CURRENT REPORT
Amendment No. 1
Pursuant to:
(i)

Section 4.02(a)(iii) of the Indenture, dated May 4, 2016, governing
the 7.875% Senior Notes due 2024 of
McGraw-Hill Global Education Holdings, LLC
and
McGraw-Hill Global Education Finance, Inc.
and

(ii)

Section 6.02(a)(iii) of the Term Loan Agreement, dated April 20, 2018,
among MHGE Parent, LLC,
the lenders party thereto
and
Ares Agent Services, L.P., as administrative agent

Date of Report: May 22, 2019

McGraw-Hill Global Education Holdings, LLC

2 Penn Plaza, 20th Floor
New York, New York 10121
Telephone: 646-766-2626

 Explanatory Note:
On May 6, 2019, McGraw-Hill Global Education Holdings, LLC (“McGraw-Issuer”) and MHGE
Parent, LLC (the “Companies”) posted a Current Report (the “Original Current Report”) to report the
entry into an Agreement and Plan of Merger by and among Cengage Learning, Inc., Cengage Learning
Holdings II, Inc., Cengage Learning Holdco, Inc., McGraw-Hill Education, Inc. and McGraw-Issuer,
dated as of May 1, 2019 (the “Merger Agreement”). The Companies are posting this Amendment No. 1
to include a copy of the Merger Agreement as an exhibit to the Original Current Report. The disclosure
included in the Original Current Report otherwise remains unchanged.
The description of the Merger Agreement in the Original Current Report is qualified in its
entirety by reference to the full text of the Merger Agreement attached hereto as Exhibit 2.1 and
incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No.

Description

2.1

Agreement and Plan of Merger, dated as of May 1, 2019, by and among
McGraw-Hill Education, Inc., McGraw-Hill Global Education Holdings,
LLC, Cengage Learning Holdings II, Inc., Cengage Learning Holdco,
Inc. and Cengage Learning, Inc.

 SIGNATURE
The Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
McGraw-Hill Global Education Holdings, LLC
Date: May 22, 2019

By:
/s/ David B. Stafford
Name: David B. Stafford
Title: Senior Vice President and General
Counsel

 EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER
by and among
MCGRAW-HILL EDUCATION, INC.,
MCGRAW-HILL GLOBAL EDUCATION HOLDINGS, LLC,
CENGAGE LEARNING HOLDINGS II, INC.,
CENGAGE LEARNING HOLDCO, INC.,
and
CENGAGE LEARNING, INC.

Dated as of May 1, 2019

W/3356598

 TABLE OF CONTENTS
Page
Article I
The Closing Transactions
1.1.
1.2.
1.3.
1.4.
1.5.
1.6.

Closing Transactions ............................................................................................................2
Closing .................................................................................................................................4
Effective Times of the Closing Transactions .......................................................................4
The Certificate of Incorporation and Bylaws of the Surviving Corporation .......................5
The Certificate of Formation and Limited Liability Company Agreement of the
Surviving Issuer ...................................................................................................................5
Directors ...............................................................................................................................5
Article II
Conversion of Securities

2.1.
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.

Effect of the Holdco Merger on Securities ..........................................................................5
Effect of the Parent Merger on Securities ............................................................................6
Effect of the Issuer Merger on Securities ............................................................................6
Treatment of Equity Awards. ...............................................................................................6
Stock Transfer Books ...........................................................................................................9
Withholding .........................................................................................................................9
Dissenting Shares ...............................................................................................................10
Article III
Mutual Representations and Warranties of Cengage and McGraw-Hill

3.1.
3.2.
3.3.
3.4.
3.5.
3.6.
3.7.
3.8.
3.9.
3.10.
3.11.
3.12.
3.13.
3.14.
3.15.

Organization, Good Standing and Qualification ................................................................12
Equity Investments.............................................................................................................12
Corporate Authority; Approval ..........................................................................................12
Governmental Filings; No Violations; Certain Contracts ..................................................13
Reports; Internal Controls ..................................................................................................13
Financial Statements ..........................................................................................................15
Absence of Certain Changes or Events ..............................................................................15
Litigation and Liabilities ....................................................................................................15
Employee Benefits .............................................................................................................16
Labor Matters .....................................................................................................................18
Compliance with Laws; Licenses ......................................................................................19
Takeover Statutes ...............................................................................................................20
Environmental Matters.......................................................................................................20
Tax Matters ........................................................................................................................21
Intellectual Property ...........................................................................................................23

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 3.16.
3.17.
3.18.
3.19.
3.20.
3.21.

Insurance ............................................................................................................................24
Material Contracts ..............................................................................................................24
Title to Assets ....................................................................................................................26
Real Property .....................................................................................................................27
Affiliate Agreements ..........................................................................................................27
No Other Representations or Warranties; Non-Reliance ...................................................28
Article IV
Individual Representations and Warranties of Cengage and McGraw-Hill

4.1.
4.2.
4.3.
4.4.
4.5.
4.6.
4.7.
4.8.

McGraw-Hill Capital Structure..........................................................................................29
McGraw-Hill Board Approval ...........................................................................................30
McGraw-Hill Brokers and Finders ....................................................................................30
McGraw-Hill Voting Requirements ..................................................................................30
Cengage Capital Structure .................................................................................................30
Cengage Board Approval ...................................................................................................31
Cengage Brokers and Finders ............................................................................................31
Cengage Voting Requirements ..........................................................................................32
Article V
Covenants

5.1.
5.2.
5.3.
5.4.
5.5.
5.6.
5.7.
5.8.
5.9.
5.10.
5.11.
5.12.
5.13.
5.14.
5.15.

Interim Operations .............................................................................................................32
Exclusive Dealing ..............................................................................................................37
Cooperation; Efforts to Consummate ................................................................................37
Status ..................................................................................................................................40
Financing and Indebtedness ...............................................................................................40
Information; Access and Reports .......................................................................................41
Publicity .............................................................................................................................43
Employee Benefits .............................................................................................................43
Certain Tax Matters ...........................................................................................................45
Expenses ............................................................................................................................46
Indemnification; Directors’ and Officers’ Insurance .........................................................46
Takeover Statutes ...............................................................................................................48
Termination of Affiliate Agreements.................................................................................48
Requisite Stockholder Approval; Stockholder Notice .......................................................49
Pre-Closing Corporate Governance Matters ......................................................................49
Article VI
Conditions

6.1.
6.2.
6.3.

Conditions to Each Party’s Obligation to Effect the Mergers ...........................................50
Conditions to Obligations of McGraw-Hill .......................................................................50
Conditions to Obligation of Cengage ................................................................................51

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 Article VII
Termination
7.1.
7.2.
7.3.
7.4.

Termination by Mutual Written Consent ...........................................................................53
Termination by Either Cengage or McGraw-Hill ..............................................................53
Termination by McGraw-Hill ............................................................................................53
Termination by Cengage ....................................................................................................54
Article VIII
Miscellaneous and General

8.1.
8.2.
8.3.
8.4.
8.5.
8.6.
8.7.
8.8.
8.9.
8.10.
8.11.
8.12.
8.13.
8.14.

Survival ..............................................................................................................................54
Amendment; Waiver ..........................................................................................................54
Counterparts .......................................................................................................................55
Governing Law and Venue; Submission to Jurisdiction; Selection of Forum;
Waiver of Trial by Jury ......................................................................................................55
Specific Performance .........................................................................................................56
Notices ...............................................................................................................................56
Definitions..........................................................................................................................57
Entire Agreement ...............................................................................................................69
Third-Party Beneficiaries ...................................................................................................69
Fulfillment of Obligations..................................................................................................70
Non-Recourse ....................................................................................................................70
Severability ........................................................................................................................70
Interpretation; Construction ...............................................................................................71
Successors and Assigns......................................................................................................72

Exhibit A
Exhibit B

Summary of Proposed Governance Arrangements of the Combined Corporation
Cengage Irrevocable Written Consent

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 AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of
May 1, 2019, is entered into by and among McGraw-Hill Education, Inc., a Delaware
corporation (“McGraw-Hill”), McGraw-Hill Global Education Holdings, LLC, a Delaware
limited liability company and an indirect wholly owned subsidiary of McGraw-Hill (“McGrawHill Issuer”), Cengage Learning Holdings II, Inc., a Delaware corporation (“Cengage”),
Cengage Learning Holdco, Inc., a Delaware corporation and a direct wholly owned subsidiary of
Cengage (“Cengage Intermediate Holdco”) and Cengage Learning, Inc., a Delaware
corporation and a direct wholly owned subsidiary of Cengage Intermediate Holdco (“Cengage
Issuer”). Each of McGraw-Hill, McGraw-Hill Issuer, Cengage, Cengage Intermediate Holdco
and Cengage Issuer is referred to herein, individually, as a “Party” and, collectively, as the
“Parties.”
RECITALS
WHEREAS, the Parties intend that, on the terms and subject to the conditions set
forth in this Agreement, (a) Cengage Intermediate Holdco shall merge with and into Cengage
(the “Holdco Merger”) in accordance with Section 253 of the General Corporation Law of the
State of Delaware (the “DGCL”), whereupon the separate corporate existence of Cengage
Intermediate Holdco shall cease and Cengage shall survive as the surviving corporation in the
Holdco Merger, (b) immediately following the Holdco Merger, Cengage Issuer shall merge with
and into Cengage (the “Issuer Merger”) in accordance with Section 253 of the General
Corporation Law of the State of Delaware (the “DGCL”), whereupon the separate corporate
existence of Cengage Issuer shall cease and Cengage shall survive as the surviving corporation in
the Issuer Merger, and (c) immediately following the Issuer Merger, Cengage shall merge with
and into McGraw-Hill Issuer (the “Parent Merger” and, together with the Issuer Merger and
Holdco Merger, the “Mergers” ) in accordance with the provisions of the DGCL and the
Delaware Limited Liability Company Act (the “DLLCA”), whereupon the separate corporate
existence of Cengage shall cease and McGraw-Hill Issuer shall survive as the surviving
corporation in the Parent Merger;
WHEREAS, the board of directors of Cengage (the “Cengage Board”), has
unanimously (a) determined that this Agreement and the transactions contemplated by this
Agreement (the “Transactions”), including the Parent Merger, are fair to, and in the best
interests of, Cengage and its stockholders and (b) approved and declared advisable this
Agreement and the transactions contemplated by this Agreement, including the Parent Merger,
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the board of directors of McGraw-Hill (the “McGraw-Hill Board”)
has unanimously (a) determined that this Agreement and the Transactions, including the Parent
Merger, are fair to, and in the best interests of, McGraw-Hill and its stockholders and
(b) approved and declared advisable this Agreement and the Transactions, including the Parent
Merger, on the terms and subject to the conditions set forth in this Agreement;

 WHEREAS, the board of managers or board of directors, as applicable, and the
sole member, as applicable, of each of Cengage Intermediate Holdco, Cengage Issuer and
McGraw-Hill Issuer has (a) determined that this Agreement and the Transactions, including each
of the Mergers, as applicable, are fair to, and in the best interests of, their respective members, as
applicable, and (b) approved and declared advisable this Agreement and the Transactions,
including each of the Mergers, as applicable, on the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, in connection with the Mergers, the Parties desire to amend and
restate the Organizational Documents of McGraw-Hill on the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, it is intended that, for U.S. federal income Tax purposes, (a) the
Parent Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement is intended to be
a “plan of reorganization” for purposes of Sections 354 and 361 of the Code, and (b) each of the
Holdco Merger and Issuer Merger shall qualify as a “liquidation” within the meaning of
Sections 332(a) and 337(a) of the Code or as a “reorganization” within the meaning of
Section 368(a) of the Code, and this Agreement is intended to be a “plan of liquidation” or “plan
or reorganization” (as applicable); and
WHEREAS, the Parties desire to make certain representations, warranties,
covenants and agreements in connection with this Agreement and set forth certain conditions to
the Mergers.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth in this Agreement, the Parties
agree as follows:
ARTICLE I
THE CLOSING TRANSACTIONS
1.1.
Closing Transactions. On the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL and DLLCA, as applicable:
(a)
At the Holdco Merger Effective Time, Cengage Intermediate Holdco shall
merge with and into Cengage, whereupon the separate corporate existence of Cengage
Intermediate Holdco shall cease, and Cengage shall survive as the surviving corporation in the
Holdco Merger;
(b)
Immediately following the Holdco Merger Effective Time, Cengage Issuer
shall merge with and into Cengage, whereupon the separate corporate existence of Cengage
Issuer shall cease, and Cengage shall survive as the surviving corporation in the Issuer Merger
(Cengage, as the surviving corporation in the Holdco Merger and Issuer Merger, sometimes
being referred to herein as the Surviving Corporation (the “Surviving Corporation”));

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 (c)
Immediately following the Issuer Merger Effective Time, at the Certificate
Amendment Effective Time:
(i)
the certificate of incorporation of McGraw-Hill (McGraw-Hill,
from and after the Parent Merger Effective Time, sometimes being referred to herein as the
Combined Corporation (the “Combined Corporation”)), as in effect at the Issuer Merger
Effective Time, shall be amended and restated in accordance with the summary set forth in
Exhibit A (such amendment and restatement, the “Certificate Amendment”) and to change the
corporate name set forth therein as mutually agreed by McGraw-Hill and Cengage, and as so
amended and restated shall be the certificate of incorporation of the Combined Corporation until
thereafter amended as provided therein or by applicable Law. The Parties agree that by virtue of
the Certificate Amendment, and without any further action on the part of any other Person,
(1) there shall be authorized a new class of common stock
of the Combined Corporation designated as Class A Common Stock, par value $0.01 per
share (the “Class A Common Stock”), having the rights, powers and privileges set forth
in the Certificate Amendment, and (2) each share of common stock of McGraw-Hill, par
value $0.01 per share (the “Existing McGraw-Hill Common Stock”) issued and
outstanding at the Issuer Merger Effective Time (other than any shares held by McGrawHill as treasury stock, which shall be cancelled, and no payment shall be made with
respect thereto) shall be converted into one share of Class A Common Stock;
there shall be authorized a new class of common stock of
the Combined Corporation designated as Class B Common Stock, par value $0.01 per
share (the “Class B Common Stock”), having the rights, powers and privileges set forth
in the Certificate Amendment;
there shall be authorized a new class of common stock of
the Combined Corporation designated as Class C Common Stock, par value $0.01 per
share (the “Class C Common Stock”), having the rights, powers and privileges set forth
in the Certificate Amendment; and
there shall be authorized a new class of common stock of
the Combined Corporation designated as Residual Common Stock, par value $0.01 per
share (the “Residual Common Stock”), having the rights, powers and privileges set forth
in the Certificate Amendment.
(ii)
the bylaws of McGraw-Hill, as in effect at the Issuer Merger
Effective Time, shall be amended and restated to the extent required to be consistent with and
not conflict with the Certificate Amendment, and to change the corporate name set forth therein
as mutually agreed by McGraw-Hill and Cengage, and as so amended and restated shall be the
bylaws of the Combined Corporation until thereafter amended as provided therein or by
applicable Law.
(d)
Immediately after the Certificate Amendment Effective Time, at the
Parent Merger Effective Time, Cengage shall merge with and into McGraw-Hill Issuer,
whereupon the separate corporate existence of Cengage shall cease, and McGraw-Hill Issuer

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 shall survive as the surviving entity in the Parent Merger (McGraw-Hill Issuer, as the surviving
entity in the Parent Merger, sometimes being referred to herein as the Surviving Issuer (the
“Surviving Issuer”)), such that following the Parent Merger, McGraw-Hill Issuer shall be an
indirect wholly owned subsidiary of McGraw-Hill.
The Mergers shall have such other effects as are provided in the DGCL and the DLLCA, as
applicable.
1.2.
Closing. The closing of the Mergers (the “Closing”) shall take place at
the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York
10019, at (a) 9:00 a.m., New York time, on the third (3rd) Business Day following the
satisfaction or waiver (to the extent permissible) of the last to be satisfied or waived conditions
set forth in Article VI (other than those conditions that by their nature are to be satisfied or
waived at the Closing, but subject to the satisfaction or (to the extent permissible) waiver of
those conditions); or (b) such other date, time or place as McGraw-Hill or Cengage may
mutually agree in writing (the date on which the Closing actually occurs, the “Closing Date”).
1.3.

Effective Times of the Closing Transactions.

(a)

At the Closing:

(i)
Cengage shall cause a certificate of ownership and merger relating
to the Holdco Merger to be executed, acknowledged and filed with the Secretary of State of the
State of Delaware (the “Delaware Secretary”) as provided in Section 253 of the DGCL (the
“Certificate of Ownership”);
(ii)
Cengage shall cause a certificate of ownership and merger relating
to the Issuer Merger to be executed, acknowledged and filed with the Secretary of State of the
State of Delaware (the “Delaware Secretary”) as provided in Section 253 of the DGCL (the
“Certificate of Issuer Ownership”);
(iii)
Immediately following the filing of the Certificate of Issuer
Ownership, McGraw-Hill shall cause a restated certificate of incorporation of McGraw-Hill
containing the terms set forth in the Certificate Amendment to be executed, acknowledged and
filed with the Delaware Secretary as provided in Sections 242 and 245 of the DGCL (the
“Certificate of Amendment”); and
(iv)
Immediately following the filing of the Certificate of Amendment,
McGraw-Hill shall cause a certificate of merger relating to the Parent Merger to be executed,
acknowledged and filed with the Delaware Secretary as provided in Section 264 of the DGCL
and Section 18-209 of the DLLCA (the “Certificate of Merger”).
(b)
(i) The Holdco Merger shall become effective at the time when the
Certificate of Ownership has been duly filed with the Delaware Secretary, or at such later date
and time as may be agreed by the Parties in writing and specified in the Certificate of Ownership
(such date and time, the “Holdco Merger Effective Time”); (ii) the Issuer Merger shall become
effective at the time when the Certificate of Issuer Ownership has been duly filed with the
Delaware Secretary, or at such later date and time as may be agreed by the Parties in writing and
-4-

 specified in the Certificate of Issuer Ownership (such date and time, the “Issuer Merger
Effective Time”); (iii) the Certificate Amendment shall become effective at the time when the
Certificate of Amendment has been duly filed with the Delaware Secretary, or at such later date
and time as may be agreed by the Parties in writing and specified in the Certificate of
Amendment (such date and time, the “Certificate Amendment Effective Time”); and (iv) the
Parent Merger shall become effective at the time when the Certificate of Merger has been duly
filed with the Delaware Secretary, or at such later date and time as may be agreed by the Parties
in writing and specified in the Certificate of Merger (such date and time, the “Parent Merger
Effective Time”).
1.4.
The Certificate of Incorporation and Bylaws of the Surviving Corporation.
At the Holdco Merger Effective Time and the Issuer Merger Effective Time, the certificate of
incorporation and bylaws of Cengage shall be the certificate of incorporation and bylaws of the
Surviving Corporation until thereafter amended as provided therein or by applicable Law.
1.5.
The Certificate of Formation and Limited Liability Company Agreement
of the Surviving Issuer. At the Parent Merger Effective Time, the certificate of formation and
limited liability company agreement of McGraw-Hill Issuer shall be the certificate of formation
and limited liability company agreement of the Surviving Issuer until thereafter amended as
provided therein or by applicable Law.
1.6.

Directors.

(a)
Subject to applicable Law, the directors of Cengage immediately prior to
the Holdco Merger Effective Time and Issuer Merger Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal.
(b)
Subject to applicable Law, the managers of McGraw-Hill Issuer
immediately prior to the Parent Merger Effective Time shall be the initial managers of the
Surviving Issuer and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SECURITIES
2.1.
Effect of the Holdco Merger on Securities. At the Holdco Merger
Effective Time, by virtue of the Holdco Merger and without any action on the part of the Parties
or holders of any securities of the Parties, each share of common stock of Cengage Intermediate
Holdco issued and outstanding immediately prior to the Holdco Merger Effective Time shall no
longer be outstanding and shall automatically be cancelled and shall cease to exist, and no
consideration shall be delivered in exchange therefor, and each share of common stock of
Cengage, par value $0.01 per share (“Cengage Common Stock”) issued and outstanding
immediately prior to the Holdco Merger Effective Time shall remain issued and outstanding as a
share of common stock of the Surviving Corporation.

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 2.2.
Effect of the Parent Merger on Securities. At the Parent Merger Effective
Time, by virtue of the Parent Merger and without any action on the part of the Parties or holders
of any securities of the Parties:
(a)
each share of Cengage Common Stock, if any, held by Cengage as
treasury stock immediately prior to the Parent Merger Effective Time shall be cancelled, and no
payment (of Merger Consideration or otherwise) shall be made with respect thereto (such shares
of capital stock, “Cancelled Shares”); and
(b)
each share of Cengage Common Stock issued and outstanding
immediately prior to the Parent Merger Effective Time (other than any Cancelled Shares or
Dissenting Shares) shall be automatically cancelled and converted into the right to receive a
number of shares of Class B Common Stock equal to the Pro Forma Ratio (the “Merger
Consideration”).
2.3.
Effect of the Issuer Merger on Securities. At the Issuer Merger Effective
Time, by virtue of the Issuer Merger and without any action on the part of the Parties or holders
of any securities of the Parties, each share of common stock of Cengage Issuer issued and
outstanding immediately prior to the Issuer Merger Effective Time shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist, and no consideration
shall be delivered in exchange therefor, and each and each share of Cengage Common Stock
issued and outstanding immediately prior to the Issuer Merger Effective Time shall remain
issued and outstanding as a as a share of common stock of the Surviving Corporation.
2.4.

Treatment of Equity Awards.

