the prior written consent of Holdco and the Stockholders’
Representative, except that either party may deliver a copy of the Award to
the Escrow Agent. If the Award assesses fees and expenses against Holdco in
accordance with Section 3.7(c), then Holdco shall promptly pay an
amount equal to such fees and expenses to the Escrow Agent for deposit into
the CVR Escrow Account and such amount shall be added to the amount then
payable from the CVR Escrow Fund to the Rights Agent for distribution under
the CVR Agreement. If the Award assesses fees and expenses against the
Stockholders’ Representative in accordance with Section 3.7(c), then
the Escrow Agent shall promptly pay to Holdco from the CVR Escrow Fund, such
fees and expenses. Except as provided in the immediately preceding
sentence, upon receipt of the Award, the Escrow Agent shall promptly
distribute funds from or retain funds in, as the case may be, the CVR Escrow
Fund in accordance with the Award, including all interest, dividends or
profit on or proceeds or other income earned thereon, less any fees and
expenses paid pursuant to the immediately preceding sentence;
provided, however, if the SBT Contingency Date has not then
occurred or there remain(s) any outstanding Objection Notice(s), then any
Award which provides for the payment of any funds in an amount less than
$1,000,000 to the Rights Agent shall direct the Escrow Agent to retain such
funds (but, for purposes of clarity, not any funds to which Holdco is
entitled and not subject to any outstanding Objection Notice(s), as such
funds shall then be paid by the Escrow Agent to Holdco) in the CVR Escrow
Account until such time as they are distributable under Section
3.6(c).”
(d) Section 3 of the Escrow Agreement is hereby amended to add the following as a new Section
3.9:
“3.9 Information Rights. Until the SBT Contingency Date, Holdco
and/or Vowel shall respond, no more frequently than twice per calendar year,
to any reasonable inquiry from the Stockholders’ Representative relating to
the procedural status of the SBT Contingency Proceeding. In addition,
Holdco and/or Vowel shall promptly deliver to the Stockholders’
Representative written notice that the SBT Contingency Date has occurred,
together with evidence of the SBT Contingency Resolution. For avoidance of
doubt, as the Stockholders’ Representative has no right to participate in,
review or consent to the prosecution or settlement of the SBT Contingency
Proceeding, except for the rights expressly provided in this Section
3.9, the Stockholders’ Representative shall not be entitled to receive,
and Holdco and/or Vowel, shall not be required to provide the Stockholders’
Representative, any substantive information relating to the SBT Contingency
Proceeding or otherwise respond to any inquiries from the Stockholders’
Representative regarding the SBT Contingency Proceeding or any aspect
thereof.”
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(e) Section 4 of the Escrow Agreement is hereby deleted in its entirety and replaced with the
following:
“Termination of Agreement. This Agreement shall become effective on the
date hereof and its term (the “Term”) shall continue until and terminate
upon the later of (x) the full distribution of all Escrow Funds pursuant to
Section 3 hereof, and (y) the SBT Contingency Payment Date.”
(e) The following definition set forth in Section 15 of the Escrow Agreement is hereby deleted
in its entirety and amended to read as follows:
““First CVR Payment Amount” means $1,106,454.98.
(f) Section 15 of the Escrow Agreement is hereby amended to add the defined terms “SBT
Contingency Date”, “SBT Contingency Payment Date”, “SBT Contingency Proceeding”, “SBT Contingency
Resolution”, and “Second CVR Escrow Fee Amount” set forth below after the definition of “Recoupment
Amount” and before the definition of “Second CVR Payment Amount”:
““SBT Contingency Date” means the date on which the SBT Contingency
Resolution occurs.
“SBT Contingency Payment Date” means the fifth (5th)
Business Day after receipt by the Escrow Agent of all funds required to be
deposited by Holdco pursuant to Section 5.23(c) of the Merger Agreement into
the CVR Escrow Fund resulting from the SBT Contingency Resolution, together
with written notice by an authorized officer of Holdco certifying that all
such funds have been deposited.
“SBT Contingency Proceeding” has the meaning given to it in the
Merger Agreement, as amended.
“SBT Contingency Resolution” means either the settlement of (as
evidenced by the existence of a settlement that is binding and enforceable
against the parties thereto), or a final, non-appealable order issued by the
Michigan Court of Claims (or if appealed, the Michigan Court of Appeals or
the Michigan Supreme Court, as the case may be) in respect of, the SBT
Contingency Proceeding; provided, that, no portion of the
SBT Contingency Amount remains subject to the SBT Contingency Proceeding
following such resolution; provided, further, that,
neither Holdco nor Vowel shall have any obligation to appeal any decision,
order, ruling or other outcome issued by the Michigan Court of Claims (or if
appealed, the Michigan Court of Appeals or the Michigan Supreme Court, as
the case may be).”
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2. Miscellaneous.
(a) Amendment; Conflicts. This Amendment shall only serve to amend and modify the
Escrow Agreement to the extent specifically provided herein. All terms, conditions, provisions and
references of and to the Escrow Agreement which are not specifically modified, amended and/or
waived herein shall remain in full force and effect and shall not be altered by any provisions
herein contained. In the event of any conflict or inconsistency between the provisions of the
Escrow Agreement and the provisions of this Amendment, the provisions of this Amendment shall
control.
(b) Governing Law. This Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York without regard for choice of law or conflicts of law
principles thereof.
(c) Counterparts; Effectiveness. This Amendment may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of which, when executed,
shall be deemed to be an original, but all of which taken together shall constitute one and the
same agreement. The exchange of copies of this Amendment and of signature pages by facsimile
transmission or by electronic transmission of portable document format (PDF) files or tagged image
file format (TIF) files shall constitute effective execution and delivery of this Amendment and may
be used in lieu of the originally executed Amendment for all purposes. Signatures of the parties
transmitted by facsimile or by electronic transmission of portable document format (PDF) files or
tagged image file format (TIF) files shall be deemed to be their original signatures for all
purposes.
(d) Amendments; Waiver. This Amendment may not be amended or modified except by an
instrument in writing signed by the Stockholders’ Representative, Holdco and the Escrow Agent. No
failure or delay by any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof.
(e) Entire Agreement; No Third-Party Beneficiaries. This Amendment and the Escrow
Agreement as amended hereby (including the exhibits and schedules thereto) taken together with the
Merger Agreement, as amended, and the CVR Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof. There are no express, implied or intended third
party beneficiaries of this Amendment. For the avoidance of doubt, none of the Holders or the
Rights Agent shall be a beneficiary of this Amendment.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date and
year first above written.
| CAMBIUM LEARNING GROUP, INC. |
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| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Chairman | |||
| VOWEL REPRESENTATIVE, LLC |
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| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Manager | |||
| XXXXX FARGO BANK, NATIONAL ASSOCIATION |
||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Vice President | |||
ACKNOWLEDGED AND AGREED WITH RESPECT TO THE PROVISIONS RELATING TO THE 280G ESCROW FUND: |
||
/s/ Xxxxxxx Xxxxxxx
|
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