(a)
At the Parent Merger Effective Time, without any action on the part of the
award holders, all of the McGraw-Hill Rollover Options and McGraw-Hill RSU Awards that are
outstanding as of immediately prior to the Certificate Amendment Effective Time and all of the
Cengage Rollover Options and Cengage Rollover RSU Awards that are outstanding as of
immediately prior to the Parent Merger Effective Time shall be treated as follows:
(i)
each McGraw-Hill Rollover Option shall be cancelled, terminated
and converted into an option (each, a “Converted McGraw-Hill Option”) (A) to purchase a
number of shares of Class C Common Stock equal to the number of shares of Existing McGrawHill Common Stock subject to such McGraw-Hill Rollover Option as of immediately prior to the
Certificate Amendment Effective Time, with (B) a per share exercise price equal to the per share
exercise price applicable to such McGraw-Hill Rollover Option as of immediately prior to the
Certificate Amendment Effective Time, and, except as specifically provided in this Section 2.4,
each such Converted McGraw-Hill Option shall continue to be governed by the same terms and
conditions (including, as applicable, vesting, exercisability and forfeiture terms) as applied to the
corresponding McGraw-Hill Rollover Option immediately prior to the Certificate Amendment
Effective Time;
(ii)
each McGraw-Hill RSU Award shall be cancelled, terminated and
converted into a restricted stock unit award corresponding to a number of shares of Class C
Common Stock (each, a “Converted McGraw-Hill RSU Award”) equal to the number of

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 shares of Existing McGraw-Hill Common Stock subject to such McGraw-Hill RSU Award as of
immediately prior to the Certificate Amendment Effective Time, and, except as specifically
provided in this Section 2.4, each such Converted McGraw-Hill RSU Award shall continue to be
governed by the same terms and conditions (including, as applicable, vesting and forfeiture
terms) as applied to the corresponding McGraw-Hill RSU Award immediately prior to the
Certificate Amendment Effective Time;
(iii)
each Cengage Rollover Option shall be cancelled, terminated and
converted into an option (each, a “Converted Cengage Option”) (A) to purchase a number of
shares of Class C Common Stock equal to the product (rounded down to the nearest whole
number of shares of Class C Common Stock) of (x) the number of shares of Cengage Common
Stock subject to such Cengage Rollover Option as of immediately prior to the Parent Merger
Effective Time multiplied by (y) the Pro Forma Ratio, with (B) a per share exercise price equal to
the quotient (rounded up to the nearest whole cent) of (x) the per share exercise price applicable
to such Cengage Rollover Option as of immediately prior to the Parent Merger Effective Time
divided by (y) the Pro Forma Ratio, and, except as specifically provided in this Section 2.4,
following the Parent Merger Effective Time, each such Converted Cengage Option shall
continue to be governed by the same terms and conditions (including, as applicable, vesting,
exercisability and forfeiture terms) as applied to the corresponding Cengage Rollover Option
immediately prior to the Parent Merger Effective Time;
(iv)
(A) each Cengage Rollover RSU Award shall be cancelled,
terminated and converted into a restricted stock unit award corresponding to a number of shares
of Class C Common Stock (each, a “Converted Cengage RSU Award”) equal to the number of
shares of Cengage Common Stock subject to such Cengage Rollover RSU Award as of
immediately prior to the Parent Merger Effective Time multiplied by the Pro Forma Ratio, and,
except as specifically provided in this Section 2.4, each such Converted Cengage RSU Award
shall continue to be governed by the same terms and conditions (including, as applicable, vesting
and forfeiture terms) as applied to the corresponding Cengage Rollover RSU Award immediately
prior to the Parent Merger Effective Time and (B) the per-unit amount of any cash dividend
equivalent right associated with a Cengage Rollover RSU Award converted into a Converted
Cengage RSU Award as of immediately prior to the Parent Merger Effective Time shall be
divided by the Pro Forma Ratio, and such cash dividend equivalent right shall following the
Parent Merger Effective Time apply to the Converted Cengage RSU Award that corresponds to
such Cengage Rollover RSU Award and shall otherwise continue to be governed by the same the
same terms and conditions (including, as applicable, vesting and forfeiture terms) as applied
prior to the Parent Merger Effective Time; and
(b)
Without any action on the part of the holder of any McGraw-Hill
Specified Option, no later than immediately prior to the Issuer Merger Effective Time, each
outstanding McGraw-Hill Specified Option shall be canceled, terminated and converted into a
number of shares of Existing McGraw-Hill Common Stock (the “McGraw-Hill Specified
Option Earned Shares”) equal to (i) the number of shares of Existing McGraw-Hill Common
Stock subject to such McGraw-Hill Specified Option minus (ii) the number of shares of Existing
McGraw-Hill Common Stock having, as of the date of such conversion, a value (based on a per
share value of Existing McGraw-Hill Common Stock determined by the McGraw-Hill Board in
its sole discretion) equal to the aggregate exercise price of the shares of Existing McGraw-Hill
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 Common Stock subject to such McGraw-Hill Specified Option. Any applicable required tax
withholding in connection with such event shall be satisfied through withholding by McGrawHill of shares of Existing McGraw-Hill Common Stock (the number of shares so withheld, the
“McGraw-Hill Specified Option Withheld Shares” and the excess of the McGraw-Hill
Specified Option Earned Shares over the McGraw-Hill Specified Option Withheld Shares, the
“McGraw-Hill Specified Option Delivered Shares”). For the avoidance of doubt, without
further action on the part of the holder of such McGraw-Hill Specified Option Delivered Shares,
(x) the McGraw-Hill Specified Option Delivered Shares will be converted pursuant to Section
1.1(c)(i)(A) into shares of Class A Common Stock and (y) the McGraw-Hill Specified Option
Withheld Shares shall be treated as treasury stock and shall be cancelled pursuant to Section
1.1(c)(i)(A).
(c)
No later than immediately prior to the Parent Merger Effective Time,
without any action on the part of the holders of any Cengage Specified Options or Cengage NonRollover RSU Awards, all of the Cengage Specified Options and Cengage Non-Rollover RSU
Awards outstanding as of the conversion described below shall be treated as follows (with any
cash payable to be paid through payroll as soon as reasonably practicable following the Parent
Merger Effective Time, but no later than ten (10) Business Days following the Parent Merger
Effective Time):
(i)
(A) each outstanding Cengage Specified Option shall be canceled,
terminated and converted into a number of shares of Cengage Common Stock (the “Cengage
Specified Option Earned Shares”) equal to (x) the number of shares of Cengage Common
Stock subject to such Cengage Specified Option minus (y) the number of shares of Cengage
Common Stock having, as of the date of such conversion, a value (based on a per share value of
Cengage Common Stock determined by the Cengage Board in its sole discretion) equal to the
aggregate exercise price of the shares of Cengage Common Stock subject to such Cengage
Specified Option, (B) any applicable required tax withholding in connection with such event
shall be satisfied through withholding by Cengage of shares of Cengage Common Stock (the
number of shares so withheld, the “Cengage Specified Option Withheld Shares” and the
excess of the Cengage Specified Option Earned Shares over the Cengage Specified Option
Withheld Shares, the “Cengage Specified Option Delivered Shares”); and (C) for the
avoidance of doubt, the Cengage Specified Option Delivered Shares shall be converted pursuant
to Section 2.2(b) into Class B Common Stock and the Cengage Specified Option Withheld
Shares shall be treated as treasury stock and cancelled pursuant to Section 2.2(a); and
(ii)
(A) each outstanding Cengage Non-Rollover RSU Award shall be
cancelled, terminated and converted into a number of shares of Cengage Common Stock (the
“Cengage RSU Earned Shares”) equal to the number of shares of Cengage Common Stock
subject to such Cengage Non-Rollover RSU Award; (B) the per-unit amount of any cash
dividend equivalent right associated with a Cengage Non-Rollover RSU Award as of such
conversion shall be paid as soon as practicable following the Parent Merger Effective Time,
subject to any required applicable tax withholding; (C) any required applicable tax withholding
in connection with the event described in clause (A) shall be satisfied through withholding by
Cengage of shares of Cengage Common Stock (the number of shares so withheld, the “Cengage
RSU Withheld Shares” and the excess of the Cengage RSU Earned Shares over the Cengage
RSU Withheld Shares, the “Cengage RSU Delivered Shares”); and (D) for the avoidance of
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 doubt, the Cengage RSU Delivered Shares shall be converted pursuant to Section 2.2(b) into
Class B Common Stock and the Cengage RSU Withheld Shares shall be treated as treasury stock
and cancelled pursuant to Section 2.2(a).
(d)
For the avoidance of doubt, (i) any withholding Taxes taken into account
pursuant to Sections 2.4(b), 2.4(c)(i), and 2.4(c)(ii) shall not give rise to any requirement of the
applicable holder of McGraw-Hill Specified Options, Cengage Specified Options or Cengage
Non-Rollover RSU Awards to make a cash payment pursuant to clause (i) of Section 2.6(a) and
(ii) the values utilized for purposes of Sections 2.4(b)(ii), 2.4(c)(i)(A)(y), and 2.4(c)(ii)(C) shall
be used solely for the purposes set forth therein, and shall not be required to be used for any
other purpose (including for purposes of tax reporting, withholding or remission).
(e)
As of the Parent Merger Effective Time, McGraw-Hill shall assume and
honor the Cengage Stock Plans in accordance with their terms. At or prior to the Parent Merger
Effective Time, Cengage and McGraw-Hill shall adopt any resolutions and take any actions that
are necessary to effectuate the treatment of Cengage Equity Awards and McGraw-Hill Equity
Awards pursuant to this Section 2.4.
2.5.
Stock Transfer Books. The shares of Class A Common Stock received by
holders of Existing McGraw-Hill Common Stock pursuant to Section 1.1(c)(i)(A)(2) and the
Merger Consideration received by holders of Cengage Common Stock pursuant to Section 2.2(b)
shall be recorded on the stock transfer books of the Combined Corporation as shares of Class A
Common Stock or Class B Common Stock, as applicable, held in book-entry. From and after the
Certificate Amendment Effective Time, there shall be no transfers on the stock transfer books of
McGraw-Hill of the shares of Existing McGraw-Hill Common Stock that were outstanding
immediately prior to the Certificate Amendment Effective Time and from and after the Parent
Merger Effective Time, there shall be no transfers on the stock transfer books of Cengage of the
shares of Cengage Common Stock that were outstanding immediately prior to the Parent Merger
Effective Time. From and after the Certificate Amendment Effective Time, the holders of shares
of Existing McGraw-Hill Common Stock shall cease to have any rights with respect to their
shares of Existing McGraw-Hill Common Stock and from and after the Parent Merger Effective
Time, the holders of shares of Cengage Common Stock shall cease to have any rights with
respect to their shares of Cengage Common Stock, in each case except as otherwise provided
herein or by applicable Law.
2.6.

Withholding.

(a)
McGraw-Hill, Cengage and their respective Affiliates shall be entitled to
deduct and withhold (or direct any other Person to deduct and withhold on their behalf) any
amount from the payment of the Merger Consideration otherwise payable pursuant to this
Agreement, or from the payment of any other consideration payable pursuant to this Agreement,
such amounts as are required to be deducted and withheld with respect to the making of such
payment under the Code, or any provision of state, local or foreign Tax law. Other that any such
deduction or withholding attributable to a failure by Cengage to deliver the certificates described
in Section 5.9(d), to the extent McGraw-Hill expects to withhold from payments of the Merger
Consideration pursuant to this Section 2.6(a), it shall notify Cengage of any such required
deduction or withholding no later than ten (10) calendar days prior to the date on which the

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 relevant payment is required to be made hereunder, or as soon as reasonably practical thereafter.
In the event that McGraw-Hill, Cengage or their respective Affiliates is entitled pursuant to this
Section 2.6(a) to deduct and withhold any amount from the payment of Merger Consideration
otherwise payable pursuant to this Agreement, or from the payment of any other consideration
payable pursuant to this Agreement, (i) the applicable withholding agent shall be entitled to
receive, at the Closing, from the Person in respect of which such deduction or withholding is
required to be made, an amount of cash equal to the amount of such required deduction or
withholding and (ii) the applicable withholding agent shall (A) timely remit such cash amount to
the appropriate Governmental Entity in accordance with applicable Tax law and (B) contingent
on the applicable withholding agent’s receipt of the cash amount described in clause (i) of this
Section 2.6(a) from the applicable Person in respect of which such deduction or withholding is
required to be made, pay to such Person, without deduction or withholding, the full amount of
the Merger Consideration or other consideration payable to such Person pursuant to this
Agreement. As promptly as reasonably practicable following the remittance of the cash amount,
the applicable withholding agent shall deliver to such Person evidence of such Tax payment.
The parties shall reasonably cooperate to minimize any such withholding Taxes and Cengage
shall use commercially reasonable efforts to ensure (including by preparing shareholder
communication and communicating with holders of Cengage Common Stock), and McGraw-Hill
shall reasonably cooperate with Cengage in ensuring, that the applicable Person pays to the
applicable withholding agent the cash amount described in clause (i) of this Section 2.6(a) in
advance of, or in connection with, the Closing.
(b)
Notwithstanding anything in this Agreement to the contrary, in the event
that McGraw-Hill, Cengage or any of their respective Affiliates is entitled pursuant to
Section 2.6(a) to deduct and withhold any amount from the payment of Merger Consideration
otherwise payable pursuant to this Agreement (or from the payment of any other consideration
payable pursuant to this Agreement) and the applicable withholding agent has not received the
cash amount described in clause (i) of Section 2.6(a) from the Person in respect of which such
deduction or withholding is required to be made in advance of, or in connection with, the Closing
(any such holder, a “Delinquent Holder”), the applicable withholding agent shall be entitled to
withhold all of the Merger Consideration or other consideration otherwise payable to such
Delinquent Holder. Any Class B Common Stock so withheld from a Delinquent Holder shall be
held in trust by McGraw-Hill for the benefit of such Delinquent Holder. While such shares of
Class B Common Stock are held in trust, (i) a Delinquent Holder shall have the right to vote, or
direct the voting of, such Class B Common Stock to the same extent and in the same manner as
all other holders of the Class B Common Stock, and (ii) any dividends or distributions declared
on such shares of Class B Common Stock shall not be paid to the Delinquent Holder and,
instead, shall also be held in trust for the benefit of such holder. All shares of Class B Common
Stock (together with any other property) held in trust for the benefit of a Delinquent Holder shall
be released to such holder upon receipt by McGraw-Hill from such holder of the cash amount
described in clause (i) of Section 2.6(a), plus interest (calculated from the Closing Date to the
date of payment at a rate of eight percent (8.0%) per annum).
2.7.
Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary and to the extent available under Section 262 of the DGCL, any share of Cengage
Common Stock that is issued and outstanding immediately prior to the Parent Merger Effective
Time and that is held by a holder of shares of Cengage Common Stock who did not consent to
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 the Parent Merger, which holder of shares of Cengage Common Stock complies with all of the
provisions of the DGCL required to demand, exercise and perfect appraisal rights (such share
being a “Dissenting Share”, and such holder of Cengage Common Stock, a “Dissenting
Stockholder”), shall not be converted into the right to receive the Merger Consideration, but,
rather, shall be converted into the right to receive such consideration as may be determined to be
due pursuant to Section 262 of the DGCL. If any Dissenting Stockholder fails to perfect such
stockholder’s dissenters’ rights under the DGCL or withdraws or otherwise loses such rights
with respect to any Dissenting Shares, such Dissenting Shares shall thereupon automatically be
converted into the right to receive the Merger Consideration. Notwithstanding anything to the
contrary contained in this Agreement, if the Parent Merger is rescinded or abandoned, then the
right of a stockholder to be paid the fair value of such holder’s Dissenting Shares pursuant to
Section 262 of the DGCL shall cease. Prior to the Closing, Cengage shall give McGraw-Hill
written notice of any demand for payment of the fair value of any shares of Cengage Common
Stock or any attempted withdrawal of any such demand for payment and any other instrument
served pursuant to the DGCL and received by Cengage relating to any stockholder’s dissenters’
rights. Prior to the Closing, Cengage shall not voluntarily make any payment with respect to any
demand for appraisal with respect to any Dissenting Shares without the prior written consent of
McGraw-Hill.
ARTICLE III
MUTUAL REPRESENTATIONS AND WARRANTIES OF CENGAGE AND MCGRAWHILL
Except as set forth (1) in the Reports of Cengage or McGraw-Hill, as applicable,
(x) in the case of McGraw-Hill, made publicly available pursuant to the Term Loan Agreement,
dated as of April 20, 2018, among McGraw-Hill Parent, LLC and the other parties thereto (the
“Term Loan Agreement”) or the Indenture, dated as of May 4, 2016, among McGraw-Hill
Issuer and the other parties thereto (the “McGraw-Hill Indenture”) or (y) in the case of
Cengage, made publicly available pursuant to the Shareholder Agreement, dated as of March 31,
2014, among Cengage and the other parties thereto (the “Cengage Shareholders Agreement”),
the Indenture, dated as of June 7, 2016, among Cengage Issuer and the other parties thereto (the
“Cengage Indenture”), the Cengage ABL Agreement and the Cengage Term Loan Agreement,
in the case of each of (x) and (y) during the period from January 1, 2018 through the Business
Day prior to the date of this Agreement (excluding any disclosures set forth or referenced in any
risk factor section or in any other section to the extent they are forward-looking statements or
cautionary, predictive or forward-looking in nature) or (2) in the correspondingly numbered
sections or subsections of the disclosure letter delivered to Cengage by McGraw-Hill (the
“McGraw-Hill Disclosure Letter” and to McGraw-Hill by Cengage (the “Cengage Disclosure
Letter”), and each of the McGraw-Hill Disclosure Letter and the Cengage Disclosure Letter, a
“Disclosure Letter”) concurrently with the execution and delivery of this Agreement (it being
agreed that for purposes of the representations and warranties set forth in this Article III,
disclosure of any item in any section or subsection of a Party’s Disclosure Letter shall be deemed
disclosure with respect to any other section or subsection of the such Disclosure Letter, to which
the relevance of such item is reasonably apparent on its face), McGraw-Hill and McGraw-Hill
Issuer hereby jointly and severally represent and warrant to Cengage, Cengage Intermediate
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 Holdco and Cengage Issuer, and Cengage, Cengage Intermediate Holdco and Cengage Issuer
hereby jointly and severally represent and warrant to McGraw-Hill and McGraw-Hill Issuer that:
3.1.

Organization, Good Standing and Qualification.

(a)
Such Party and each of its Subsidiaries (i) is a legal entity duly organized,
validly existing and in good standing (with respect to jurisdictions which recognize such
concept) under the Laws of its respective jurisdiction of organization, (ii) has all requisite
corporate or similar power and authority to own, lease and operate its properties and assets and
to carry on its business as currently conducted and (iii) is qualified to do business and is in good
standing (where applicable) as a foreign corporation or other legal entity in each jurisdiction
where the ownership, leasing or operation of its assets or properties or conduct of its business
requires such qualification, except, in the case of each of clause (i), (ii) and (iii), as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on
such Party. Cengage has made available to McGraw-Hill, and McGraw-Hill has made available
to Cengage, complete and correct copies of such Party’s Organizational Documents.
(b)
Such Party is not in violation of its Organizational Documents, except as
would not, individually or in the aggregate, reasonably be expected to be material to such Party
and its Subsidiaries, taken as a whole, or prevent the ability of such Party to consummate the
transactions contemplated by this Agreement. In the case of Cengage, the Cengage Shareholders
Agreement, and, in the case of McGraw-Hill, the Stockholders’ Agreement, dated as of March
22, 2013, among McGraw-Hill and the other parties thereto (the “McGraw-Hill Stockholders
Agreement”), constitutes a valid and binding agreement of each party thereto enforceable
against each such party in accordance with its terms. There are no Proceedings pending against
or, to the Knowledge of such Party, threatened in writing against such Party or any of its
Subsidiaries in respect of the Cengage Shareholders Agreement or McGraw-Hill Stockholders
Agreement, as applicable, or alleging a breach by such Party of any fiduciary duty or otherwise.
3.2.
Equity Investments. Section 3.2 of such Party’s Disclosure Letter sets
forth, as of the date hereof, such Party’s or its Subsidiaries’ capital stock, equity interest or other
direct or indirect ownership interest in any other Person other than (a) securities in a publicly
traded company held for investment by such Party or any of its Subsidiaries and consisting of
less than one percent (1%) of the outstanding capital stock of such company and (b) capital
stock, equity interests or other direct or indirect ownership interests or securities of direct or
indirect wholly-owned Subsidiaries of such Party. Such Party does not own, directly or
indirectly, any voting interest in any Person that requires an additional filing by any Party under
the HSR Act.
3.3.
Corporate Authority; Approval. In the case of Cengage, each of Cengage,
Cengage Intermediate Holdco and Cengage Issuer and, in the case of McGraw-Hill, each of
McGraw-Hill and McGraw-Hill Issuer has all requisite corporate or entity power and authority
and has taken all corporate or entity action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate the Transactions, and the execution and
delivery of this Agreement and the consummation of the Transactions, by such Party have been
duly authorized by all necessary corporate or entity action on the part of such Party, in each case
subject only to, in the case of McGraw-Hill, the Requisite McGraw-Hill Stockholder Approval,

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 and, in the case of Cengage, the Requisite Cengage Stockholder Approval. This Agreement has
been duly executed and delivered by such Party and, assuming the valid execution and delivery
of this Agreement by each other Party, constitutes a valid and binding agreement of such Party
enforceable against such Party in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance of preferential transfers, reorganization, moratorium and similar Laws of
general applicability relating to or affecting creditors’ rights and to general equity principles (the
“Bankruptcy and Equity Exception”).
3.4.

Governmental Filings; No Violations; Certain Contracts.

(a)
Other than (i) the filings, notices, reports, consents, registrations,
clearances, approvals, permits, expirations of waiting periods or authorizations (collectively,
“Filings”) pursuant to the DGCL, (ii) Filings pursuant to federal and state securities, takeover
and “blue sky” Laws, (iii) the Requisite Regulatory Approvals, and (iv) Filings relating to the
commercial Contracts with Governmental Entities set forth on Section 3.4(a)(iv) of such Party’s
Disclosure Letter, no Filings are required to be made or obtained by such Party with, nor are any
required to be obtained by such Party with or from, any Governmental Entity, in connection with
the execution, delivery and performance of this Agreement by such Party and the consummation
of the Transactions except as would not, individually or in the aggregate, reasonably be expected
to be material to such Party and its Subsidiaries, taken as a whole, or prevent the ability of such
Party to consummate the Transactions.
(b)
Subject to obtaining the Requisite McGraw-Hill Stockholder Approval
and the Requisite Cengage Stockholder Approval, as applicable, the execution, delivery and
performance of this Agreement by such Party does not, and the consummation of the
Transactions will not, (i) constitute or result in any violation or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under, or result in the creation of any Encumbrance upon any
of the properties or assets of such Party or any of its Subsidiaries under, (A) the Organizational
Documents of such Party or any of its Subsidiaries, (B) any Contract, including for the avoidance
of doubt any loan or credit agreement, note, bond or indenture, binding upon such Party or any of
its Subsidiaries or (C) assuming (solely with respect to performance of this Agreement and
consummation of the Transactions) compliance with the matters referred to in Section 3.4(a),
under any Law to which such Party or any of its Subsidiaries is subject or (ii) result in any
change in the rights or obligations of any Party under any Contract binding upon such Party or
any of its Subsidiaries, except, in the case of clause (i)(B) or (C) or clause (ii) above, as would
not, individually or in the aggregate, reasonably be expected to be material to such Party and its
Subsidiaries, taken as a whole, or prevent the ability of such Party to consummate the
Transactions.
3.5.

Reports; Internal Controls.

(a)
Such Party has made publicly available, on a timely basis, all forms,
schedules, prospectuses, statements, certifications, reports and documents required to be made
publicly available, in the case of McGraw-Hill, pursuant to the Term Loan Agreement and the
McGraw-Hill Indenture or, in the case of Cengage, pursuant to the Cengage Shareholders
Agreement, the Cengage Indenture, the Cengage ABL Agreement and the Cengage Term Loan

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 Agreement, in each case since January 1, 2017 (the “Applicable Date”) (the forms, schedules,
prospectuses, statements, reports and documents, in the case of McGraw-Hill, made publicly
available pursuant to the Term Loan Agreement and the McGraw-Hill Indenture or, in the case
of Cengage, made publicly available pursuant to the Cengage Shareholders Agreement and the
Cengage Indenture, in each case since the Applicable Date and those made publicly available by
McGraw-Hill or Cengage, as applicable, pursuant to such documents subsequent to the date of
this Agreement, including any amendments thereto, such Party’s “Reports”). As of their
respective dates (or, if amended or superseded by any report prior to the date of this Agreement,
then as of the date of such report), such Party’s Reports did not, and any of such Party’s Reports
made publicly available subsequent to the date of this Agreement will not, contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in which they were
made, not misleading.
(b)
Such Party maintains internal control over financial reporting and such
internal control is effective in providing reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in
accordance with GAAP and includes policies and procedures that (i) pertain to the maintenance
of records that in reasonable detail accurately and fairly reflect the transactions and dispositions
of the assets of such Party and its Subsidiaries, (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with
GAAP, and that receipts and expenditures of such Party and its Subsidiaries are being made only
in accordance with authorizations of management and directors of such Party and its
Subsidiaries, and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of such Party’s assets that could have a material
effect on its financial statements. The records, systems, controls, data and information of such
Party and its Subsidiaries that are used in the systems of disclosure controls and procedures and
of financial reporting controls and procedures described above are recorded, stored, maintained
and operated under means that are under the exclusive ownership and direct control of such Party
or a wholly owned Subsidiary of such Party or its accountants, except as would not reasonably
be expected to adversely affect or disrupt, in any material respect, such Party’s systems of
disclosure controls and procedures and of financial reporting controls and procedures or the
reports generated thereby.
(c)
Since the Applicable Date, none of such Party’s auditors, such Party’s
board of directors and the audit committee of the board of directors of such Party has received
any oral or written notification of (i) any “significant deficiency” in the design or operation of its
internal controls over financial reporting that are reasonably likely to adversely affect such
reporting (ii) any “material weakness” in internal controls over financial reporting and (iii) any
fraud, whether or not material, that involves management or other employees who have a
significant role in such Party’s internal controls over financial reporting. Since the Applicable
Date, no concerns in writing from such Party’s employees regarding questionable accounting or
auditing matters and, to the Knowledge of such Party, no complaints from any source regarding
accounting, internal accounting controls or auditing matters, have been received by any of the
Persons listed on Section 8.7(a)(i) of such Party’s Disclosure Letter.

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 3.6.

Financial Statements.

(a)
In the case of Cengage, Cengage, and in the case of McGraw-Hill,
McGraw-Hill, has made available to the other the following (collectively, the “Financial
Statements”): (i) the audited consolidated balance sheets of such Party and its consolidated
Subsidiaries as at March 31, 2018 (in the case of Cengage) and December 31, 2018 (in the case
of McGraw-Hill), and the related consolidated statements of operations, stockholders’ equity and
cash flows of such Party and its consolidated Subsidiaries for the fiscal years ended March 31,
2018 (in the case of Cengage) and December 31, 2018 (in the case of McGraw-Hill) (including
in each case the related notes and schedules, where applicable) and (ii) the unaudited
consolidated balance sheet of Cengage and its consolidated Subsidiaries as at December 31,
2018, and the related consolidated statements of operations, stockholders’ equity and cash flows
of Cengage and its consolidated Subsidiaries as at and for the nine-month period ended
December 31, 2018 (the “Balance Sheet Date”) (including the related notes and schedules,
where applicable). The financial statements of such Party included in the Reports of such Party
at the time made publicly available were prepared in all material respects in accordance with
GAAP consistently applied during the periods involved (except as may be indicated in the notes
thereto or), and fairly present in all material respects (subject in the case of unaudited statements
to normal, recurring audit adjustments which are not, individually or in the aggregate, material,
and to any other adjustments described therein, including the notes thereto) the consolidated
financial position of such Party and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations, stockholders’ equity and cash flows for the periods then
ended. The Financial Statements of such Party have been prepared from the books and records
of such Party and its Subsidiaries.
(b)
No such Party or any of its Subsidiaries has any commitment to become a
party to (i) any off balance sheet partnership or any similar Contract or arrangement (including
any Contract or arrangement relating to any transaction or relationship between or among such
Party or its Subsidiaries, on the one hand, and any unconsolidated Affiliate on the other hand),
including any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K
promulgated by the U.S. Securities and Exchange Commission) or (ii) any hedging, derivatives
or similar Contract or arrangement.
3.7.

Absence of Certain Changes or Events.

(a)
Since the Balance Sheet Date through the date of this Agreement, except
for matters arising in connection with the Transactions, such Party and its Subsidiaries have
conducted their businesses in all material respects in the Ordinary Course.
(b)
Since the Balance Sheet Date, there has not been any Effect that has had
or would, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect on such Party.
3.8.

Litigation and Liabilities.

(a)
There are no Proceedings before any Governmental Entity pending against
or, to the Knowledge of such Party, threatened in writing against such Party or any of its

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 Subsidiaries, or any of their respective properties or assets, except as would not, individually or
in the aggregate, reasonably be expected to (i) be material to such Party and its Subsidiaries,
taken as a whole or (ii) prevent or materially delay the consummation of the Transactions.
Section 3.8(a) of such Party’s Disclosure Letter, sets forth all settlement agreements or similar
Contracts entered into since the Applicable Date of such Party or its Subsidiaries (x) providing
for payments by such Party or its Subsidiaries in excess of $1,000,000, or (y) imposing material
non-monetary restrictions on the business of such Party or any of its Subsidiaries.
(b)
Except for obligations and liabilities (i) reflected or reserved against in
such Party’s most recent consolidated balance sheet (or the notes thereto) included in the
Financial Statements (solely to the extent so reflected or reserved), (ii) incurred in the Ordinary
Course since the Balance Sheet Date, or (iii) incurred in connection with or contemplated by this
Agreement, there are no obligations or liabilities of such Party or any of its Subsidiaries that
would be required by GAAP to be set forth on a consolidated balance sheet of such Party,
whether or not accrued, contingent or otherwise, except as would not, individually or in the
aggregate, reasonably be expected to be material to such Party and its Subsidiaries, taken as a
whole.
(c)
Neither such Party nor any of its Subsidiaries is a party to or subject to the
provisions of any material judgment, order, writ, injunction, decree or award of any
Governmental Entity. There has not been since the Applicable Date, nor are there currently any,
internal investigations or inquiries being conducted by such Party, such Party’s board of directors
(or any committee thereof) or any third party at the request of any of the foregoing concerning
any material financial, accounting, tax, conflict of interest, self-dealing, fraudulent or deceptive
conduct or other misfeasance or malfeasance issues.
3.9.

Employee Benefits.

(a)
Section 3.9(a) of such Party’s Disclosure Letter sets forth an accurate and
complete list of each material Benefit Plan of such Party. With respect to each material Benefit
Plan of such Party, such Party has made available to the other Party, to the extent applicable,
accurate and complete copies of the Benefit Plan document (or a written description of such
Benefit Plan if such plan is not set forth in a written document), including any amendments
thereto and, to the extent applicable, (i) all related trust documents, insurance contracts or
funding vehicles, (ii) the most recent summary plan description together with all summaries of
material modifications thereto, (iii) the most recent IRS determination or opinion letter, (iv) the
most recent annual report (Form 5500 or 990 series and all schedules and financial statements
attached thereto), (v) the most recently prepared actuarial report and (vi) all material
correspondence to or from any Governmental Entity received since the Applicable Date with
respect to any Benefit Plan of such Party.
(b)
(i) Each Benefit Plan (including any related trusts), other than
“multiemployer plans” within the meaning of Section 3(37) of ERISA (each, a “Multiemployer
Plan”) and Non-U.S. Benefit Plans, has been established, operated and administered in
compliance in all material respects with its terms and applicable Laws, including ERISA and the
Code, (ii) all contributions or other amounts payable by such Party or any of its Subsidiaries with
respect to each Benefit Plan in respect of current or prior plan years have been paid or accrued in

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 accordance with GAAP in all material respects and (iii) there are no pending or, to the
Knowledge of such Party, threatened (in writing) claims (other than routine claims for benefits)
or Proceedings by a Governmental Entity by, on behalf of or against any Benefit Plan or any
trust related thereto that would reasonably be expected to result in any material liability to such
Party or any of its Subsidiaries. No individual who has performed services for such Party or any
of its Subsidiaries has, during the prior three (3) years, been improperly excluded from
participation in any Benefit Plan.
(c)
Each ERISA Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the IRS to be qualified and the plan’s related trust to be exempt
from U.S. federal income Taxes under Sections 401(a) and 501(a) of the Code, respectively, and
to the Knowledge of such Party, nothing has occurred that would adversely affect the
qualification or Tax exemption of any such ERISA Plan. With respect to any ERISA Plan,
neither such Party nor any of its Subsidiaries has engaged in a transaction in connection with
which such Party or any of its Subsidiaries reasonably could be subject to either a material civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material Tax imposed pursuant
to Section 4975 or 4976 of the Code.
(d)
No Party or its ERISA Affiliates (i) maintains, sponsors or contributes to,
or has within the past six (6) years maintained, sponsored or contributed to, or has any material
liability with respect to, any “defined benefit plan,” whether or not subject to Title IV of ERISA,
excluding any Multiemployer Plan, or (ii) has an “obligation to contribute” (as defined in ERISA
Section 4212) to a Multiemployer Plan.
(e)
No Controlled Group Liability has been incurred by such Party or its
ERISA Affiliates that has not been satisfied in full, and no condition exists that presents a
material risk to such Party or its ERISA Affiliates of incurring any such material liability.
(f)
Except as required by applicable Law, no Benefit Plan provides retiree or
post-employment medical, disability, life insurance or other welfare benefits to any Person, and
none of such Party or any of its Subsidiaries has any obligation to provide such benefits
(excluding such Benefit Plan that provides for employer payment or subsidy of COBRA
premiums).
(g)
Neither the execution and delivery of this Agreement, stockholder or other
approval of this Agreement or the consummation of the Transactions could, either alone or in
combination with another event, (i) entitle any Employee to severance pay or any increase in
severance pay, (ii) accelerate the time of payment or vesting, or increase the amount of
compensation due to any such Employee, (iii) directly or indirectly cause either such Party to
transfer or set aside any assets to fund any benefits under any Benefit Plan, (iv) otherwise give
rise to any liability under any Benefit Plan, (v) limit or restrict the right to merge, terminate or
amend any Benefit Plan on or following the Parent Merger Effective Time or (vi) result in any
payment (whether in cash or property or the vesting of property) to any “disqualified individual”
(as such term is defined in Treasury Regulation Section 1.280G-1) that would, individually or in
combination with any other such payment, constitute an “excess parachute payment” (as defined
in Section 280G(b)(1) of the Code).

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 (h)
Neither such Party nor any of its Subsidiaries has any obligation to
provide, and no Benefit Plan or other agreement of such Party of any of its Subsidiaries provides
any individual with the right to, a gross up, indemnification, reimbursement or other payment for
any excise or additional Taxes, interest or penalties incurred pursuant to Section 409A or
Section 4999 of the Code or due to the failure of any payment to be deductible under
Section 280G of the Code.
(i)
All Benefit Plans that are maintained primarily for the benefit of
Employees outside of the United States (“Non-U.S. Benefit Plans”) comply in all material
respects with their terms, the terms of any collective bargaining, collective labor or works
council agreements, and applicable local Law, and to the Knowledge of such Party, all such
plans that are intended or required to be funded or book-reserved are funded or book-reserved, as
appropriate, based upon reasonable actuarial assumptions and applicable Law. Each Non-U.S.
Benefit Plan which, under the Laws of the applicable foreign country, is required to be registered
or approved by any Governmental Entity, has been so registered or approved and each Non-U.S.
Benefit Plan intended to qualify for special tax treatment meets all the requirements for such
treatment. As of the date of this Agreement, there is no material litigation pending or, to the
Knowledge of such Party, threatened relating to any Non-U.S. Benefit Plan.
3.10.

Labor Matters.

(a)
Section 3.10(a) of such Party’s Disclosure Letter sets forth, as of the date
of this Agreement, an accurate and complete list of any collective bargaining agreement or other
similar material written agreement with a labor union, works council, or similar employee
representative group or organization (“Labor Organization”) that such Party or its Subsidiaries
is party to, otherwise bound by, or negotiating, as applicable, and copies of such agreements
have been made available to the other Party prior to the date of this Agreement or shall be made
available to the other Party as promptly as practicable following the date of this Agreement (but
in no event later than fifteen (15) Business Days following the date of this Agreement). To the
Knowledge of such Party, as of the date of this Agreement, there are no activities or Proceedings
by any individual, group of individuals, including representatives of any Labor Organizations,
seeking to authorize representation of such Party’s employees by a Labor Organization or to
compel such Party to negotiate on a collective basis with respect to terms and conditions of
employment.
(b)
As of the date of this Agreement, (i) there is no, and has not been since the
Applicable Date, any strike, lockout, slowdown, work stoppage, unfair labor practice charge or
complaint or other labor dispute, or arbitration or grievance pending or, to the Knowledge of
such Party, threatened in writing that may interfere with the respective business activities of such
Party and its Subsidiaries, (ii) such Party and its Subsidiaries are in compliance with all
applicable Laws respecting labor, employment standards, workers’ compensation, terms and
conditions of employment, employment and employment practices, the termination of
employment, wages and hours, classification of employees as exempt or non-exempt,
immigration, equal employment opportunities (including the prevention of sexual harassment),
the provision of meal and rest breaks, pay for all working time, classification of independent
contractors, immigration law requirements, and occupational safety and health, and (iii) none of
such Party or any of its Subsidiaries has any liability or obligation under the Worker Adjustment

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 and Retraining Notification Act and the regulations promulgated thereunder or any similar state,
local or foreign “mass layoff” or “plant closing” Law that remains unsatisfied, except, in each of
clauses (i), (ii) and (iii), as would not, individually or in the aggregate, reasonably be expected to
be material to such Party and its Subsidiaries, taken as a whole. No Party or any of its
Subsidiaries has, or in the prior three (3) years has had, any liability with respect to any
misclassification of any Person as an independent contractor rather than an employee, or as an
“exempt” employee (within the meaning of the Fair Labor Standards Act of 1938, as amended).
3.11.

Compliance with Laws; Licenses.

(a)
The businesses of such Party and its Subsidiaries have not been since the
Applicable Date, and are not being, conducted in violation of any applicable Law, except as
would not, individually or in the aggregate, reasonably be expected to be material to such Party
and its Subsidiaries, taken as a whole.
(b)
Except with respect to regulatory matters covered by Section 5.3, no
investigation or review by any Governmental Entity with respect to such Party or any of its
Subsidiaries is pending or, to the Knowledge of such Party, threatened in writing, nor has any
Governmental Entity indicated an intention to conduct the same, nor has such Party received any
notice or communication of material noncompliance with any such Laws that has not been cured
as of the date hereof, in each case, except as would not, individually or in the aggregate,
reasonably be expected to be material to such Party and its Subsidiaries, taken as a whole, or
prevent the ability of such Party to consummate the Transactions.
(c)
Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, (i) such Party and
each of its Subsidiaries has obtained and is in compliance with all Licenses necessary for it to
own, lease or operate its properties, rights and other assets and to conduct its business and
operations as currently conducted, (ii) all such Licenses are in full force and effect in all material
respects, and (iii) to such Party’s Knowledge, there is not currently threatened any revocation,
adverse modification or cancellation of any License.
(d)
Except as, individually or in the aggregate, would not reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, since the Applicable
Date, such Party and each of its Subsidiaries have at all times conducted all export transactions
in accordance with (i) all applicable U.S. export and re-export controls, including the United
States Export Administration Act, Export Administration Regulations, the Arms Export Control
Act and the International Traffic in Arms Regulations, (ii) statutes, executive orders and
regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets
Control (“OFAC”) and the United States Department of State, (iii) import control statutes and
regulations administered by the Department of Homeland Security, U.S. Customs and Border
Protection, (iv) the anti-boycott regulations administered by the United States Department of
Commerce and the U.S. Department of Treasury, and (v) all applicable sanctions, export and
import controls and anti-boycott Laws of all other countries in which the business of such Party
or any of its Subsidiaries is conducted. Except as, individually or in the aggregate, would not
reasonably be expected to be material to such Party and its Subsidiaries, taken as a whole, neither
such Party nor any of its Subsidiaries has been since the Applicable Date or currently is the

-19-

 subject of a charging letter or penalty notice issued, or to the Knowledge of such Party, an
investigation conducted, by a Governmental Entity pertaining to the statutes or regulations
referred to in this Section 3.11(d), nor are there any currently pending internal investigations by
such Party pertaining to such matters. Neither such Party nor any of its Subsidiaries is currently
designated as a sanctioned party under sanctions administered by OFAC, nor are they owned
fifty percent (50%) or more by an individual or entity that is so designated. Neither such Party
nor any of its Subsidiaries, or, to such Party’s Knowledge, any directors, officers, Employees,
independent contractors, consultants, agents and other representatives thereof, located, organized
or resident in, or doing business in, a country or region that is the target of comprehensive OFAC
sanctions (as of the date of this Agreement, including Cuba, Iran, North Korea, Syria and the
Crimea region of Ukraine).
(e)
Except as, individually or in the aggregate, would not reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, such Party, its
Subsidiaries and their respective Representatives are, and since the Applicable Date have been,
in compliance in all material respects with: (i) the provisions of the U.S. Foreign Corrupt
Practices Act of 1977, as amended (15 U.S.C. §§ 78dd-1, et seq.) (“FCPA”), as if its foreign
payments provisions were fully applicable to such Party, its Subsidiaries and such
Representatives, and (ii) the provisions of all anti-bribery, anti-corruption and anti-money
laundering Laws of each jurisdiction in which such Party and its Subsidiaries operate or have
operated and in which any agent thereof is conducting or has conducted business involving such
Party. No Proceeding by or before any Governmental Entity involving such Party, any of its
Subsidiaries or any of their Representatives involving FCPA or any anti-bribery, anti-corruption
or anti-money laundering Law is pending or, to the Knowledge of such Party, threatened, except
as, individually or in the aggregate, would not reasonably be expected to be material to such
Party and its Subsidiaries, taken as a whole.
3.12. Takeover Statutes. No “fair price”, “moratorium”, “control share
acquisition” or other similar anti-takeover statute or regulation (each, a “Takeover Statute”) or
any anti-takeover provision in such Party’s or its Subsidiaries’ Organizational Documents is
applicable to such Party, the shares of Cengage Common Stock, in the case of Cengage, the
shares of Existing McGraw-Hill Common Stock, in the case of McGraw-Hill, or the
Transactions.
3.13. Environmental Matters. Except for those matters that, individually or in
the aggregate, are not and would not reasonably be expected to be material to such Party and its
Subsidiaries, taken as a whole: (a) such Party and each of its Subsidiaries is, and to the
Knowledge of such Party, has been at all prior times, in compliance with all applicable
Environmental Laws, which compliance includes the possession of and compliance with
Licenses required pursuant to any Environmental Law for it to own, lease or operate its
properties, rights and other assets and to conduct its business and operations as currently
conducted and all such Licenses are in full force and effect; (b) to the Knowledge of such Party,
there is no presence, and there have been no Releases or threatened Releases, of Hazardous
Materials on, under, from or affecting any properties or facilities currently or formerly, owned,
leased or operated by such Party or any of its Subsidiaries or any predecessor of any of them,
under circumstances that would reasonably be expected to result in any claims or liabilities
relating to applicable Environmental Laws against such Party or any of its Subsidiaries or
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 otherwise adversely impact such Party or any of its Subsidiaries; (c) to the Knowledge of such
Party, neither such Party nor any of its Subsidiaries nor any other Person whose conduct would
result in liability to such Party or any of its Subsidiaries, has Released, placed or disposed of any
Hazardous Materials at any other location under circumstances that would reasonably be
expected to result in any claims or liabilities relating to applicable Environmental Laws against
such Party or any of its Subsidiaries; (d) neither such Party nor any of its Subsidiaries nor, to the
Knowledge of such Party, any predecessor of any of them, is subject to any Order of or with any
Governmental Entity, or any indemnity or other Contract obligation with any other Person,
relating to obligations or liabilities under Environmental Laws or regarding Releases of or
exposure to any Hazardous Materials; (e) neither such Party nor any of its Subsidiaries have
since the Applicable Date received any written claim, notice or complaint from, or is subject to
any Proceeding before, any Governmental Entity relating to or alleging noncompliance with or
liability under Environmental Laws or regarding Releases of or exposure to any Hazardous
Materials, and no such matter is threatened to the Knowledge of such Party; and (f) to the
Knowledge of such Party, there are no other circumstances or conditions involving such Party or
any of its Subsidiaries that would reasonably be expected to result in any claim, liability,
investigation, or cost pursuant to any Environmental Law with respect to such Party or any of its
Subsidiaries.
3.14.

Tax Matters.

(a)
Except for those matters that, individually or in the aggregate, would not
reasonably be expected to be material to such Party and its Subsidiaries, taken as a whole:
(i)
Such Party and each of its Subsidiaries (A) have prepared in good
faith and duly and timely filed (taking into account any extension of time within which to file) all
Tax Returns required to be filed by any of them with the appropriate Tax authority and all such
filed Tax Returns (and any amendments thereto) are complete and accurate in all respects;
(B) have paid all Taxes that are shown as due on such filed Tax Returns except for Taxes being
contested in good faith and for which adequate reserves have been established in accordance
with GAAP in the Financial Statements; (C) have withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any Employee, stockholder,
creditor, independent contractor or other third party; (D) have complied in all respects with all
information reporting (and related withholding) and record retention requirements; and (E) have
not waived any statute of limitations with respect to Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency (other than pursuant to extensions to file Tax
Returns).
(ii)
Except to the extent such amount has been accrued on such Party’s
Financial Statements in accordance with GAAP, no deficiency with respect to an amount of
Taxes has been proposed, asserted or assessed against such Party or any of its Subsidiaries by
any Governmental Entity. There are no pending or threatened in writing disputes, claims, audits,
examinations or other Proceedings regarding any Taxes of such Party and its Subsidiaries or the
assets of such Party and its Subsidiaries.
(iii)
To the Knowledge of such Party, during the past six (6) years,
neither such Party nor any of its Subsidiaries has been informed in writing by any Governmental

-21-

 Entity that the Governmental Entity believes that such Party or any of its Subsidiaries was
required to file any Tax Return that was not filed.
(iv)
Neither such Party nor any of its Subsidiaries has any liability for
Taxes of any Person (other than such Party or any of its Subsidiaries) arising from the
application of Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or
non-U.S. Law), as a transferee or successor, or otherwise by operation of Law.
(v)
There are no Encumbrances for Taxes (other than Permitted
Encumbrances) on any of the assets of such Party or any of its Subsidiaries.
(vi)
Neither such Party nor any of its Subsidiaries is a party to or is
bound by any Tax sharing, allocation or indemnification agreement or arrangement (other than
(A) such an agreement or arrangement exclusively between or among such Party and its
Subsidiaries or (B) an agreement or arrangement entered into in connection with an acquisition
or divestiture, or in the ordinary course of business, where the primary purpose of such
agreement or arrangement is not Tax sharing, allocation or indemnification).
(vii) Within the past two (2) years, neither such Party nor any of its
Subsidiaries has been a “distributing corporation” or a “controlled corporation” within the
meaning of Section 355(a) of the Code in a distribution of stock intended to qualify for tax-free
treatment under Section 355 of the Code.
(viii) Neither such Party nor any of its Subsidiaries has participated in a
“listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b) or any other
transaction requiring disclosure under any similar provision of state, local, or non-U.S. Law.
(ix)
Neither such Party nor any of its Subsidiaries will be required to
include a material item of income (or exclude a material item of deduction) in any taxable period
(or portion thereof) beginning after the Closing Date as a result of (A) a change in or incorrect
method of Tax accounting occurring prior to the Closing Date, (B) a prepaid amount received, or
paid, prior to the Closing Date, (C) a “closing agreement” as described in Section 7121 of the
Code (or any similar provision of state, local, or non-U.S. Law) executed on or prior to the
Closing Date, or (D) an election under Section 108(i) of the Code (or any similar provision of
state, local, or non-U.S. Law).
(b)
Section 3.14(b) of such Party’s Disclosure Letter sets forth the U.S.
federal income tax classification of each of such Party’s Subsidiaries.
(c)
Neither such Party nor any of its Subsidiaries has made an election
pursuant to Section 965(h) of the Code.
(d)
To the Knowledge of such Party, no action has been taken or agreed to,
and no fact exists, that could prevent or impede (i) the Parent Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code or (ii) each of the Holdco
Merger and the Issuer Merger from qualifying as a “liquidation” within the meaning of
Sections 332(a) and 337(a) of the Code or as a “reorganization” within the meaning of
Section 368(a) of the Code.
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 3.15.

Intellectual Property.

(a)
Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, (i) such Party and its
Subsidiaries, each as applicable, exclusively own all right, title and interest to its Intellectual
Property free and clear of all Encumbrances (except Permitted Encumbrances), and (ii) such
Party’s Registered Intellectual Property is subsisting and, to the Knowledge of such Party, is not
invalid or unenforceable. Since the Applicable Date, no Party has received any written claim or
notice from any Person alleging that such Party’s Registered Intellectual Property of such Party
is invalid or unenforceable.
(b)
Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, (i) the operation of
the respective businesses of such Party or any of its Subsidiaries and the development,
manufacture, use, sale, commercialization or other exploitation of any product, service or other
offering currently provided by such Party or its Subsidiaries does not infringe, misappropriate or
violate and has not since the Applicable Date infringed, misappropriated, or otherwise violated
any Intellectual Property of any other Person, and neither such Party nor any of its Subsidiaries
has received any written allegation of same, and (ii) to such Party’s Knowledge, no Person is
infringing, misappropriating or otherwise violating, or has since the Applicable Date infringed,
misappropriated or otherwise violated, such Party’s Intellectual Property, and neither such Party
nor any of its Subsidiaries have alleged same in writing.
(c)
Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, such Party and each
of its Subsidiaries have taken commercially reasonable efforts to protect and maintain their
Intellectual Property, including using commercially reasonable efforts and taking commercially
necessary steps to maintain their material trade secrets in confidence.
(d)
Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, such Party and its
Subsidiaries do not distribute or make available any material proprietary software to third parties
pursuant to any license that requires such Party or its Subsidiaries to also license or make
available to third parties any material source code owned by such Party.
(e)
Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, the IT Assets used
by such Party or any of its Subsidiaries in the conduct of their businesses (i) have not
malfunctioned or failed since the Applicable Date and (ii) are sufficient for the current needs of
the businesses of such Party and its Subsidiaries.
(f)
Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, such Party and each
of its Subsidiaries have taken commercially reasonable efforts to (i) protect and maintain the
confidentiality, integrity and security of its IT Assets and the information stored or contained
therein or transmitted thereby from any unauthorized use, access, interruption or modification by
any Person, including the implementation of reasonable backup and disaster recovery technology

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 processes and (ii) prevent the introduction of disabling codes or instructions, spyware, Trojan
horses, worms, viruses or other software routines that permit or cause unauthorized access to, or
disruption, impairment, disablement, or destruction of, software, data or other materials. Except
as would not, individually or in the aggregate, reasonably be expected to be material to such
Party and its Subsidiaries, taken as a whole, no Person has gained unauthorized access to any IT
Assets owned, used, or held for use by such Party or any of its Subsidiaries or the information
stored or contained therein or transmitted thereby.
(g)
Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, (i) such Party and
each of its Subsidiaries are in compliance, and has since the Applicable Date complied, with all
applicable Laws and its posted policies relating to the collection, storage, use, transfer and any
other processing of any Personal Data collected or used by or on behalf of such Party or its
Subsidiaries; and (ii) such Party and each of its Subsidiaries have, since the Applicable Date,
taken commercially reasonable steps to ensure that all Personal Data is protected against loss and
unauthorized access, use, modification or disclosure, and there has been no incident of same.
3.16. Insurance. All fire and casualty, general liability, business interruption,
product liability, sprinkler and water damage, workers’ compensation and employer liability,
directors’, officers’ and fiduciaries’ policies and other liability insurance policies (“Insurance
Policies”) maintained by such Party and any of its Subsidiaries are with reputable insurance
carriers, provide adequate coverage for all normal risks incident to the business of such Party and
its Subsidiaries and their respective properties and assets, and are in character and amount at
least equivalent to that carried by Persons engaged in similar businesses and subject to the same
or similar perils or hazards, in each case, except as would not, individually or in the aggregate,
reasonably be expected to be material to such Party and its Subsidiaries, taken as a whole. Each
Insurance Policy is in full force and effect and all premiums due with respect to all Insurance
Policies have been paid, and neither such Party nor any of its Subsidiaries has taken any action or
failed to take any action that (including with respect to the Mergers), with notice or lapse of time
or both, would constitute a breach or default, or permit a termination of any of the Insurance
Policies, in each case, except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole.
3.17.

Material Contracts.

(a)
Section 3.17(a) of such Party’s Disclosure Letter sets forth a true, correct
and complete list, organized under a header for each subsection, of all of the following Contracts
(other than insurance or reinsurance Contracts, Benefit Plans and investment assets) to which
such Party or any of its Subsidiaries is party as of the date hereof:
(i)
any Contract that involved the expenditure by such Party or any of
its Subsidiaries, or involved the payment by a third party to such Party or any of its Subsidiaries,
of in excess of $5,000,000 in the aggregate for the provision of goods and services during the
twelve (12) month period ended as of December 31, 2018;
(ii)
(A) Contracts with the twenty-five (25) authors who were paid the
highest aggregate amount of royalties in 2018 for Higher Ed Titles and (B) Contracts with

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 authors for Higher Ed Titles that generated more than $5,000,000 in revenue in 2016, 2017 or
2018;
(iii)
Contracts with any content provider (including authors) under
which such content provider was paid at least $1,000,000 in the aggregate by such Party during
any year since the Applicable Date;
(iv)
any distribution Contract or agency Contract with a distributor or
agent relating to the distribution (including rental) of such Party’s or a third party’s products
pursuant to which such Party received revenue (net of fees payable to the distributor or agent) of
at least $1,000,000 in the aggregate during the twelve (12) month period ended as of December
31, 2018;
(v)
any translation Contract under which such Party was paid at least
$1,000,000 in the aggregate during any year since the Applicable Date;
(vi)
any Contract that materially limits, curtails or restricts or purports
to materially limit, curtail or restrict, or, in the case of the Combined Corporation, would or
would purport to materially limit, curtail, or restrict, either (A) the type of business in which such
Party or any of its Subsidiaries or the Combined Corporation or any of their respective
Subsidiaries may engage or the locations in which any of them may so engage in any business or
(B) the ability of such Party or any of its Subsidiaries or the Combined Corporation or any of
their respective Subsidiaries to hire or solicit for hire for employment any individual or group as
would be material to such Party or the Combined Corporation and their respective Subsidiaries,
taken as a whole, except for non-disclosure or confidentiality agreements with customary terms
and conditions entered into in connection with potential acquisitions or dispositions;
(vii) any Contract that contains a provision requiring, or, in the case of
the Combined Corporation, would or would purport to require, such Party or any of its
Subsidiaries or the Combined Corporation to purchase products or services from any third party
on an exclusive basis;
(viii) any Contract for any joint venture, partnership, stockholder,
limited liability or similar arrangement, in each case that is material to such Party;
(ix)
any Contract that is an indenture, credit agreement, loan
agreement, security agreement, guarantee, note, mortgage or other agreement providing for or
guaranteeing Indebtedness of any Person (A) in excess of $10,000,000 or (B) in excess of
$1,000,000 that provides that (x) such Contract may be terminated as a result of, or (y) the
Indebtedness under such Contract becomes due and payable upon, or may have its maturity
accelerated as a result of, the consummation of the Transactions, other than Contracts between or
among or for the benefit of such Party and any of its wholly owned Subsidiaries or between or
among any such wholly owned Subsidiaries;
(x)
any Contract that is an acquisition agreement, asset purchase
agreement, sale agreement, purchase agreement, stock purchase agreement, put agreement, call
agreement or other similar agreement pursuant to which (A) such Party or any of its Subsidiaries
would reasonably be expected to be obligated to pay total consideration including assumption of
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 debt after the date of this Agreement in excess of $10,000,000, (B) any third party has the right
to acquire any assets of such Party or any of its Subsidiaries with a fair market value or purchase
price of more than $10,000,000, (C) such Party or any of its Subsidiaries has contingent liability
in excess of $10,000,000 in respect of indemnification (other than indemnification for
representations and covenants that typically do not expire), “earn out” payments, contingent
purchase price, or similar contingent payment obligations, or (D) any third party has the right to
acquire any interests in such Party or any of its Subsidiaries, other than, in the case of clauses (A)
and (B), sales of goods or services in the Ordinary Course;
(xi)

any Affiliate Agreement;

(xii) any settlement agreement or similar Contract (i) providing for
future payments by such Party or its Subsidiaries in excess of $1,000,000 or (ii) imposing
continuing material non-monetary restrictions on the business of such Party or any of its
Subsidiaries; or
(xiii) any Contract that is related to material Intellectual Property or
material IT Assets, excluding non-exclusive licenses (A) entered into in the Ordinary Course or
(B) for commercially available software under which such Party was not obligated to make
aggregate payments of more than $5,000,000 million during the twelve (12) month period ended
as of December 31, 2018 and is not obligated to make aggregate payments of more than
$5,000,000 in any subsequent twelve (12) month period.
Each such Contract described in this Section 3.17(a), together with all Contracts filed as exhibits
to such Party’s Reports, is referred to herein as a “Material Contract.”
(b)
A copy of each Material Contract of such Party or its Subsidiaries entered
into prior to the date of this Agreement has been made available to the other Party. Except as,
individually or in the aggregate, would not reasonably be expected to material to such Party,
(i) each of the Material Contracts is binding on such Party or its Subsidiaries, as the case may be,
and to the Knowledge of such Party, each other party thereto, in accordance with its terms,
subject to the Bankruptcy and Equity Exception, and is in full force and effect, and (ii) each of
such Party and each of its Subsidiaries (to the extent they are party thereto or bound thereby)
and, to such Party’s Knowledge, each other party thereto have performed all obligations required
to be performed by it under each Material Contract. Except as, individually or in the aggregate,
would not reasonably be expected to be material to such Party and its Subsidiaries, taken as a
whole, (A) each of such Party and each of its Subsidiaries are not (with or without notice, lapse
of time or both) in breach or default under any Material Contract and, to the Knowledge of such
Party, no other party to any Material Contract is (with or without notice, lapse of time or both) in
breach or default thereunder, and (B) neither such Party nor any of its Subsidiaries have received
written notice from the other party to any Material Contract of any intention to cancel, terminate,
materially change the scope of rights and obligations under or not to renew such Material
Contract.
3.18. Title to Assets. Except as would not, individually or in the aggregate,
reasonably be expected to be material to such Party and its Subsidiaries, taken as a whole,
(a) such Party has good and marketable title to, or in the case of leased assets, valid leasehold

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 interests in, all of its assets, tangible or intangible, free and clear of any Encumbrances other than
Permitted Encumbrances, (b) such Party or one of its Subsidiaries owns or leases all tangible
personal property used in or necessary to conduct its business as currently conducted by such
Party and (c) each such item of tangible personal property is in all respects in good operating
condition and repair, ordinary wear and tear excepted.
3.19.

Real Property.

(a)
Section 3.19(a) of such Party’s Disclosure Letter, sets forth a complete
and correct list of each such parcel of Owned Real Property and identifies the street address of
such Owned Real Property. Except as would not, individually or in the aggregate, reasonably be
expected to be material to such Party and its Subsidiaries, taken as a whole, (i) such Party or one
of its Subsidiaries, as applicable, has good and marketable title to such Owned Real Property,
free and clear of any Encumbrance except for Permitted Encumbrances, and (ii) there are no
outstanding options, rights of first refusal, rights of first offer or other third party rights to
purchase such Owned Real Property, or any portion thereof or interest therein.
(b)
Section 3.19(b) of such Party’s Disclosure Letter sets forth a complete and
correct list of each Leased Real Property and, for each parcel of Leased Real Property, identifies
the street address of such Leased Real Property. Cengage has made available to McGraw-Hill,
and McGraw-Hill has made available to Cengage, complete and correct copies of each Real
Property Lease with annual payments by such Party for the applicable Leased Real Property in
excess of $1,000,000 and each such Real Property Lease constitutes the entire agreement
between each such Party or its Subsidiaries and the counterparty thereto. With respect to the
Leased Real Property of such Party, the lease or sublease for such property is valid, legally
binding, enforceable and in full force and effect, and, to the Knowledge of such Party, each other
party thereto, and none of such Party or any of its Subsidiaries is in breach of or default under
such lease or sublease, and no event has occurred, which, with notice, lapse of time or both,
would constitute a breach or default by any of such Party or its Subsidiaries or permit
termination, modification or acceleration by any third party thereunder, except in each case as
would not, individually or in the aggregate, reasonably be expected to be material to such Party
and its Subsidiaries, taken as a whole.
(c)
The Owned Real Property and Leased Real Property constitute all of the
real property used or occupied by each of such Party or its Subsidiaries. There is no pending or
threatened appropriation, condemnation or like action, or sale or other disposition in lieu of
condemnation, affecting the Owned Real Property or any part thereof, or, to the Knowledge of
such Party, the Leased Real Property or any part thereof.
3.20. Affiliate Agreements. Except as set forth on Section 3.20 of such Party’s
Disclosure Letter, as of the date hereof, no executive officer or director of any such Party or any
of its Subsidiaries or any Person owning directly or indirectly five percent (5%) or more of the
capital stock of such Party or any of its Subsidiaries as of the date hereof (any such person, an
“Interested Party”) or any partner, director, executive officer, employee, investor or Affiliate of
such Interested Party (including for this purpose any “portfolio companies” (as such term is
customarily used among institutional investors) of any private equity investor or its Affiliate) or,
to the Knowledge of such Party, any family member of any such Interested Party, is a party to

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 any Contract with or binding upon such Party or its Subsidiaries or has engaged in any
transaction with any such Party or its Subsidiaries (in each case, other than other ordinary course
employment, compensation or incentive arrangements) (all such Contracts, the “Affiliate
Agreements”).
3.21. No Other Representations or Warranties; Non-Reliance. Except for the
representations and warranties made by such Party in this Article III and Article IV and in any
certificate delivered by such Party pursuant to Article VI, neither such Party nor any other Person
makes any express or implied representation or warranty with respect to such Party or any of its
Affiliates or any of their respective businesses, operations, assets, liabilities, conditions (financial
or otherwise) or prospects in connection with this Agreement or the Transactions, and such Party
expressly disclaims any such other representations or warranties. Each Party expressly disclaims
reliance upon any representations, warranties or statements relating to a Party or its Subsidiaries
whatsoever, express or implied, beyond those expressly given by such Party in this Article III
and Article IV and in any certificate delivered by such Party pursuant to Article VI. In
particular, without limiting the foregoing, neither such Party nor any other Person makes or has
made, and each Party acknowledges that that neither such Party nor any other Person has made,
any representation or warranty to any other Party or any of such other Party’s Affiliates or
Representatives with respect to (a) any financial projection, forecast, estimate, budget or
prospect information relating to such Party, any of its Affiliates or any of their respective
businesses that may have been made available to a Party or any of its Representatives (including
in certain “data rooms,” “virtual rooms,” management presentations or in any other form in
expectation of, or in connection with, the Transactions) or (b) except for the representations and
warranties made by such Party in this Article III and Article IV and in any certificate delivered
by such Party pursuant to Article VI, any oral or written information made available to any other
Party or any of such other Party’s Affiliates or Representatives in the course of their evaluation
of such Party, the negotiation of this Agreement or in the course of the Mergers.
Notwithstanding the foregoing, nothing in this Section 3.21 shall limit a Party’s remedies in the
event of common law fraud arising from the express representations and warranties made by any
other Party in this Article III and Article IV.
ARTICLE IV
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF CENGAGE AND MCGRAWHILL
Except as set forth (1) in the Reports of Cengage or McGraw-Hill, as applicable,
(x) in the case of McGraw-Hill, made publicly available pursuant to the Term Loan Agreement
or the McGraw-Hill Indenture or (y) in the case of Cengage, made publicly available pursuant to
the Cengage Shareholders Agreement, the Cengage Indenture, the Cengage ABL Agreement and
the Cengage Term Loan Agreement, in the case of each of (x) and (y) during the period from
January 1, 2018 through the Business Day prior to the date of this Agreement (excluding any
disclosures set forth or referenced in any risk factor section or in any other section to the extent
they are forward-looking statements or cautionary, predictive or forward-looking in nature) or
(2) in the correspondingly numbered sections or subsections of the McGraw-Hill Disclosure
Letter or Cengage Disclosure Letter delivered concurrently with the execution and delivery of

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 this Agreement (it being agreed that for purposes of the representations and warranties set forth
in this Article IV, disclosure of any item in any section or subsection of the McGraw-Hill
Disclosure Letter or Cengage Disclosure Letter, as applicable, shall be deemed disclosure with
respect to any other section or subsection of the McGraw-Hill Disclosure Letter or Cengage
Disclosure Letter, as applicable, to which the relevance of such item is reasonably apparent on its
face), McGraw-Hill and McGraw-Hill Issuer hereby jointly and severally represent and warrant
to Cengage, Cengage Intermediate Holdco and Cengage Issuer, in respect of Section 4.1,
Section 4.2, Section 4.3 and Section 4.4, and Cengage, Cengage Intermediate Holdco and
Cengage Issuer hereby jointly and severally represent and warrant to McGraw-Hill and McGrawHill Issuer, in respect of Section 4.5, Section 4.6, Section 4.7 and Section 4.8, that:
4.1.

McGraw-Hill Capital Structure.

(a)
The authorized share capital of McGraw-Hill consists of 100,000,000
shares of Existing McGraw-Hill Common Stock, of which 10,749,363.10 shares were issued and
outstanding as of the date hereof, and 1,000,000 shares of preferred stock, par value $0.01 per
share, of which none are issued and outstanding as of the date hereof. As of April 26, 2019,
there were (i) 186,040 shares of Existing McGraw-Hill Common Stock reserved for issuance
under the McGraw-Hill Stock Plan, (ii) 1,004,656 shares of Existing McGraw-Hill Common
Stock reserved for issuance upon the exercise and settlement of outstanding McGraw-Hill
Options having a weighted average exercise price of $94.22 per share, and (iii) 145,821 shares of
Existing McGraw-Hill Common Stock reserved for issuance upon the settlement or vesting of
outstanding McGraw-Hill RSU Awards. Section 4.1(a) of the McGraw-Hill Disclosure Letter
contains a complete and accurate list of each outstanding McGraw-Hill Option and McGraw-Hill
RSU Award currently outstanding as of the date hereof (including all written commitments to
grant awards under the McGraw-Hill Stock Plan) and, with respect thereto, the name or
employee identification number of the holder, the date of grant, the number of shares of Existing
McGraw-Hill Common Stock issuable upon exercise or settlement, the McGraw-Hill Stock Plan
under which it was granted, the applicable vesting schedule, the exercise price per share or
purchase price (as applicable), the vested and unvested portion of each such award and the
expiration date (as applicable). Each of the outstanding shares of capital stock or other securities
of each of McGraw-Hill’s Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and each of the outstanding shares of capital stock or other securities of each of
McGraw-Hill’s Subsidiaries is owned beneficially and of record by McGraw-Hill or by a direct
or indirect wholly owned Subsidiary of McGraw-Hill, free and clear of any pledge, lien, charge,
option, hypothecation, mortgage, security interest, adverse right, claim, restriction, prior
assignment, license, sublicense, title defect, survey defect, easement or any other encumbrance
of any kind or nature whatsoever, whether contingent or absolute, or any agreement, option, right
or privilege (whether by Law, Contract or otherwise) capable of becoming any of the foregoing
(excluding such transfer restrictions of general applicability as may be provided under the
Securities Act, the “blue sky” Laws of the various States of the United States or similar Law of
other applicable jurisdictions, an “Encumbrance,” and any action of correlative meaning, to
“Encumber”). As of the date of this Agreement, except as set forth in this Section 4.1, there are
no outstanding subscriptions, options, warrants, puts, call agreements, understandings, claims or
other commitments or rights of any type relating to the issuance, sale or transfer by McGraw-Hill
of any equity securities of McGraw-Hill, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of McGraw-Hill and neither
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 McGraw-Hill nor any of its Subsidiaries has any obligation to issue any additional securities or
to pay for or repurchase any securities of McGraw-Hill.
(b)
McGraw-Hill Acquisition, LLC (“McGraw-Hill Acquisition”) is the sole
direct Subsidiary of McGraw-Hill and McGraw-Hill owns beneficially and of record all of the
outstanding membership interests of McGraw-Hill Acquisition. McGraw-Hill US Holdings,
LLC (“McGraw-Hill US Holdings”) is the sole direct Subsidiary of McGraw-Hill Acquisition
and McGraw-Hill Acquisition owns beneficially and of record all of the outstanding membership
interests of McGraw-Hill US Holdings. McGraw-Hill Parent, LLC (“McGraw-Hill Parent”) is
the sole direct Subsidiary of McGraw-Hill US Holdings and McGraw-Hill US Holdings owns
beneficially and of record all of the outstanding membership interests of McGraw-Hill Parent.
McGraw-Hill Global Education Intermediate Holdings, LLC (“McGraw-Hill Intermediate
Holdco”)(together with McGraw-Hill, McGraw-Hill Issuer, McGraw-Hill Acquisition, McGrawHill US Holdings and McGraw-Hill Parent, the “McGraw-Hill Holding Companies”) is a
direct Subsidiary of McGraw-Hill Parent and McGraw-Hill Parent owns beneficially and of
record all of the outstanding membership interests of McGraw-Hill Intermediate Holdco. The
authorized membership interests of McGraw-Hill Issuer consist solely of the membership
interests owned by McGraw-Hill Intermediate Holdco. Each of the McGraw-Hill Holding
Companies (other than McGraw-Hill) is an entity that is disregarded as separate from its owners
for U.S. federal income tax purposes.
4.2.
McGraw-Hill Board Approval. The McGraw-Hill Board has, at a meeting
duly called and held at which all directors of McGraw-Hill were present, duly and unanimously
adopted resolutions (a) determining that this Agreement and the Transactions are fair to, and in
the best interests of, McGraw-Hill and the holders of shares of Existing McGraw-Hill Common
Stock and (b) approving and declaring advisable this Agreement and the Transactions on the
terms and subject to the conditions set forth in this Agreement. The board of managers and the
sole member of McGraw-Hill Issuer has (a) determined that this Agreement and the
Transactions, including each of the Mergers, as applicable, are fair to, and in the best interests of,
their respective members, and (b) approved and declared advisable this Agreement and the
Transactions, including each of the Mergers, as applicable, on the terms and subject to the
conditions set forth in this Agreement.
4.3.
McGraw-Hill Brokers and Finders. Neither McGraw-Hill nor any of its
Subsidiaries nor any of their respective officers or directors has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder’s fees in connection with the
Transactions.
4.4.
McGraw-Hill Voting Requirements. The Requisite McGraw-Hill
Stockholder Approval and the approval of the sole member of McGraw-Hill Issuer are the only
votes of holders of any securities of McGraw-Hill and its Subsidiaries necessary to approve the
Transactions.
4.5.

Cengage Capital Structure.

(a)
The authorized share capital of Cengage consists of 300,000,000 shares of
Cengage Common Stock, of which 61,807,236 shares are issued and outstanding as of the date

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 hereof and 50,000,000 shares of preferred stock, of which none are issued and outstanding as of
the date hereof. As of April 26, 2019, there were (i) 9,602,550 shares of Cengage Common
Stock reserved for issuance under the Cengage Stock Plans, (ii) 4,055,417 shares of Cengage
Common Stock reserved for issuance upon the exercise and settlement of outstanding Cengage
Options having a weighted average exercise price of $18.09 per share, and (iii) 957,982 shares of
Cengage Common Stock reserved for issuance upon the settlement or vesting of outstanding
Cengage RSU Awards. Section 4.5(a) of the Cengage Disclosure Letter contains a complete and
accurate list of each outstanding Cengage Option and Cengage RSU Award currently
outstanding as of the date hereof (including all written commitments to grant awards under the
Cengage Stock Plans) and, with respect thereto, the name or employee identification number of
the holder, the date of grant, the number of shares of Cengage Common Stock issuable upon
exercise or settlement, the Cengage Stock Plan under which it was granted, the applicable
vesting schedule, the exercise price per share or purchase price (as applicable), the vested and
unvested portion of each such award and the expiration date (as applicable). Each of the
outstanding shares of capital stock or other securities of each of Cengage’s Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and each of the outstanding shares of
capital stock or other securities of each of Cengage’s Subsidiaries is owned beneficially and of
record by Cengage or by a direct or indirect wholly owned Subsidiary of Cengage, free and clear
of any Encumbrance. As of the date of this Agreement, except as set forth in this Section 4.5,
there are no outstanding subscriptions, options, warrants, puts, call agreements, understandings,
claims or other commitments or rights of any type relating to the issuance, sale or transfer by
Cengage of any equity securities of Cengage, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of Cengage and neither Cengage
nor any of its Subsidiaries has any obligation to issue any additional securities or to pay for or
repurchase any securities of Cengage.
(b)
The authorized capital stock of Cengage Intermediate Holdco consists
solely of 2,000 shares of common stock, par value $0.01 per share, 1,001 shares of which are
validly issued and outstanding and all of which are owned by Cengage. The authorized capital
stock of Cengage Issuer consists solely of 7,500 shares of common stock, par value $1.00 per
share, 130 shares of which are validly issued and outstanding and all of which are owned by
Cengage Intermediate Holdco.
4.6.
Cengage Board Approval. The Cengage Board has, at a meeting duly
called and held at which all directors of Cengage were present, duly and unanimously adopted
resolutions (a) determining that this Agreement and the Transactions are fair to, and in the best
interests of, Cengage and the holders of shares of Cengage Common Stock and (b) approving
and declaring advisable this Agreement and the Transactions on the terms and subject to the
conditions set forth in this Agreement. The board of directors and the sole stockholder of each of
Cengage Intermediate Holdco and Cengage Issuer, has (a) determined that this Agreement and
the Transactions, including each of the Mergers, as applicable, are fair to, and in the best
interests of, their respective stockholders, and (b) approved and declared advisable this
Agreement and the Transactions, including each of the Mergers, as applicable, on the terms and
subject to the conditions set forth in this Agreement.
4.7.
Cengage Brokers and Finders. Neither Cengage nor any of its
Subsidiaries nor any of their respective officers or directors has employed any broker or finder or
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 incurred any liability for any brokerage fees, commissions or finder’s fees in connection with the
Transactions.
4.8.
Cengage Voting Requirements. The Requisite Cengage Stockholder
Approval and the approval of the sole stockholder of Cengage Intermediate Holdco and Cengage
Issuer are the only votes of holders of any securities of Cengage and its Subsidiaries necessary to
approve the Transactions.
ARTICLE V
COVENANTS
5.1.

Interim Operations.

(a)
From and after the date of this Agreement until the Parent Merger
Effective Time, except as otherwise (w) expressly contemplated by this Agreement, (x) required
by applicable Law, (y) approved in writing by the other Party (which approval shall not be
unreasonably withheld, conditioned or delayed) or (z) set forth in Section 5.1(a) of such Party’s
Disclosure Letter, each of McGraw-Hill and Cengage covenants and agrees that it and its
Subsidiaries shall use reasonable best efforts to conduct their businesses in all material respects
in the Ordinary Course and to the extent consistent therewith, it and its Subsidiaries shall use
their respective commercially reasonable efforts to preserve their business organizations intact
and maintain existing relations and goodwill with Governmental Entities, customers, suppliers,
licensors, licensees, distributors, creditors, partners and others having material relationships with
such Party or its Subsidiaries.
(b)
Without limiting the generality of and in furtherance of Section 5.1(a),
from and after the date of this Agreement until the Parent Merger Effective Time, except as
otherwise (w) expressly contemplated by this Agreement, (x) required by applicable Law,
(y) approved in writing by the other Party (which approval shall not be unreasonably withheld,
conditioned or delayed) or (z) set forth in Section 5.1(b) of such Party’s Disclosure Letter, each
Party, on its own account, shall not and shall cause its Subsidiaries not to (it being agreed that
(1) the more specific matters addressed by this Section 5.1(b) shall govern the more general
provisions of Section 5.1(a) and (2) no action by a Party or its Subsidiaries with respect to
matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of
this sentence unless such action would constitute a breach of such provision of Section 5.1(b)):
(i)
make or propose any change to such Party’s or any of its
Subsidiaries’ Organizational Documents (other than (A) the Certificate Amendment, and (B) to
reflect changes of officers, directors or managers of such Party or its Subsidiaries);
(ii)
other than in the Ordinary Course, except for any such transactions
solely among its direct or indirect wholly owned Subsidiaries, (A) merge or consolidate itself or
any of its Subsidiaries with any other Person, or (B) except as set forth in the Certificate
Amendment, restructure, recapitalize, reorganize or partially or completely liquidate;

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 (iii)
acquire assets outside of the Ordinary Course from any other
Person (A) with a purchase price in excess of $10,000,000 in the aggregate in any transaction or
series of related transactions (including incurring any Indebtedness related thereto), in each case,
including any amounts or value reasonably expected to be paid in connection with a future earnout, purchase price adjustment, release of “holdback” or similar contingent payment obligation,
or (B) that would reasonably be expected to prevent, materially delay or materially impair the
ability of such Party to consummate the Transactions;
(iv)
issue, sell, pledge, dispose of, grant, transfer, encumber, or
authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or
Encumbrance of, or otherwise enter into any Contract or understanding with respect to the voting
of, any shares of its capital stock or of any of its Subsidiaries (other than the issuance of shares
(A) by its direct or indirect wholly owned Subsidiary solely to it or another of its direct or
indirect wholly owned Subsidiaries or (B) in respect of equity awards outstanding as of the date
of this Agreement under the McGraw-Hill Stock Plans and Cengage Stock Plans in accordance
with the terms of the applicable McGraw-Hill Stock Plan or Cengage Stock Plan, as applicable,
and related award agreement, in each case, in effect as of the date of this Agreement), or
securities convertible or exchangeable into or exercisable for any shares of such capital stock, or
any options, warrants or other rights of any kind to acquire any shares of such capital stock or
such convertible or exchangeable securities;
(v)
create or incur any Encumbrance (other than any Permitted
Encumbrances) over any material portion of such Party’s and its Subsidiaries’ consolidated
properties and assets that is not incurred in the Ordinary Course on any of its assets or any of its
Subsidiaries, except for Encumbrances (A) that are required by or automatically effected by
Contracts in place as of the date hereof, or (B) that do not materially detract from the value of
such assets and that do not materially impair the operations of such Party or any of its
Subsidiaries;
(vi)
make any loans, advances, guarantees or capital contributions to or
investments in any Person other than (A) to or from Cengage and any of its direct or indirect
wholly owned Subsidiaries or to or from McGraw-Hill and any of its direct or indirect wholly
owned Subsidiaries, as applicable, (B) in accordance with Section 5.1(b)(xvii), or (C) extension
of credit terms to customers in the Ordinary Course;
(vii) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, securities, property or otherwise, or a combination thereof, with respect to
any of its capital stock (except for dividends paid by any direct or indirect wholly owned
Subsidiary to it or to any other direct or indirect wholly owned Subsidiary);
(viii) reclassify, split, combine, subdivide or redeem, purchase, retire or
otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or
exchangeable into or exercisable for any shares of its capital stock (or set aside any amount for
any such purpose), other than with respect to the acquisition of shares of Existing McGraw-Hill
Common Stock or Cengage Common Stock, as applicable, tendered by Employees in connection
with a cashless exercise of options outstanding as of the date hereof or in order to pay Taxes in
connection with the exercise or vesting of McGraw-Hill Equity Awards or Cengage Equity

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 Awards, as applicable, outstanding as of the date hereof, pursuant to the terms of the applicable
McGraw-Hill Stock Plan or Cengage Stock Plan, and the applicable award agreement, in the
Ordinary Course;
(ix)
except to the extent expressly provided by, and consistent with, the
applicable Party’s capital expenditures budget set forth in Section 5.1(b)(ix) of such Party’s
Disclosure Letter, make or authorize any payment of, or accrual or commitment for, capital
expenditures, except any such expenditure (A) not in excess of $10,000,000 in the aggregate
during any consecutive twelve (12)-month period, (B) not in excess of $10,000,000 (net of
insurance proceeds) in the aggregate that such Party reasonably determines are necessary to
avoid a material business interruption or maintain the safety and integrity of any asset or
property or (C) paid by any direct or indirect wholly owned Subsidiary to such Party or to any
other direct or indirect wholly owned Subsidiary of such Party, in each case in response to any
unanticipated and subsequently discovered events, occurrences or developments (provided, that
such Party shall use its reasonable best efforts to consult with the other Party prior to making or
agreeing to any significant capital expenditure in excess of the capital expenditures budget set
forth in Section 5.1(b)(ix) that is otherwise permitted pursuant to this clause (ix));
(x)
Other than in the Ordinary Course or as permitted pursuant to
Section 5.1(b)(xvii), enter into any Contract that would have been a Material Contract had it
been entered into prior to this Agreement, or amend, modify, supplement or waive, terminate,
assign, convey, Encumber (except by a Permitted Encumbrance) or otherwise transfer, in whole
or in part, rights or interest pursuant to or in any Material Contract, in each case other than any
agreement among such Party and its direct or indirect wholly owned Subsidiaries or among such
Party’s direct or indirect wholly owned Subsidiaries (provided, that except as permitted pursuant
to Section 5.1(b)(xvii), no such Party or any of its Subsidiaries shall (A) enter into, assign,
convey, Encumber (except in connection with a Permitted Encumbrance) or otherwise transfer
any Material Contract if existing on the date hereof, to the extent such Contract is or would be a
Material Contract pursuant to clause (vi), (vii) or (xi) of Section 3.17(a) or (B) amend, modify or
supplement any Material Contract to the extent the subject of such amendment, modification or
supplement specifically relates to any provision of such Material Contract that causes such
Contract to be a Material Contract pursuant to clause (vi) or (vii) of Section 3.17(a));
(xi)
settle or compromise, or offer or propose to settle or compromise
any material Proceeding (other than a Tax Proceeding), including before a Governmental Entity,
which (A) requires payment by such Party or its Subsidiaries in excess of $2,000,000
individually or $5,000,000 in the aggregate or (B) imposes any non-monetary relief on such
Party and its Subsidiaries or Affiliates, or, after the Parent Merger Effective Time, the Combined
Corporation;
(xii) materially amend any financial accounting policies or procedures,
except as required by changes to GAAP;
(xiii) make (other than in the Ordinary Course), change or revoke any
material Tax election, change any material Tax accounting method, enter into any material
closing agreement with respect to Taxes, settle any material Tax claim, audit, assessment,
dispute or other Tax Proceeding for an amount materially in excess of the amount reserved

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 therefor on such Party’s financial statements, surrender any right to, or claim for, a material Tax
refund, or amend any material Tax Return;
(xiv) other than in the Ordinary Course, transfer, sell, lease, divest,
cancel, abandon, allow to lapse or expire or otherwise dispose of, or permit or suffer to exist the
creation of any Encumbrance (other than any Permitted Encumbrances) upon, any assets
(tangible or intangible), product lines or businesses material to it and its Subsidiaries, taken as a
whole, including capital stock of any of its Subsidiaries, except (A) for consideration not in
excess of $10,000,000 in the aggregate or (B) in connection with sales among such Party and its
direct or indirect wholly owned Subsidiaries or among such Party’s direct or indirect wholly
owned Subsidiaries;
(xv) except as required by the terms of any Benefit Plan as in effect on
the date hereof, as permitted under this Agreement or as required by applicable Law, increase or
change the compensation or benefits payable to any Employee other than in the Ordinary Course;
provided, that, notwithstanding the foregoing, except as expressly disclosed in Section 5.1(b)(xv)
of such Party’s Disclosure Letter or required pursuant to a Cengage Benefit Plan or McGraw-Hill
Benefit Plan, as applicable, in effect as of the date of this Agreement, the Parties shall not:
(A) grant any new long-term incentive or equity-based awards or amend or modify the terms of
any such outstanding awards under any Cengage Benefit Plan or McGraw-Hill Benefit Plan, as
applicable, (B) grant any retention or transaction bonuses, (C) increase or change the
compensation or benefits payable to any Employee with an annual base salary in excess of
$400,000 (other than changes in health and welfare benefits that are generally applicable to all
salaried Employees in the Ordinary Course), (D) terminate, enter into, amend or renew (or
communicate any intention to take such action) any material Benefit Plan, other than routine
amendments to health and welfare plans (other than severance plans) that do not materially
increase benefits or result in a material increase in administrative costs or adopt any
compensation or benefit arrangement that would be a material Benefit Plan if it were in existence
as of the date of this Agreement, (E) accelerate the vesting of any compensation for the benefit of
any Employee, (F) increase or change the severance terms applicable to any Employee, (G) take
any action to fund or secure the payment of any amounts under any Benefit Plan, (H) other than
as required by GAAP, change any assumptions used to calculate funding or contribution
obligations under any Benefit Plan, or increase or accelerate the funding rate in respect of any
Benefit Plan, or (I) terminate the employment of any Employee with a base salary in excess of
$400,000 (other than for cause) or hire any new Employee with a base salary in excess of
$400,000 (other than as a replacement hire receiving substantially similar terms of employment);
(xvi) recognize any Labor Organization as the representative of any of
the Employees of the Party or its Subsidiaries, or become a party to, establish, adopt, amend,
commence negotiations for or terminate any collective bargaining agreement or other similar
written agreement with a Labor Organization, in each case, other than in the Ordinary Course or
as required by applicable Law;
(xvii) incur any Indebtedness (including the issuance of any debt
securities, warrants or other rights to acquire any debt security) or guarantee any such
Indebtedness, except for (A) Indebtedness for borrowed money incurred in the Ordinary Course
under Cengage’s or McGraw-Hill’s, as applicable, revolving credit facilities and other lines of

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 credit existing as of the date of this Agreement, (B) guarantees by Cengage or any direct or
indirect wholly owned Subsidiary of Cengage of Indebtedness of Cengage or any other direct or
indirect wholly owned Subsidiary of Cengage, (C) guarantees by McGraw-Hill or any direct or
indirect wholly owned Subsidiary of McGraw-Hill of Indebtedness of McGraw-Hill or any other
direct or indirect wholly owned Subsidiary of McGraw-Hill, (D) Indebtedness incurred to
refinance or replace existing Indebtedness of such Party; provided that, in each case of this
clause (D), (i) such Indebtedness shall not be incurred or committed prior to the date that is eight
months after the date of this Agreement, (ii) such Indebtedness shall not have an aggregate
principal amount (and, in the case of any revolving facility, shall also not have aggregate
commitments) greater than the Indebtedness (and commitments, if applicable) being refinanced
or replaced, (iii) such Indebtedness shall have market economic and other terms, (iv) such
Indebtedness shall be prepayable or redeemable at any time without premium or penalty, (v)
none of the execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby or to be consummated in connection herewith shall conflict
with, or result in any violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of any obligation under
or any other material right of the lenders (or their agents or trustees) under or any loss of a
material benefit of such Party and its Subsidiaries under, or result in the creation of any
Encumbrance under, such Indebtedness, (vi) none of such Party or its Subsidiaries shall pay or
incur, or agree to pay or incur, any fee, cost, penalty, premium, expense or other liability in
connection therewith, and (vii) the consummation of such refinancing or replacement, including
the terms and conditions of such Indebtedness, would not reasonably be expected to cause the
condition set forth in Section 6.1(d) to not be satisfied at the Closing, (E) Indebtedness incurred
pursuant to letters of credit, performance bonds or other similar arrangements in the Ordinary
Course, (F) interest, exchange rate and commodity swaps, options, futures, forward contracts and
similar derivatives or other hedging Contracts (1) not entered into for speculative purposes and
(2) entered into in the Ordinary Course and in compliance with such Party’s risk management
and hedging policies or practices in effect on the date of this Agreement, (G) Indebtedness
incurred by mutual agreement of the Parties in accordance with Section 5.5 or (H) Indebtedness
incurred among such Party and its direct or indirect wholly owned Subsidiaries or among such
Party’s direct or indirect wholly owned Subsidiaries;
(xviii) acquire or sell any fee interest in real property;
(xix) enter into, amend or modify in any material respect or terminate
any Real Property Lease other than in the Ordinary Course; or
(xx)

agree or commit to do any of the foregoing.

(c)
Nothing contained in this Agreement shall give Cengage or McGraw-Hill,
directly or indirectly, the right to control or direct the other Party’s operations prior to the Parent
Merger Effective Time. Prior to the Parent Merger Effective Time, each Party shall exercise,
consistent with the terms and conditions of this Agreement, complete control and supervision
over its and its Subsidiaries’ respective operations. Notwithstanding anything in this Agreement
to the contrary, no consent of Cengage or McGraw-Hill shall be required with respect to any
matter set forth in this Section 5.1 or elsewhere in this Agreement to the extent that the
requirement of such consent would, upon the advice of outside antitrust legal counsel, violate

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 applicable Antitrust Law, provided that prior notice of such advice shall be provided to outside
antitrust legal counsel for the other Party on a confidential, outside counsel only basis. Nothing
in this Agreement, including any of the actions, rights or restrictions set forth herein, shall be
interpreted in such a way as to require compliance by any Party if such compliance would result
in the violation of any rule, regulation or policy of any applicable Law.
5.2.

Exclusive Dealing.

(a)
No Solicitation. During the period from the date of this Agreement until
the earlier of the Parent Merger Effective Time and the termination of this Agreement in
accordance with its terms, Cengage and McGraw-Hill each shall not, and none of their respective
Subsidiaries shall, and shall cause their and their respective Subsidiaries’ directors, officers and
employees not to, and not permit its investment bankers, attorneys, accountants and other
advisors or representatives to (such directors, officers, employees, investment bankers, attorneys,
accountants and other advisors or representatives, collectively, “Representatives”), directly or
indirectly: (i) initiate, solicit, propose, knowingly encourage (including by way of furnishing
information) or knowingly take any action designed to facilitate any inquiry regarding, or the
making of any inquiry, proposal or offer that constitutes or would reasonably be expected to lead
to, an Acquisition Proposal; (ii) engage in, continue or otherwise participate in any discussions
with or negotiations relating to, or otherwise cooperate in any way with, any Acquisition
Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an
Acquisition Proposal (other than to state that the terms of this provision prohibit such discussions
or negotiations); (iii) provide any nonpublic information to any Person in connection with any
Acquisition Proposal or any inquiry, proposal or offer that constitutes or would reasonably be
expected to lead to an Acquisition Proposal; or (iv) otherwise knowingly facilitate any effort or
attempt to make an Acquisition Proposal or any inquiry, proposal or offer that constitutes or
would reasonably be expected to lead to an Acquisition Proposal.
(b)
Representatives. Any violation of the restrictions contained in this
Section 5.2 by any of a Party’s Representatives shall be deemed to be a breach of this Section 5.2
by such Party. The Parties shall use reasonable best efforts to ensure that their respective
Representatives are aware of the provisions of this Section 5.2.
(c)
Termination of Existing Discussions. Cengage and McGraw-Hill each
shall, shall cause their respective Subsidiaries to, and shall use their reasonable best efforts to
cause their respective Representatives to, immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any Person conducted heretofore with respect
to any Acquisition Proposal, or proposal that would reasonably be expected to lead to an
Acquisition Proposal.
5.3.

Cooperation; Efforts to Consummate.

(a)
On the terms and subject to the conditions set forth in this Agreement,
Cengage and McGraw-Hill shall cooperate with each other and use (and shall cause their
respective Affiliates to use) their respective reasonable best efforts to take or cause to be taken
all actions, and to do or cause to be done all things, reasonably necessary, proper or advisable on
its part under this Agreement and applicable Law to cause the conditions to Closing to be

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 satisfied as promptly as reasonably practicable and advisable (and in any event no later than the
Outside Date) and consummate and make effective the Transactions as soon as reasonably
practicable, including (i) preparing and filing as promptly as reasonably practicable and
advisable all documentation to effect all necessary notices, reports and other Filings, including
by filing no later than thirty (30) calendar days after the date of this Agreement the notification
and report form required under the HSR Act (unless agreed otherwise by the parties), (ii) if a
Request for Additional Information and Documentary Material (“Second Request”) has been
issued under the HSR Act, by using reasonable best efforts to certify substantial compliance as
promptly as practicable but in any event, within 120 days of receipt of the Second Request, (iii)
making any necessary Filings under the Australian Foreign Acquisitions and Takeovers Act 1975
(Cth) or its associated regulations (the “Required FI Approval”), (iv) working jointly to
determine any other Filings under any Antitrust Laws that may be necessary or advisable (the
“Other Antitrust Approvals”, (v) making any other such Filings with governmental entities as
soon as practicable and obtaining as promptly as reasonably practicable (and in any event no
later than the Outside Date) all actions or nonactions, waivers, consents, registrations, expirations
or terminations of waiting periods, clearances, approvals, permits and authorizations necessary or
advisable to be obtained from any third party or any Governmental Entity in order to
consummate the Transactions, (vi) executing and delivering any additional instruments necessary
to consummate the Transactions and (vii) refraining from taking any action that would
reasonably be expected to impede, interfere with, prevent or materially delay the consummation
of the Transactions; provided, that in no event shall either Party or any of their respective
Subsidiaries be permitted to pay prior to the Closing any fee, penalty or other consideration to
any third party for any consent required for the consummation of the Transactions under any
Contract without the prior written consent of the other Party (which consent shall not be
unreasonably withheld, conditioned or delayed).
(b)
Cengage and McGraw-Hill shall jointly develop and consult and cooperate
in all respects with one another, and consider in good faith the views of one another, in
connection with the form and content of any analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made with, or submitted to, any third party or any
Governmental Entity in connection with the Transactions. Neither Cengage nor McGraw-Hill
nor any Affiliate of Cengage or McGraw-Hill shall permit any of its officers or other
Representatives to participate in any substantive meeting, telephone call or conference with any
Governmental Entity in respect of any Filing, investigation or otherwise relating to the
Transactions unless, to the extent reasonably practicable, it consults with the other Party in
advance and, to the extent permitted by such Governmental Entity, gives the other Party the
opportunity to attend and participate therein. Each of the Parties shall use reasonable best efforts
to furnish to each other all information required for any Filing, other than confidential or
proprietary information not directly related to the Transactions, and to give the other Party
reasonable prior notice of any such Filing and, to the extent practicable, keep the other Party
reasonably informed with respect to the status of each Consent sought from a Governmental
Entity in connection with the Transactions and the material communications between such Party
and such Governmental Entity, and, to the extent practicable, permit the other Party to review
and discuss in advance, and consider in good faith the views of the other in connection with any
such Filing or communication. Each of the Parties shall promptly furnish the other with copies
of all correspondence, Filings (except for the Parties’ initial HSR Act filings) and material
communications between them and their Affiliates and Representatives, on one hand, and any
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 such Governmental Entity or its respective staff on the other hand, with respect to the
Transactions in order for such other Party to meaningfully consult and participate in accordance
with this Section 5.3, provided, that materials furnished pursuant to this Section 5.3 may be
designated “Highly Confidential Information” pursuant to the Clean Team Agreement, dated as
of February 11, 2019, between Cengage and McGraw-Hill or redacted as necessary to address
reasonable confidentiality concerns. Subject to applicable Law, each of Cengage and McGrawHill and their respective Subsidiaries shall not agree to any actions, restrictions or conditions
with respect to obtaining any Consent in connection with the Transactions, and neither Party
shall directly or indirectly agree to extend any applicable waiting period (including under the
HSR Act) or enter into any agreement with a Governmental Entity related to this Agreement or
the Transactions, in each case, without the prior written consent of the other Party. In exercising
the foregoing rights, each of Cengage and McGraw-Hill shall act reasonably and as promptly as
reasonably practicable.
(c)
Subject to Section 6.1(b) of such Party’s Disclosure Letter, neither
McGraw-Hill nor Cengage shall, and each of them shall cause their respective Affiliates not to,
take any action, including acquiring any asset, property, business or Person (by way of merger,
consolidation, share exchange, investment, other business combination, asset, stock or equity
purchase, or otherwise), in each case, that could reasonably be expected to materially impair,
adversely affect or materially delay obtaining or making any Filing contemplated by this
Section 5.3 or the timely receipt thereof.
(d)
Without limiting the generality of the undertakings pursuant to this
Section 5.3, but on the terms and subject to the conditions set forth in this Agreement, including
Section 5.3(e), each of Cengage and McGraw-Hill agree to take or cause to be taken the
following actions:
(i)
subject to applicable Law, the prompt provision to each and every
federal, state, local or foreign court or Governmental Entity with jurisdiction over enforcement
of any applicable Antitrust Law (each, a “Governmental Antitrust Entity”) of non-privileged
information and documents requested by any Governmental Antitrust Entity or that are
necessary, proper or advisable to permit consummation of the Transactions; and
(ii)
subject to Section 5.3(e), the prompt use of its reasonable best
efforts to take all reasonably necessary, proper or advisable steps to (A) avoid the entry of, and
(B) resist, vacate, modify, reverse, suspend, prevent, eliminate or remove any actual, anticipated
or threatened temporary, preliminary or permanent injunction or other Order, decree, decision,
determination or judgment entered or issued, or that becomes reasonably foreseeable to be
entered or issued, in any Proceeding or inquiry of any kind, in the case of each of the foregoing
clauses (A) and (B), that would reasonably be expected to delay, restrain, prevent, enjoin or
otherwise prohibit or make unlawful the consummation of the Transactions, including (I) the
defense through litigation (excluding any appeals) on the merits of any claim asserted in any
court, agency or other Proceeding by any person or entity (including any Governmental Antitrust
Entity) seeking to delay, restrain, prevent, enjoin or otherwise prohibit consummation of the
Transactions and (II) (x) proposing, negotiating, committing to and agreeing to sell, lease,
license, divest or otherwise dispose of, or hold separate pending such disposition, (y) agreeing to
restrictions or actions that after the Parent Merger Effective Time would limit the Combined

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 Corporation’s or its Subsidiaries’ or Affiliates’ freedom of action or operations with respect to,
or its ability to retain, one or more of its or its Subsidiaries’ businesses, product lines or assets or
(z) agreeing to enter into, modify or terminate existing contractual relationships, contractual
rights or contractual obligations, and promptly effecting the sale, lease, license, divestiture,
disposal and holding separate of, assets, operations, rights, product lines, licenses, businesses or
interests therein of Cengage or McGraw-Hill or either of their respective Subsidiaries (and the
entry into agreements with, and submission to Orders of, the relevant Governmental Antitrust
Entity giving effect thereto or to such restrictions or actions) (such sale, lease, license, defense
through litigation, divestiture, disposal and holding separate or other action described in
clauses (I) or (II), a “Regulatory Remedy”) if such Regulatory Remedy should be reasonably
necessary, proper or advisable so as to permit the consummation of the Transactions on a
schedule as close as possible to that contemplated herein. Nothing in this Section 5.3(d) shall
require either McGraw-Hill or Cengage to effectuate or agree to effectuate any Regulatory
Remedy unless such Regulatory Remedy is conditioned upon the Closing. No action taken
pursuant to this Section 5.3 shall be considered for the purposes of determining whether a
Material Adverse Effect has occurred.
(e)
Notwithstanding anything in this Section 5.3 to the contrary, neither this
Section 5.3 nor the “reasonable best efforts” standard herein shall require, or be construed to
require, Cengage or McGraw-Hill or any of their respective Subsidiaries or other Affiliates to
(i) waive any of the conditions set forth in Article VI as they apply to such Party, (ii) take, effect
or agree to any Regulatory Remedy unless such Regulatory Remedy is conditioned upon the
Closing, (iii) effect or agree to any divestiture of assets of Cengage or McGraw-Hill that
produced net revenues of, in the aggregate, $175,000,000 during calendar year 2018 (this clause
(iii), a “Burdensome Effect”).
(f)
For the avoidance of doubt, Cengage and McGraw-Hill shall use
reasonable best efforts to cooperate with each other and work in good faith in formulating any
Regulatory Remedy.
5.4.
Status. Subject to applicable Law and except as otherwise required by any
Governmental Entity, Cengage and McGraw-Hill each shall keep the other apprised of the status
of material matters relating to completion of the Transactions, including promptly furnishing the
other with copies of notices or other substantive communications received by Cengage or
McGraw-Hill, as applicable, or any of its Subsidiaries, from any third party or any Governmental
Entity with respect to the Transactions.
5.5.

Financing and Indebtedness.

(a)
During the period from the date of this Agreement to the Parent Merger
Effective Time or the earlier termination of this Agreement pursuant to its terms, the Parties
hereto shall cooperate in good faith to mutually determine, and use reasonable best efforts to
implement, any necessary, appropriate or desirable arrangements, in each case in anticipation of
the consummation of the Transactions contemplated by this Agreement, regarding (i) each
Party’s credit agreements, indentures, intercreditor and collateral arrangements or other
documents governing or relating to Indebtedness of the Parties, including arrangements by way
of amendments, tenders, exchanges, consents, redemptions, or payoffs with respect thereto and

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 (ii) new financings incurred to replace or refinance any Party’s existing indebtedness or to
provide reasonable working capital for the companies following the Mergers (any such
arrangement, other than any arrangement or financing which is consummated by the applicable
Party or its Subsidiaries pursuant to Section 5.1(b)(xvii)(A)-(F), a “Financing Transaction”),
including the Financing Amendments. Cengage shall indemnify and hold harmless McGrawHill, its Subsidiaries and their respective directors, officers, employees and Representatives from
and against any and all losses, damages, claims, costs or expenses (including reasonably,
documented out-of-pocket attorneys’ fees) suffered or incurred by any of them in connection
with any Financing Transaction solely to the extent arising from (i) information provided by or
on behalf of Cengage, its Subsidiaries or their respective affiliates or shareholders or the
Representatives thereof for inclusion in any offering documents or similar materials relating to
any Financing Transaction or (ii) the bad faith, gross negligence or willful misconduct of
Cengage, its Subsidiaries or their respective affiliates or shareholders or the Representatives
thereof in connection with any Financing Transaction. McGraw-Hill shall indemnify and hold
harmless Cengage, its Subsidiaries and their respective directors, officers, employees and
Representatives from and against any and all losses, damages, claims, costs or expenses
(including reasonably, documented out-of-pocket attorneys’ fees) suffered or incurred by any of
them in connection with any Financing Transaction solely to the extent arising from
(i) information provided by or on behalf of McGraw-Hill, its Subsidiaries or their respective
affiliates or shareholders or the Representatives thereof for inclusion in any offering documents
or similar materials relating to any Financing Transaction or (ii) the bad faith, gross negligence
or willful misconduct of McGraw-Hill, its Subsidiaries or their respective affiliates or
shareholders or the Representatives thereof in connection with any Financing Transaction. This
Section 5.5(a) shall be given effect whether or not the Closing occurs and shall survive the
termination of this Agreement.
(b)
Cengage and McGraw-Hill shall each bear fifty percent (50%) of the
reasonable and documented out-of-pocket costs, penalties, premiums, and expenses incurred by
the Parties in connection with any Financing Transaction expenses (including, without limitation,
(x) fees, disbursements and other charges of the arrangers, lenders and their counsel in
connection with the Financing Transaction and (y) fees, disbursements and other charges of any
rating agency (payable in connection therewith)), and which shall be promptly paid by the
applicable Party from time-to-time upon provision of applicable written invoices by the other
Party. Notwithstanding anything herein to the contrary, this Section 5.5(b) shall be given effect
whether or not the Closing occurs and shall survive the termination of this Agreement.
5.6.

Information; Access and Reports.

(a)
Subject to applicable Law and the other provisions of this Section 5.6,
Cengage and McGraw-Hill each shall (and shall cause its Affiliates to), upon request by the
other, use reasonable best efforts to furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing, notice or application made by or
on behalf of McGraw-Hill, Cengage or any of their respective Subsidiaries to any third party or
any Governmental Entity in connection with the Transactions, and shall (and shall cause its
Subsidiaries to), upon giving of reasonable notice by the other Party, use reasonable best efforts
to afford the other Party’s officers and other authorized Representatives reasonable access,

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 during normal business hours following reasonable advance notice throughout the period prior to
the Parent Merger Effective Time, to its officers, Employees, agents, Contracts, books and
records (including the work papers of such Party’s independent accountants upon receipt of any
required consents from such accountants and subject to the execution of customary access
letters), as well as properties, offices and other facilities, and, during such period, each shall (and
shall cause its Subsidiaries to) use reasonable best efforts to furnish promptly to the other all
information concerning its business, properties and personnel as may reasonably be requested,
including in connection with any other statement, filing, notice or application made by or on
behalf of McGraw-Hill, Cengage or any of their respective Subsidiaries to any third party or any
Governmental Entity in connection with the consummation of the Transactions.
(b)
The foregoing provisions of this Section 5.6 shall not require and shall not
be construed to require either Cengage or McGraw-Hill to permit any access to any of its
officers, Employees, agents, Contracts, books or records, or its properties, offices or other
facilities, or to permit any inspection, review, sampling or audit, or to disclose or otherwise make
available any information that in the reasonable judgment of Cengage or McGraw-Hill, as
applicable, would (i) unreasonably interfere with such Party’s or its Subsidiaries’ business
operations, (ii) result in the disclosure of any trade secrets of any third parties, competitively
sensitive information, information concerning the valuation of Cengage, McGraw-Hill or any of
their respective Subsidiaries or violate the terms of any confidentiality provisions in any
agreement with a third party entered into prior to the date of this Agreement, (iii) result in a
violation of applicable Law (including Antitrust Law), (iv) waive the protection of any
attorney-client privilege or (v) result in the disclosure of any personal information that would
expose the Party to the risk of liability. In the event that Cengage or McGraw-Hill, as applicable,
objects to any request submitted pursuant to and in accordance with this Section 5.6 and
withholds information on the basis of the foregoing clauses (i) through (v), Cengage or McGrawHill, as applicable, shall, to the extent permitted by applicable Law, inform the other Party as to
the general nature of what is being withheld and shall use reasonable best efforts to make
appropriate substitute arrangements to permit reasonable disclosure that does not suffer from any
of the foregoing impediments. Each of Cengage and McGraw-Hill, as it deems advisable and
necessary, may reasonably designate competitively sensitive material provided to the other as
“Outside Counsel Only Material” or with similar restrictions. Such materials and the
information contained therein shall be given only to the outside legal counsel of the recipient, or
otherwise as the restriction indicates, and be subject to any additional confidentiality or joint
defense agreement between the Parties. All requests for information made pursuant to this
Section 5.6 shall be directed to the Person designated by Cengage or McGraw-Hill, as
applicable. All information exchanged or made available shall be governed by the terms of the
Confidentiality Agreement.
(c)
To the extent that any of the information or material furnished pursuant to
this Section 5.6 or otherwise in accordance with the terms of this Agreement may include
material subject to the attorney-client privilege, work product doctrine or any other applicable
privilege, including those concerning pending or threatened Proceedings, the Parties understand
and agree that they have a commonality of interest with respect to such matters and it is their
desire, intention and mutual understanding that the sharing of such material is not intended to,
and shall not, waive or diminish in any way the confidentiality of such material or its continued
protection under the attorney-client privilege, work product doctrine or other applicable
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 privilege. All such information that is entitled to protection under the attorney-client privilege,
work product doctrine or other applicable privilege shall remain entitled to such protection under
these privileges, this Agreement, and under the joint defense doctrine.
(d)
No exchange of information or investigation by McGraw-Hill or its
Representatives shall affect or be deemed to affect, modify or waive the representations and
warranties of Cengage set forth in this Agreement, and no investigation by Cengage or its
Representatives shall affect or be deemed to affect, modify or waive the representations and
warranties of McGraw-Hill set forth in this Agreement.
5.7.
Publicity. The initial press release with respect to the execution of this
Agreement shall be a joint release to be reasonably agreed upon by the Parties. Cengage and
McGraw-Hill shall consult with each other before issuing any other press release or making any
public statement to the extent related to this Agreement or the Transactions and shall not issue
any such press release or make any such public statement without the prior consent of the other,
such consent not to be unreasonably withheld, conditioned or delayed; provided, that (a) any
such press release or public statement as may be required by applicable Law may be issued prior
to such consultation if the Party making the release or statement has used its reasonable best
efforts to consult with the other Party on a timely basis and (b) each Party may issue public
announcements or make other public disclosures regarding this Agreement or the Transactions
that consist solely of information previously disclosed in press releases or public statements
previously approved by either Cengage or McGraw-Hill or made by either Cengage or McGrawHill in compliance with this Section 5.7; provided, further, that the first sentence of this
Section 5.7 shall not apply to (x) any disclosure of information concerning this Agreement in
connection with any dispute between the parties regarding this Agreement and (y) internal
announcements to employees which are not made generally available to the public.
5.8.

Employee Benefits.

(a)
McGraw-Hill shall provide, or shall cause to be provided, (i) the
Employees of Cengage and its Subsidiaries at the Parent Merger Effective Time who continue to
remain employed with McGraw-Hill or its Subsidiaries (the “Cengage Continuing Employees”)
and (ii) the Employees of McGraw-Hill and its Subsidiaries at the Parent Merger Effective Time
who continue to remain employed with McGraw-Hill or its Subsidiaries (the “McGraw-Hill
Continuing Employees”), with: (x) during the period commencing at the Parent Merger
Effective Time and ending on the one (1)-year anniversary of the Closing Date, (A) base salary
or base wage and annual cash incentive opportunities, that, in each case, are no less favorable to
such Cengage Continuing Employee or McGraw-Hill Continuing Employee, as applicable, than
those provided to such Cengage Continuing Employee or McGraw-Hill Continuing Employee, as
applicable, immediately prior to the Parent Merger Effective Time and (B) severance benefits
and protections that are no less favorable than the greater of (I) those provided to similarly
situated Cengage Continuing Employees immediately prior to the Parent Merger Effective Time
and (II) those provided to similarly situated McGraw-Hill Continuing Employees immediately
prior to the Parent Merger Effective Time; and (y) during the period commencing at the Parent
Merger Effective Time and ending on December 31 of the year during which the Parent Merger
Effective Time occurs, health, welfare and retirement benefits that are no less favorable, in the
aggregate, to the Cengage Continuing Employees or McGraw-Hill Continuing Employees, as

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 applicable, than those provided to such Cengage Continuing Employees or McGraw-Hill
Continuing Employees, as applicable, immediately prior to the Parent Merger Effective Time.
(b)
With respect to any Benefit Plan in which any Cengage Continuing
Employee or McGraw-Hill Continuing Employee (collectively, the “Continuing Employees”)
first becomes eligible to participate on or after the Parent Merger Effective Time, each Party
shall (i) make commercially reasonable efforts to (A) cause any pre-existing conditions or
limitations and eligibility waiting periods under any of its group health plans to be waived with
respect to the other Party’s Continuing Employees and their eligible dependents, and (B) give the
other Party’s Continuing Employees credit for the plan year in which the Parent Merger
Effective Time occurs (or the plan year in which the Continuing Employee first becomes eligible
to participate in the applicable Benefit Plan, if later) towards applicable deductibles and annual
out-of-pocket limits for medical expenses incurred during the plan year but prior to the Parent
Merger Effective Time (or eligibility date, as applicable), for which payment has been made and
(ii) give the other Party’s Continuing Employees service credit for such Continuing Employee’s
employment with the other Party for purposes of vesting, benefit accrual and eligibility to
participate under each applicable Benefit Plan, as if such service had been performed with such
Party, except for benefit accrual under defined benefit pension plans, for purposes of qualifying
for subsidized early retirement benefits (unless otherwise required under applicable Law) or to
the extent it would result in a duplication of benefits.
(c)
The Parties shall cooperate in good faith to determine whether
Section 280G of the Code shall apply in connection with the Transactions, and, if so, which
Party shall have undergone a change in control for purposes of Section 280G of the Code (the
“280G Party”). The 280G Party, if any, shall, prior to the Closing Date, (i) solicit, and make
commercially reasonable efforts to obtain, a waiver from each “disqualified individual” (as
defined in Section 280G(c) of the Code) who would be reasonably expected to potentially
receive an “excess parachute payment” (as defined in Section 280G(b)(5) of the Code) of such
individual’s right to receive or retain such payment and (ii) solicit the approval of the 280G
Party’s shareholders of the right of any such “disqualified individual” who executed a waiver
under clause (i) to receive or retain any and all payments and other benefits contingent on the
consummation of the Transactions (within the meaning of Section 280G(b)(2)(A)(i) of the
Code). All materials produced by the 280G Party in connection with this Section 5.8(c) shall be
submitted to the other Party at least three (3) Business Days in advance for the other Party’s
review and comment and the 280G Party shall consider any of the other Party’s requested
changes or comments in good faith and not unreasonably omit them.
(d)
Subject to Section 5.1, nothing contained in this Agreement is intended to
(i) be treated as an amendment of any particular Cengage Benefit Plan or McGraw-Hill Benefit
Plan, (ii) prevent Cengage, McGraw-Hill, the Combined Corporation or any of their Affiliates
from amending or terminating any of their respective Benefit Plans in accordance with their
terms, or (iii) prevent Cengage, McGraw-Hill, the Combined Corporation or any of their
Affiliates, after the Parent Merger Effective Time, from terminating the employment of any
Cengage Continuing Employee or McGraw-Hill Continuing Employee. Nothing contained in
this Agreement is intended to create any third-party beneficiary rights in any Employee of
Cengage, McGraw-Hill or any of their Subsidiaries, any beneficiary or dependent thereof, or any
collective bargaining representative thereof (including any Labor Organization), with respect to
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 the compensation, terms and conditions of employment or benefits that may be provided to any
Cengage Continuing Employee or McGraw-Hill Continuing Employee by Cengage, McGrawHill, the Combined Corporation or any of their Affiliates or under any Benefit Plan which
Cengage, McGraw-Hill, the Combined Corporation or any of their Affiliates may maintain.
5.9.

Certain Tax Matters.

(a)
The Parties (as applicable) intend that, for U.S. federal income Tax
purposes, (x) the Parent Merger shall qualify as a “reorganization” within the meaning of
Section 368(a) of the Code, and adopt this Agreement as a “plan of reorganization” for purposes
of Sections 354 and 361 of the Code, and (y) each of the Holdco Merger and Issuer Merger shall
qualify as a “liquidation” within the meaning of Sections 332(a) and 337(a) of the Code or as a
“reorganization” within the meaning of Section 368(a) of the Code, and adopt this Agreement as
a “plan of liquidation” or “plan or reorganization” (as applicable). None of McGraw-Hill,
Cengage or any of their respective Subsidiaries shall take or cause to be taken, or fail to take, any
action, whether before or after the Parent Merger Effective Time, that could reasonably be
expected to prevent or impede (i) the Parent Merger from qualifying as a “reorganization” within
the meaning of Section 368(a) of the Code or (ii) each of the Holdco Merger and the Issuer
Merger from qualifying as a “liquidation” within the meaning of Sections 332(a) and 337(a) of
the Code or as a “reorganization” within the meaning of Section 368(a) of the Code.
(b)
Each of McGraw-Hill and Cengage shall use its reasonable best efforts
and shall cooperate in good faith with one another to obtain the opinions of counsel referred to in
Section 6.2(d) and Section 6.3(e). In connection therewith, McGraw-Hill shall deliver to Paul,
Weiss, Rifkind, Wharton & Garrison LLP, counsel to McGraw-Hill (“McGraw-Hill’s
Counsel”), and Wachtell, Lipton, Rosen & Katz, special counsel to Cengage (“Cengage’s
Counsel”), a representation letter dated as of the Closing Date and signed by an officer of
McGraw-Hill (the “McGraw-Hill Tax Representation Letter”), and Cengage shall deliver to
McGraw-Hill’s Counsel and Cengage’s Counsel a representation letter dated as of the Closing
Date and signed by an officer of Cengage (the “Cengage Tax Representation Letter”);
provided that, in each case, the representation letter shall be as reasonably necessary or
appropriate to allow McGraw-Hill’s Counsel and Cengage’s Counsel each to provide the
opinions of counsel referred to in Section 6.2(d) and Section 6.3(e).
(c)
Except to the extent payable with respect to the delivery of the Merger
Consideration to a person other than a registered holder of Cengage Common Stock, McGrawHill shall be exclusively responsible for any transfer or similar Taxes imposed on McGraw-Hill,
Cengage or any of their respective Subsidiaries as a result of the closing of the Parent Merger.
(d)
On or prior to the Closing Date, Cengage shall deliver to McGraw-Hill (i)
a certification from Cengage pursuant to Treasury Regulations Section 1.1445-2(c)(3), in form
and substance reasonably satisfactory to McGraw-Hill, dated no more than thirty (30) days prior
to the Closing Date and signed by a responsible corporate officer of Cengage, that Cengage
Common Stock is not a “United States real property interest” (as defined in Section 897(c)(1) of
the Code) and (ii) a certification from Cengage pursuant to Treasury Regulations Section 1.14452(b)(2)(iv)(B), in form and substance reasonably satisfactory to McGraw-Hill, signed by a
responsible corporate officer of Cengage, that Cengage is not a “foreign person” for U.S. federal

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 income Tax purposes. If Cengage fails to deliver the documentation described in clause (i) of
the preceding sentence, notwithstanding anything contained herein to the contrary, McGrawHill’s sole remedies shall be limited to those set forth in Section 2.6 until it has received from the
applicable holder of Cengage Common Stock the cash amount to which it is entitled (or, for the
avoidance of doubt, a properly executed IRS Form W-9 (or such other documentation, in form
and substance reasonably satisfactory to McGraw-Hill, for evidencing an exemption from Tax
pursuant to Section 897 of the Code) from the applicable holder of Cengage Common Stock).
5.10. Expenses. Whether or not the Mergers are consummated, all costs and
expenses incurred by a Party in connection with the preparation, negotiation, execution and
performance of this Agreement and the Transactions, including all fees and expenses of its
Representatives, shall be paid by the Party incurring such expense, except that (a) expenses
described on Section 5.10 of the Cengage Disclosure Letter and McGraw-Hill Disclosure Letter
shall be shared equally by Cengage and McGraw-Hill; (b) expenses incurred in connection with
any filing fees in connection with the HSR Act and any other Antitrust Law shall be shared
equally by Cengage and McGraw-Hill; (c) expenses incurred in connection with any third party
advisor that, as part of such advisor’s services in connection with the Transaction, advised both
of the Parties, shall be shared equally by Cengage and McGraw-Hill regardless of whether
Cengage or McGraw-Hill initially engaged such advisor, provided, that the Party that did not
initially engage such advisor shall have consented to such engagement or such advisor is set
forth on Section 5.10 of the McGraw-Hill Disclosure Letter; and (d) expenses in connection with
any Financing Transaction shall be allocated in accordance with Section 5.5(b).
5.11.

Indemnification; Directors’ and Officers’ Insurance.

(a)
From and after the Parent Merger Effective Time, the Combined
Corporation shall indemnify and hold harmless to the fullest extent as such individuals would be
indemnified as of the date of this Agreement under applicable Law, Cengage’s Organizational
Documents and any indemnification agreements in effect as of the date of this Agreement, each
present and former (determined as of the Parent Merger Effective Time) director and officer of
Cengage or any of its Subsidiaries or any Person who prior to or at the Parent Merger Effective
Time served at the request of Cengage or any of its Subsidiaries as a director or officer of
another Person in which Cengage or any of its Subsidiaries has an equity investment, in each
case, when acting in such capacity (the “Indemnified Parties”), against any costs or expenses
(including reasonable attorneys’ fees, costs and expenses), judgments, inquiries, fines, losses,
claims, damages or liabilities incurred in connection with, arising out of or otherwise related to
any Proceeding, in connection with, arising out of or otherwise related to matters existing or
occurring at or prior to the Parent Merger Effective Time, whether asserted or claimed prior to, at
or after the Parent Merger Effective Time, including in connection with (i) this Agreement or the
Transactions, and (ii) actions to enforce this provision or any other indemnification or
advancement right of any Indemnified Party, and the Combined Corporation shall also advance
expenses as incurred to the fullest extent that such individual would have been entitled to under
applicable Law, Cengage’s Organizational Documents and any indemnification agreements in
effect as of the date of this Agreement; provided that any Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined by final
adjudication that such Person is not entitled to indemnification.

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 (b)
Prior to the Parent Merger Effective Time, Cengage shall and, if Cengage
is unable to, McGraw-Hill shall cause the Combined Corporation as of the Parent Merger
Effective Time to, obtain and fully pay the premium for “tail” insurance policies for the
extension of the directors’ and officers’ liability coverage of Cengage’s existing directors’ and
officers’ insurance policies and fiduciary liability insurance policies for a claims reporting or
discovery period of six (6) years from and after the Parent Merger Effective Time (the “Tail
Period”) from one or more insurance carriers with the same or better credit rating as Cengage’s
insurance carrier as of the date of this Agreement with respect to directors’ and officers’ liability
insurance and fiduciary liability insurance (collectively, “D&O Insurance”) with terms,
conditions, retentions and limits of liability that are at least as favorable to the insureds as
Cengage’s existing policies with respect to matters existing or occurring at or prior to the Parent
Merger Effective Time (including in connection with this Agreement or the Transactions). If
Cengage or McGraw-Hill and the Combined Corporation for any reason fail to obtain such “tail”
insurance policies as of the Parent Merger Effective Time, the Combined Corporation shall
continue to maintain in effect for the Tail Period the D&O Insurance in place as of the date of
this Agreement with terms, conditions, retentions and limits of liability that are at least as
favorable to the insureds as provided in Cengage’s existing policies as of the date of this
Agreement, or the Combined Corporation shall purchase comparable D&O Insurance for the Tail
Period with terms, conditions, retentions and limits of liability that are at least as favorable as
provided in Cengage’s existing policies as of the date of this Agreement; provided, that in no
event shall the aggregate cost of the D&O Insurance exceed during the Tail Period three hundred
percent (300%) of the current aggregate annual premium paid by Cengage for such purpose; and
provided, further, that if the cost of such insurance coverage exceeds such amount, the Combined
Corporation shall obtain a policy with the greatest coverage available for a cost not exceeding
such amount.
(c)
Any Indemnified Party wishing to claim indemnification under this
Section 5.11, upon learning of any such Proceeding, shall promptly notify the Combined
Corporation thereof in writing, but the failure to so notify shall not relieve the Combined
Corporation of any liability it may have to such Indemnified Party except to the extent such
failure materially prejudices the indemnifying party. In the event of any Proceeding: (i) the
Combined Corporation shall have the right to assume the defense thereof (it being understood
that by electing to assume the defense thereof, the Combined Corporation shall not be deemed to
have waived any right to object to the Indemnified Party’s entitlement to indemnification
hereunder with respect thereto or assumed any liability with respect thereto), except that if the
Combined Corporation elects not to assume such defense or legal counsel or the Indemnified
Party advises that there are issues which raise conflicts of interest between the Combined
Corporation and the Indemnified Party, the Indemnified Party may retain legal counsel
satisfactory to them, and the Combined Corporation shall pay all reasonable and documented
fees, costs and expenses of such legal counsel for the Indemnified Party promptly as statements
therefor are received; provided, however, that the Combined Corporation shall be obligated
pursuant to this Section 5.11(c) to pay for only one firm of legal counsel for all Indemnified
Parties in any jurisdiction unless the use of one legal counsel for such Indemnified Parties would
present such legal counsel with a conflict of interest (provided, that the fewest number of legal
counsels necessary to avoid conflicts of interest shall be used); (ii) the Indemnified Parties shall
cooperate in the defense of any such matter if the Combined Corporation elects to assume such
defense, and the Combined Corporation shall cooperate in the defense of any such matter if the
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 Combined Corporation elects not to assume such defense; (iii) the Indemnified Parties shall not
be liable for any settlement effected without their prior written consent if the Combined
Corporation elects to assume such defense and the Combined Corporation shall not be liable for
any settlement effected without their prior written consent the Combined Corporation elects not
to assume such defense; (iv) the Combined Corporation shall not have any obligation hereunder
to any Indemnified Party if and when a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the indemnified action of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable Law; and
(v) all rights to indemnification in respect of any such Proceedings shall continue until final
disposition of all such Proceedings.
(d)
During the Tail Period, all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Parent Merger Effective Time and
rights to advancement of expenses relating thereto now existing in favor of any Indemnified
Party as provided in the Organizational Documents (subject to the amendment and restatement of
the certificate of incorporation of McGraw-Hill as contemplated by Section 1.1(c)) of Cengage
and its Subsidiaries or any indemnification agreement between such Indemnified Party and
Cengage or any of its Subsidiaries, in each case, as in effect on the date of this Agreement, shall
survive the Transactions unchanged and shall not be amended, restated, repealed or otherwise
modified in any manner that would adversely affect any right thereunder of any such
Indemnified Party.
(e)
If the Combined Corporation or any of their respective successors or
assigns (i) shall consolidate with or merge into any other Person and shall not be the continuing
or surviving Person of such consolidation or merger or (ii) shall transfer all or substantially all of
its properties and assets to any Person, then, and in each such case, proper provisions shall be
made so that the successors and assigns of the Combined Corporation shall assume all of the
obligations set forth in this Section 5.11.
(f)
The rights of the Indemnified Parties under this Section 5.11 shall survive
consummation of the Mergers and are in addition to any rights such Indemnified Parties may
have under the Organizational Documents of Cengage or any of its Subsidiaries, or under any
indemnification agreements or other applicable Contracts of Cengage or Laws.
(g)
This Section 5.11 is intended to be for the benefit of, and from and after
the Parent Merger Effective Time shall be enforceable by, each of the Indemnified Parties, who
shall be third-party beneficiaries of this Section 5.11.
5.12. Takeover Statutes. If any Takeover Statute is or may become applicable
to the Transactions, each of Cengage and McGraw-Hill and the McGraw-Hill Board and
Cengage Board, respectively, shall grant such approvals and take, or cause to be taken, such
actions as are necessary and legally permissible so that the Transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement and otherwise act to
eliminate or minimize the effects of such statute or regulation on the Transactions.
5.13. Termination of Affiliate Agreements. Prior to the Closing, Cengage and
McGraw-Hill shall take (and shall cause their respective Subsidiaries to take) all such actions as

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 may be necessary or appropriate such that the Affiliate Agreements other than those set forth in
Section 5.13 of such Party’s Disclosure Letter, as applicable, are terminated or novated at the
Closing, in each case without any liability to Cengage or McGraw-Hill (other than those amounts
as are necessary to be paid to release and discharge such Party from any obligations owed under
such Affiliate Agreements) from and after the Parent Merger Effective Time. At or prior to the
Parent Merger Effective Time, Cengage and McGraw-Hill shall deliver to the other
documentation reasonably satisfactory to such other Party that the actions required by the
preceding sentence have been taken and shall be effective as of the Closing.
5.14.

Requisite Stockholder Approval; Stockholder Notice.

(a)
Substantially concurrent with, and conditioned upon, the execution of this
Agreement, Cengage shall deliver to McGraw-Hill an irrevocable written consent, in
substantially the form attached hereto as Exhibit B (the “Cengage Irrevocable Written
Consent”), which shall be signed by a sufficient number of holders of shares of Cengage
Common Stock that reflects Cengage’s receipt of the Requisite Cengage Stockholder Approval.
(b)
Cengage shall prepare and mail, within thirty (30) calendar days of the
date of this Agreement, a notice of action by written consent as required by Section 228(e) of the
DGCL and their Organizational Documents to the holders of outstanding shares of Cengage
Common Stock (the “Stockholder Notice”), which Stockholder Notice shall contain an appraisal
notice pursuant to Section 262 of the DGCL in connection with the Parent Merger containing the
information required by applicable Law. McGraw-Hill shall provide to Cengage any
information of McGraw-Hill reasonably necessary to prepare the Stockholder Notice. Cengage
shall provide to McGraw-Hill a reasonable opportunity to comment on the Stockholder Notice
and Cengage shall consider any such comments in good faith.
5.15.

Pre-Closing Corporate Governance Matters.

(a)
At or prior to the Closing, the Parties shall have prepared definitive
versions of the amended and restated Organizational Documents of McGraw-Hill on the terms
set forth on Exhibit A in all material respects and with such other terms as shall be reasonably
satisfactory to McGraw-Hill and Cengage.
(b)
McGraw-Hill and the McGraw-Hill Board shall take all necessary action
to cause the board of directors of the Combined Corporation to be constituted in the manner set
forth in the Certificate Amendment, and shall solicit and obtain the Requisite McGraw-Hill
Stockholder Approval.
(c)
The initial officers of the Combined Corporation, each to hold the office in
accordance with the Organizational Documents of the Combined Corporation, shall be those
appointed by the initial directors of the Combined Corporation in accordance with the
arrangements contemplated by the Certificate Amendment.

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 ARTICLE VI
CONDITIONS
6.1.
Conditions to Each Party’s Obligation to Effect the Mergers. The
respective obligation of each Party to effect the Mergers is subject to the satisfaction at the
Closing or waiver, in whole or in part (to the extent permitted by applicable Law), on or prior to
the Closing Date of each of the following conditions:
(a)
Cengage Stockholder Approval. The Requisite Cengage Stockholder
Approval shall have been obtained in accordance with the Organizational Documents of Cengage
and the DGCL and not withdrawn.
(b)
Government Approvals. (i) The waiting period (and any extension
thereof) applicable to the consummation of the Transactions under the HSR Act shall have
expired or been earlier terminated, and (ii) the Required FI Approval (if applicable) shall have
been obtained, and (iii) the Other Antitrust Approvals shall have been obtained (all such
authorizations, consents, orders, approvals, Filings and declarations and the lapse of all such
waiting periods required by clauses (i), (ii) and (iii) collectively being the “Requisite
Regulatory Approvals”), in the case of each of (i), (ii) and (iii) without the imposition of a
Burdensome Effect.
(c)
Laws or Orders. (i) No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins, makes illegal or
otherwise prohibits the consummation of the Transactions or imposes a Burdensome Effect
(such Law or Order, a “Relevant Legal Restraint”) and (ii) no Governmental Entity of
competent jurisdiction shall have instituted any Proceeding (which remains pending at what
would otherwise be the Closing Date) seeking to temporarily or permanently enjoin, restrain or
otherwise prohibit consummation of the Parent Merger or impose a Relevant Legal Restraint (it
being understood and agreed that, with respect to any such Law or Order that is, or is under, an
Antitrust Law, only a Governmental Entity of competent jurisdiction in (i) jurisdictions in which
there are Requisite Regulatory Approvals and (ii) Canada, shall constitute a Governmental Entity
of competent jurisdiction for purposes of this Section 6.1(c)).
(d)
Financing Amendments. The Financing Amendments shall have been
consummated in a manner reasonably satisfactory to each of Cengage and McGraw-Hill.
6.2.
Conditions to Obligations of McGraw-Hill. The obligation of McGrawHill to effect the Mergers is also subject to the satisfaction at the Closing or waiver, in whole or
in part (to the extent permitted by applicable Law), by McGraw-Hill on or prior to the Closing
Date of the following conditions:
(a)
Representations and Warranties. (i) Each of the representations and
warranties of Cengage, Cengage Intermediate Holdco and Cengage Issuer set forth in Section 3.1
[Organization, Good Standing and Qualification], Section 3.3 [Corporate Authority; Approval],
Section 3.12 [Takeover Statutes], Section 4.5 [Cengage Capital Structure] and Section 4.7

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 [Cengage Brokers and Finders] shall be true and correct in all material respects (without giving
effect to any qualification by materiality or Material Adverse Effect contained therein) as of the
date of this Agreement and as of the Closing Date with the same effect as though made as of the
Closing Date (except to the extent that any such representation and warranty expressly speaks as
of a particular date or period of time, in which case such representation and warranty shall be so
true and correct in all material respects as of such particular date or period of time); (ii) the
representations and warranties of Cengage, Cengage Intermediate Holdco and Cengage Issuer set
forth in Section 3.7(b) [Absence of Certain Changes or Events] shall be true and correct in all
respects as of the date of this Agreement and as of the Closing Date with the same effect as
though made as of the Closing Date; and (iii) each other representation and warranty of Cengage,
Cengage Intermediate Holdco and Cengage Issuer set forth in Article III and Article IV shall be
true and correct in all respects (without giving effect to any qualification by materiality or
Material Adverse Effect contained therein) as of the date of this Agreement and as of the Closing
Date with the same effect as though made as of the Closing Date (except to the extent that any
such representation and warranty expressly speaks as of a particular date or period of time, in
which case such representation and warranty shall be so true and correct in all respects as of such
particular date or period of time), except, in the case of this clause (iii), for any failure of any
such representation and warranty to be so true and correct in all respects that would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with
respect to Cengage.
(b)
Performance of Obligations of Cengage. Cengage, Cengage Intermediate
Holdco and Cengage Issuer shall have performed or complied in all material respects with the
obligations required to be performed or complied with by them under this Agreement at or prior
to the Closing.
(c)
Certificate. McGraw-Hill shall have received a certificate of an executive
officer of Cengage certifying that the conditions set forth in Section 6.2(a) and Section 6.2(b)
have been satisfied.
(d)
Tax Opinion. McGraw-Hill shall have received a written opinion from
McGraw-Hill’s Counsel, in form and substance reasonably satisfactory to McGraw-Hill, dated as
of the Closing Date, to the effect that, on the basis of the facts, representations and assumptions
set forth or referred to in such opinion, the Parent Merger will qualify as a “reorganization”
within the meaning of Section 368(a) of the Code. In rendering the opinion described in this
Section 6.2(d), McGraw-Hill’s Counsel shall have received and shall be entitled to rely on the
McGraw-Hill Tax Representation Letter and the Cengage Tax Representation Letter and such
other information as McGraw-Hill’s Counsel reasonably deems relevant.
(e)
Required Consent. Cengage shall have received the consent set forth in
Section 6.2(e) of Cengage’s Disclosure Letter, which consent shall be in a form reasonably
satisfactory to McGraw-Hill.
6.3.
Conditions to Obligation of Cengage. The obligation of Cengage to effect
the Mergers is also subject to the satisfaction at the Closing or waiver, in whole or in part (to the
extent permitted by applicable Law), by Cengage on or prior to the Closing Date of the following
conditions:

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 (a)
Representations and Warranties. (i) Each of the representations and
warranties of McGraw-Hill and McGraw-Hill Issuer set forth in Section 3.1 [Organization, Good
Standing and Qualification], Section 3.3 [Corporate Authority; Approval], Section 3.12
[Takeover Statutes], Section 4.1 [McGraw-Hill Capital Structure] and Section 4.3 [McGraw-Hill
Brokers and Finders] shall be true and correct in all material respects (without giving effect to
any qualification by materiality or Material Adverse Effect contained therein) as of the date of
this Agreement and as of the Closing Date with the same effect as though made as of the Closing
Date (except to the extent that any such representation and warranty expressly speaks as of a
particular date or period of time, in which case such representation and warranty shall be so true
and correct in all material respects as of such particular date or period of time); (ii) the
representations and warranties of McGraw-Hill and McGraw-Hill Issuer set forth in
Section 3.7(b) [Absence of Certain Changes or Events] shall be true and correct in all respects as
of the date of this Agreement and as of the Closing Date with the same effect as though made as
of the Closing Date; and (iii) each other representation and warranty of McGraw-Hill and
McGraw-Hill Issuer set forth in Article III and Article IV shall be true and correct in all respects
(without giving effect to any qualification by materiality or Material Adverse Effect contained
therein) as of the date of this Agreement and as of the Closing Date (except to the extent that any
such representation and warranty expressly speaks as of a particular date or period of time, in
which case such representation and warranty shall be so true and correct in all respects as of such
particular date or period of time), except, in the case of this clause (iii), for any failure of any
such representation and warranty to be so true and correct in all respects (without giving effect to
any qualification by materiality or Material Adverse Effect contained therein) that would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with
respect to McGraw-Hill.
(b)
Performance of Obligations of McGraw-Hill. McGraw-Hill and McGrawHill Issuer shall have performed and complied in all material respects with the obligations
required to be performed or complied with by them under this Agreement at or prior to the
Closing.
(c)
Certificate. Cengage shall have received a certificate of an executive
officer of McGraw-Hill certifying that the conditions set forth in Section 6.3(a) and
Section 6.3(b) have been satisfied.
(d)
Combined Corporation Governance Matters. (i) The McGraw-Hill Board
shall be composed, simultaneously with the Closing, as contemplated by Section 5.15 and (ii) the
definitive version of the amended and restated certificate of incorporation contemplated by
Section 5.15 shall have been filed with the Certificate of Merger.
(e)
Tax Opinion. Cengage shall have received a written opinion from
Cengage’s Counsel, in form and substance reasonably satisfactory to Cengage, dated as of the
Closing Date, to the effect that, on the basis of the facts, representations and assumptions set
forth or referred to in such opinion, the Parent Merger will qualify as a “reorganization” within
the meaning of Section 368(a) of the Code. In rendering the opinion described in this
Section 6.3(e), Cengage’s Counsel shall have received and shall be entitled to rely on the
Cengage Tax Representation Letter and the McGraw-Hill Tax Representation Letter and such
other information as Cengage’s Counsel reasonably deems relevant.

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 ARTICLE VII
TERMINATION
7.1.
Termination by Mutual Written Consent. This Agreement may be
terminated at any time prior to the Parent Merger Effective Time by mutual written consent of
Cengage and McGraw-Hill.
7.2.
Termination by Either Cengage or McGraw-Hill. This Agreement may be
terminated at any time prior to the Parent Merger Effective Time by McGraw-Hill or Cengage,
if:
(a)
the Parent Merger shall not have been consummated by 5:00 p.m. Eastern
Time on February 1, 2020 (the “Original Outside Date”); provided, that if any of the conditions
to the Closing set forth in Section 6.1(b) or Section 6.1(c) (solely as it relates to any Antitrust
Laws) has not been satisfied or waived (to the extent legally permissible) on or prior to the
Original Outside Date or the First Extended Outside Date, as applicable, but all other conditions
to Closing set forth in Article VI have been satisfied (other than those conditions that by their
nature are to be satisfied at the Closing (so long as such conditions are reasonably capable of
being satisfied if the Closing were to occur on the Outside Date)) or waived (to the extent legally
permissible), (i) the Outside Date may be extended by Cengage or McGraw-Hill (by delivery of
written notice to the other Party no earlier than thirty (30) calendar days prior to the Outside
Date), without further action of the other Party to (and including) 5:00 p.m. Eastern Time on
May 1, 2020 (the Original Outside Date, as so extended, the “First Extended Outside Date”),
and (ii) thereafter, the First Extended Outside Date may be further extended by mutual
agreement of Cengage and McGraw-Hill to (and including) 5:00 p.m. Eastern Time on August 1,
2020 (the Outside Date, as so further extended, the “Second Extended Outside Date” and, each
of the First Extended Outside Date and the Second Extended Outside Date, the “Extended
Outside Date,” and the Original Outside Date, or, if extended, the Extended Outside Date then
in effect, the “Outside Date”), it being agreed that there shall be no more than two such
extensions pursuant to this Section 7.2(a) in the aggregate for Cengage and McGraw-Hill and
that in no event shall the Outside Date occur after 5:00 p.m. Eastern Time on August 1, 2020;
provided, further, that the right to terminate this Agreement pursuant to this Section 7.2(a) shall
not be available to any Party whose action or failure to act has been a principal cause of or
directly resulted in the failure of the Parent Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement; or
(b)
a Relevant Legal Restraint permanently restraining, enjoining or otherwise
prohibiting consummation of the Transactions shall become final and non-appealable.
7.3.
Termination by McGraw-Hill. This Agreement may be terminated at any
time prior to the Parent Merger Effective Time by McGraw-Hill if at any time prior to the Parent
Merger Effective Time, there has been a breach by Cengage, Cengage Intermediate Holdco or
Cengage Issuer of any of their representations, warranties, covenants or agreements set forth in
this Agreement such that the conditions in Section 6.2(a) or Section 6.2(b) would not be satisfied
(and such breach is not curable prior to the Outside Date, or if curable prior to the Outside Date,
has not been cured within the earlier of (a) thirty (30) calendar days after the giving of notice

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 thereof by McGraw-Hill to Cengage or (b) three (3) Business Days prior to the Outside Date);
provided, that McGraw-Hill shall not have the right to terminate this Agreement pursuant to this
Section 7.3 if McGraw-Hill is then in material breach of this Agreement or if any representation
or warranty of McGraw-Hill shall have become untrue, in either case, so as to result in the failure
of any of the conditions set forth in Section 6.3(a) or Section 6.3(b).
7.4.
Termination by Cengage. This Agreement may be terminated at any time
prior to the Parent Merger Effective Time by action of Cengage if at any time prior to the Parent
Merger Effective Time, there has been a breach by McGraw-Hill or McGraw-Hill Issuer of any
of their representations, warranties, covenants or agreements set forth in this Agreement such
that the conditions in Section 6.3(a) or Section 6.3(b) would not be satisfied (and such breach is
not curable prior to the Outside Date, or if curable prior to the Outside Date, has not been cured
within the earlier of (a) thirty (30) calendar days after the giving of notice thereof by Cengage to
McGraw-Hill or (b) three (3) Business Days prior to the Outside Date); provided, that Cengage
shall not have the right to terminate this Agreement pursuant to this Section 7.4 if Cengage is
then in material breach of this Agreement or if any representation or warranty of Cengage shall
have become untrue, in either case, so as to result in the failure of any of the conditions set forth
in Section 6.2(a) or Section 6.2(b).
ARTICLE VIII
MISCELLANEOUS AND GENERAL
8.1.
Survival. This Article VIII and the agreements of Cengage and McGrawHill contained in Article II [Conversion of Securities], Section 1.1(c), [Closing Transactions],
Section 5.5 [Financing and Indebtedness], Section 5.8 [Employee Benefits], Section 5.9 [Certain
Tax Matters], Section 5.10 [Expenses], and Section 5.11 [Indemnification; Directors’ and
Officers’ Insurance] shall survive the consummation of the Mergers. All other representations,
warranties, covenants and agreements in this Agreement or in any instrument or other document
delivered pursuant to this Agreement shall not survive the consummation of the Mergers.
8.2.
Amendment; Waiver. Subject to the provisions of applicable Laws and
the provisions of Section 5.11 [Indemnification; Directors’ and Officers’ Insurance], at any time
prior to the Parent Merger Effective Time, this Agreement may be amended, modified or waived
if, and only if, such amendment, modification or waiver is in writing and signed, in the case of an
amendment, modification or waiver, by Cengage and McGraw-Hill, or in the case of a waiver,
by the Party against whom the waiver is to be effective. The conditions to each of the respective
parties’ obligations to consummate the Transactions are for the sole benefit of such Party and
may be waived by such Party in whole or in part to the extent permitted by applicable Law;
provided, however, that any such waiver shall only be effective if made in writing and executed
by the Party against whom the waiver is to be effective. No failure or delay by any Party in
exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by Law.

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 8.3.
Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement. A signed copy of this Agreement
delivered by facsimile, email or other means of electronic transmission shall be deemed to have
the same legal effect as delivery of an original signed copy of this Agreement.
8.4.
Governing Law and Venue; Submission to Jurisdiction; Selection of
Forum; Waiver of Trial by Jury.
(a)
THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND
IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OR ANY OTHER
JURISDICTION) TO THE EXTENT THAT SUCH PRINCIPLES WOULD DIRECT A
MATTER TO ANOTHER JURISDICTION.
(b)
Each of the Parties agrees that it shall bring any action or Proceeding in
respect of any claim arising under or relating to this Agreement or the Transactions exclusively
in the Court of Chancery for the State of Delaware in and for New Castle County, Delaware (or,
in the event that such court does not have subject matter jurisdiction over such action or
Proceeding, the United States District Court for the District of Delaware) (the “Chosen Court”)
and, solely in connection with such claims, (i) irrevocably submits to the exclusive jurisdiction of
the Chosen Court, (ii) waives any objection to the laying of venue in any such action or
Proceeding in the Chosen Court, (iii) waives any objection that the Chosen Court is an
inconvenient forum or does not have jurisdiction over any Party and (iv) agrees that mailing of
process or other papers in connection with any such action or Proceeding in the manner provided
in Section 8.6 or in such other manner as may be permitted by Law shall be valid and sufficient
service thereof.
(c)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY BE IN CONNECTION WITH, ARISE OUT OF OR
OTHERWISE RELATE TO THIS AGREEMENT, ANY INSTRUMENT OR OTHER
DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT OR OTHER DOCUMENT
DELIVERED PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS, IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH
PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY WITH RESPECT TO ANY ACTION OR PROCEEDING DIRECTLY OR
INDIRECTLY IN CONNECTION WITH, ARISING OUT OF OR OTHERWISE RELATING
TO THIS AGREEMENT, ANY INSTRUMENT OR OTHER DOCUMENT DELIVERED
PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS. EACH PARTY HEREBY
ACKNOWLEDGES AND CERTIFIES (I) THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY
ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(III) IT MAKES THIS WAIVER VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO

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 ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS, ACKNOWLEDGMENTS AND CERTIFICATIONS
CONTAINED IN THIS SECTION 8.4(c).
8.5.
Specific Performance. Each of the Parties acknowledges and agrees that
the rights of each Party to consummate the Transactions are special, unique and of extraordinary
character and that if for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and irreparable harm
or damage would be caused for which money damages would not be an adequate remedy.
Accordingly, each Party agrees that, in addition to any other available remedies a Party may have
in equity or at Law, each Party shall be entitled to enforce specifically the terms and provisions
of this Agreement and to obtain an injunction restraining any breach or violation or threatened
breach or violation of the provisions of this Agreement in the Court of Chancery of the State of
Delaware without necessity of posting a bond or other form of security. In the event that any
action or Proceeding should be brought in equity to enforce the provisions of this Agreement, no
Party shall allege, and each Party hereby waives the defense, that there is an adequate remedy at
Law.
8.6.
Notices. All notices, requests, instructions or other communications or
documents to be given or made hereunder by any Party to the other Parties shall be in writing
and shall be deemed to have been duly given when (a) served by personal delivery or by an
internationally recognized overnight courier service upon the Party or Parties for whom it is
intended, (b) delivered by registered or certified mail, return receipt requested or (c) sent by
email, provided that the transmission of the email is promptly confirmed by telephone or
response email:
If to Cengage, Cengage Intermediate Holdco or Cengage Issuer:
Cengage Learning, Inc.
20 Channel Center Street
Boston, MA 02210
Attention:
Laura Stevens, General Counsel and Secretary
Telephone: (617) 757-8370
E-mail:
laura.stevens@cengage.com
With a copy (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention:
Steven A. Cohen
Alison Z. Preiss
Telephone: (212) 403-1000
E-mail:
sacohen@wlrk.com
azpreiss@wlrk.com

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 If to McGraw-Hill or McGraw-Hill Issuer:
McGraw-Hill Education, Inc.
2 Penn Plaza, 20th Floor
New York, NY 10121
Attention:
David B. Stafford, General Counsel and Secretary
Telephone: (646) 766-2626
E-mail:
david.stafford@mheducation.com
With a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Attention:
Brian P. Finnegan
Telephone: (212) 373-3079
E-mail:
bfinnegan@paulweiss.com
or to such other Person or addressees as has been designated in writing by the party to receive
such notice provided above.
8.7.

Definitions.

(a)
For purposes of this Agreement, the following terms (including, with
correlative meaning, their singular and plural variations) shall have the following meanings:
“Acquisition Proposal” means any proposal, offer or indication of interest
relating to a possible transfer, disposition, sale or similar transaction to any Person (other than
the Parties) of all or any material portion of the assets of, more than a de minimis portion of any
equity interests of, or any acquisition or merger of such Party and its Subsidiaries (other than
assets such Party sold in the ordinary course of business or as permitted by Section 5.1 ).
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with, such first Person. Notwithstanding the foregoing, for purposes of this Agreement,
(i) none of the stockholders of Cengage or McGraw-Hill or their respective Affiliates, solely by
virtue of being stockholders of Cengage or McGraw-Hill, shall be considered Affiliates of any
other stockholder of Cengage or McGraw-Hill, as applicable, or such other stockholder’s
Affiliates or Affiliates of Cengage or McGraw-Hill, and (ii) no operating portfolio company
(other than McGraw-Hill and its Subsidiaries) of any investment fund affiliates of Apollo Global
Management, LLC shall be deemed Affiliates of McGraw-Hill or its Subsidiaries, nor shall
McGraw-Hill or its Subsidiaries be deemed Affiliates of any operating portfolio company (other
than McGraw-Hill and its Subsidiaries) of any investment fund affiliate of Apollo Global
Management, LLC.
“Antitrust Law” means the Sherman Antitrust Act of 1890, as amended, the
Clayton Act of 1914, as amended, the HSR Act, the Federal Trade Commission Act of 1914, as
amended, and all other United States or non-United States, including state, national, or
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 supranational, antitrust, competition or other Laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
“Benefit Plan” means any benefit or compensation plan, program, policy,
practice, agreement, contract, arrangement or other obligation, whether or not in writing and
whether or not funded, in each case, that is sponsored or maintained by, or required to be
contributed to, or with respect to which any potential liability is borne by Cengage or McGrawHill or any of their respective Subsidiaries. Benefit Plans include, but are not limited to,
“employee benefit plans” within the meaning of ERISA, employment, non-compete or nonsolicit, consulting, retirement, severance, termination or change in control agreements, deferred
compensation, equity-based, incentive, bonus, supplemental retirement, profit sharing, insurance,
medical, health, welfare, fringe or other benefits or remuneration of any kind.
“Business Day” means any day ending at 11:59 p.m. (Eastern Time) other than a
Saturday or Sunday or a day on which banks in the City of New York, New York are required or
authorized by Law to be closed.
“Cengage ABL Agreement” means the Revolving Credit Agreement, dated as of
March 31, 2014, among Cengage Intermediate Holdco, Cengage Issuer, Cengage, the lenders
and other parties from time to time party thereto, and Citibank, N.A., as administrative agent,
and the loan documents relating thereto, in each case as amended, amended and restated,
supplemented or otherwise modified from time to time.
“Cengage Benefit Plan” means any Benefit Plan that is sponsored or maintained
by, or required to be contributed to, or with respect to which any potential liability is borne by
Cengage or any of its Subsidiaries.
“Cengage Equity Awards” means Cengage Options and Cengage RSU Awards.
“Cengage Non-Rollover RSU Award” means each Cengage RSU Award that
either (i) is vested as of immediately prior to the Parent Merger Effective Time but for which
shares of Cengage Common Stock have not yet been issued or (ii) becomes vested upon the
occurrence of the Parent Merger Effective Time in accordance with its terms (in each case, as
determined by the Cengage Board in its sole discretion).
“Cengage Option” means each option to purchase shares of Cengage Common
Stock granted under a Cengage Stock Plan.
“Cengage Rollover Option” means each Cengage Option that is not a Cengage
Specified Option.
“Cengage Rollover RSU Award” means each Cengage RSU Award that is not a
Cengage Non-Rollover RSU Award.
“Cengage RSU Award” means each restricted stock unit relating to shares of
Cengage Common Stock granted under a Cengage Stock Plan.

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 “Cengage Specified Option” means each vested Cengage Option with a per
share exercise price that is equal to or less than $18.00.
“Cengage Stock Plans” means (i) the Cengage 2014 Equity Incentive Plan, as
amended June 2014, (ii) the Cengage 2018 Equity Incentive Plan and (iii) the Cengage 2014
Equity Purchase Plan.
“Cengage Term Loan Agreement” means the Term Loan Credit Agreement,
dated as of March 31, 2014, among Cengage Intermediate Holdco, Cengage Issuer, Cengage, the
lenders and other parties from time to time party thereto, and Credit Suisse AG, Cayman Islands
Branch, as administrative agent, and the loan documents relating thereto, in each case as
amended, amended and restated, supplemented or otherwise modified from time to time.
“Contract” means any oral or written contract, agreement, lease, license, note,
mortgage, indenture, arrangement or other obligation (other than a Benefit Plan).
“Controlled Group Liability” means any and all liabilities (i) under Title IV of
ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, (iv) as a
result of a failure to comply with the continuation coverage requirements of Section 601 et seq.
of ERISA and Section 4980B of the Code and (v) any similar liability under applicable Law in
any jurisdiction outside of the United States.
“Effect” means any effect, development, change or circumstance.
“Employee” means any current or former employee, officer, director or
independent contractor (who is a natural person) of Cengage or McGraw-Hill or any of their
respective Subsidiaries, as applicable.
“Environmental Law” means any Law relating to: (i) the protection,
investigation or restoration of the environment or natural resources, (ii) the handling, use,
disposal, release or threatened release of, or exposure to any harmful or deleterious substances or
(iii) indoor air quality, wetlands, pollution, contamination or any injury or threat of injury to
persons or property arising from any harmful or deleterious substances.
“ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA Affiliate” means all employers (whether or not incorporated) that would
be treated together with Cengage or McGraw-Hill or any of their respective Subsidiaries, as
applicable, as a “single employer” within the meaning of Section 414 of the Code.
“ERISA Plans” means each Benefit Plan that is an “employee benefit plan”
within the meaning of Section 3(3) of ERISA, excluding Multiemployer Plans.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Financing Amendments” means certain amendments to and/or refinancings of
the McGraw-Hill Credit Agreement and the Cengage Term Loan Agreement to, among other

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 things, (i) extend the maturity of the Initial Term B Loans, the Term B-1 Loans and the Initial
Revolving Loans outstanding under the McGraw-Hill Credit Agreement (each as defined
therein) and make such other amendment to the terms thereof as shall be mutually agreed and (ii)
extend the maturity date of the Term Loans outstanding under the Cengage Term Loan
Agreement (as defined therein) and make such other amendments to the terms thereof as shall be
mutually agreed, which amendment and extension may take the form of an amendment and
restatement of each of the McGraw-Hill Credit Agreement and the Cengage Term Loan
Agreement into a consolidated credit agreement, and which amendments to and/or refinancings
shall be subject to the following minimum consents levels: participation by (x) lenders holding at
least ninety percent (90%) of the principal amount of the term loans under the McGraw-Hill
Credit Agreement, (y) lenders holdings at least ninety percent (90%) of the principal amount of
the term loans under the Cengage Term Loan Agreement and (z) lenders holdings at least ninety
percent (90%) of the amount of the revolving facility commitments under the McGraw-Hill
Credit Agreement, in each case outstanding as of the date of such amendments.
“GAAP” means accounting principles generally accepted in the United States as
in effect from time to time
“Governmental Entity” means any United States, non-United States,
supranational or transnational governmental (including public international organizations), quasigovernmental, regulatory or self-regulatory authority, agency, commission, body, department or
instrumentality or any court, tribunal or arbitrator or other entity or subdivision thereof or other
legislative, executive or judicial entity or subdivision thereof, in each case, of competent
jurisdiction.
“Hazardous Materials” means (i) petroleum, petroleum products and byproducts, asbestos and asbestos-containing materials, polychlorinated biphenyls, mold, and
radioactive substances and (ii) any other chemical, material, substance, waste, pollutant or
contaminant that is prohibited or regulated by or pursuant to, any Environmental Law.
“Higher Ed Titles” means titles that are sold primarily in the higher education
market.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
“Indebtedness” means, with respect to any Person, without duplication, all
obligations or undertakings by such Person (i) for borrowed money (including deposits or
advances of any kind to such Person); (ii) evidenced by bonds, debentures, notes or similar
instruments; (iii) for capitalized leases or to pay the deferred and unpaid purchase price of
property or equipment; (iv) pursuant to securitization or factoring programs or arrangements;
(v) pursuant to guarantees and arrangements having the economic effect of a guarantee of any
Indebtedness of any other Person (other than between or among any of McGraw-Hill and its
wholly owned Subsidiaries or between or among any of Cengage and its wholly owned
Subsidiaries); (vi) to maintain or cause to be maintained the financing, financial position or
financial covenants of others; (vii) net cash payment obligations of such Person under swaps,
options, derivatives and other hedging Contracts or arrangements that will be payable upon

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 termination thereof (assuming termination on the date of determination); (viii) all obligations of
such Person in respect of deferred purchase price with respect to the acquisition by such Person
of any business, division or product line or portion thereof (whether by merger, sale of stock,
sale of assets or otherwise) (including any outstanding “earn-outs” and “seller notes” payable
with respect to the acquisition of any business, division or product line); or (ix) letters of credit,
bank guarantees, and other similar Contracts or arrangements entered into by or on behalf of
such Person.
“Intellectual Property” means all intellectual and industrial property rights
anywhere in the world (whether foreign, state or domestic, registered or unregistered), including
rights arising under or with respect to: (i) patents and utility models of any kind, patent
applications, including provisional applications, statutory invention registrations, inventions,
discoveries and invention disclosures (whether or not patented), and all related continuations,
continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions
thereof, (ii) trademarks, service marks, trade dress, logos, Internet domain names, uniform
resource locators, social and mobile media identifiers and other similar identifiers of origin, trade
names and corporate names, whether registered or unregistered, and the goodwill associated
therewith, together with any registrations and applications for registration thereof,
(iii) copyrights, mask works, rights under copyrights and corresponding rights in, industrial
designs, and works of authorship (including computer software, applications, source code and
object code, and databases and other compilations of information), whether registered or
unregistered, and any registrations, renewals and applications for registration thereof, (iv) trade
secrets and other rights in know-how and confidential or proprietary information, including in
any technical data, specifications, designs, techniques, processes, methods, inventions,
discoveries, software, algorithms and databases and the information contained therein, in each
case, to the extent that it qualifies as a trade secret under applicable Law and (v) all other
intellectual and industrial property rights recognized by applicable Law.
“IT Assets” means computers, software, firmware, middleware, servers,
workstations, routers, hubs, switches, networks, data communications lines and all other
information technology equipment and all associated documentation.
“Knowledge” (i) with respect to Cengage or any of its Subsidiaries means actual
knowledge of the Persons listed on Section 8.7(a)(i) of the Cengage Disclosure Letter and
(ii) with respect to McGraw-Hill or any of its Subsidiaries means actual knowledge of the
Persons listed on Section 8.7(a)(i) of the McGraw-Hill Disclosure Letter, in each case after
reasonably inquiry of their respective employees who would reasonably be expected to have
actual knowledge over the matter in question.
“Laws” means any federal, state, local, foreign, international or transnational law,
statute, ordinance, common law, rule, regulation, standard, judgment, determination, Order, writ,
injunction, decree, arbitration award, treaty, agency requirement, authorization, license or permit
of any Governmental Entity.
“Leased Real Property” with respect to Cengage or McGraw-Hill, means all
leasehold or subleasehold estates and other rights to use and occupy any land, buildings,

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 structures, improvements, fixtures or other interest in Real Property held by Cengage and any of
its Subsidiaries or McGraw-Hill and any of its Subsidiaries, as applicable.
“Licenses” means all permits, licenses, certifications, approvals, registrations,
consents, authorizations, franchises, variances, exemptions and Order issued or granted by a
Governmental Entity.
“Material Adverse Effect” with respect to Cengage or McGraw-Hill, means any
Effect that is materially adverse to the business, condition (financial or otherwise) or results of
operations of such Party and its Subsidiaries, taken as a whole; provided, that none of the
following, alone or in combination, shall be deemed to constitute a Material Adverse Effect, or
be taken into account in determining whether a Material Adverse Effect has occurred or would
reasonably be expected to occur:
(i)
Effects generally affecting (A) the economy, credit, capital,
securities or financial markets in the United States or elsewhere in the world, including changes
to interest rates and exchange rates, or (B) political, regulatory or business conditions in any
jurisdiction in which such Party or any of its Subsidiaries has material operations or where any of
such Party’s or any of its Subsidiaries’ products or services are sold;
(ii)
Effects generally affecting the industry, markets or geographical
areas in which such Party and its Subsidiaries operate;
(iii)
any loss of, or adverse Effect in, the relationship of such Party or
any of its Subsidiaries, contractual or otherwise, with customers, Employees, unions, suppliers,
distributors, financing sources, partners or similar relationship to the extent caused by the entry
into, announcement or consummation of the Transactions (provided that the exception in this
clause (iii) shall not apply to the representations and warranties contained in Section 3.4(b));
(iv)
the performance by any Party of its obligations to the extent
expressly required under this Agreement or the consummation of the Transactions (including any
specific action permitted by or failing to take any action prohibited by, this Agreement);
(v)
any action taken (or not taken) by such Party or any of its
Subsidiaries at the written request of the other Party, which action taken (or not taken) is not
required under the terms of this Agreement;
(vi)
changes or modifications, and prospective changes or
modifications, in GAAP or in any Law of general applicability, including the repeal thereof, or in
the interpretation or enforcement thereof, after the date of this Agreement;
(vii) any failure, in and of itself, by such Party to meet any internal or
public projections or forecasts or estimates of revenues or earnings for any period; provided, that
the exception in this clause (vii) shall not prevent or otherwise affect a determination that any
Effect underlying such failure has resulted in, or contributed to, or would reasonably be expected
to result in, or contribute to, a Material Adverse Effect (if not otherwise falling within any of the
exceptions in clauses (i) through (vi) or (viii) and (ix)); or

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 (viii) any acts of war (whether or not declared), civil disobedience,
hostilities, sabotage, terrorism, geopolitical conditions, military actions or the escalation or
worsening of any of the foregoing, any hurricane, flood, tornado, earthquake or other weather or
natural disaster, or any outbreak of illness or other public health event or any other force majeure
event, whether or not caused by any Person; or
(ix)
in the case of Cengage, (A) a decline in the market price, or change
in trading volume, in and of itself, of the shares of common stock of Cengage on the over-thecounter, or OTC, market, or (B) any ratings downgrade or change in ratings outlook for such
Party or any of its Subsidiaries; provided, that the exceptions in this clause (ix) shall not prevent
or otherwise affect a determination that any Effect underlying such decline or change has
resulted in, or contributed to, or would reasonably be expected to result in, or contribute to, a
Material Adverse Effect (if not otherwise falling within any of the exceptions in clauses (i)
through (viii));
provided, further, that, with respect to clauses (i), (ii), (vi) and (viii), such Effect shall be taken
into account in determining whether a Material Adverse Effect has occurred if it
disproportionately adversely affects such Party and its Subsidiaries, taken as a whole, compared
to other companies and their respective Subsidiaries, taken as a whole, of comparable size,
operating in the industries in which such Party and its Subsidiaries operate, but, in such event,
only the incremental disproportionate impact of any such Effect shall be taken into account in
determining whether a Material Adverse Effect has occurred.
“McGraw-Hill Benefit Plan” means any Benefit Plan that is sponsored or
maintained by, or required to be contributed to, or with respect to which any potential liability is
borne by McGraw-Hill or any of its Subsidiaries.
“McGraw-Hill Credit Agreement” means the First Lien Credit Agreement,
dated as of May 4, 2016, among McGraw Hill Global Education Intermediate Holdings, LLC,
McGraw-Hill Issuer, the lenders and other parties from time to time party thereto, and Credit
Suisse AG, Cayman Islands Branch, as administrative agent, and the loan documents relating
thereto, in each case as amended, amended and restated, supplemented or otherwise modified
from time to time.
“McGraw-Hill Equity Awards” means McGraw-Hill Options and McGraw-Hill
RSU Awards.
“McGraw-Hill Option” means each option to purchase shares of Existing
McGraw-Hill Common Stock granted under the McGraw-Hill Stock Plan.
“McGraw-Hill Rollover Option” means each McGraw-Hill Option that is not a
McGraw-Hill Specified Option.
“McGraw-Hill RSU Award” means each restricted stock unit award relating to
shares of Existing McGraw-Hill Common Stock granted under the McGraw-Hill Stock Plan.
“McGraw-Hill Specified Option” means each vested McGraw-Hill Option with
a per share exercise price that is equal to or less than $75.00.
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 “McGraw-Hill Stock Plan” means (i) the McGraw-Hill Management Equity
Plan and (ii) the Engrade Inc. 2011 Stock Plan.
“Order” means any order, writ, judgment, temporary, preliminary or permanent
injunction, decree, ruling, stipulation, determination, or award entered by or with any
Governmental Entity.
“Ordinary Course” means, with respect to an action taken by any Person, that
such action is in the ordinary course of business of such Person.
“Organizational Documents” means, with respect to any Person: (i) (A) that is a
corporation, its articles or certificate of incorporation, memorandum and articles of association,
as applicable, and bylaws, or comparable documents, (B) that is a partnership, its certificate of
partnership and partnership agreement, or comparable documents, (C) that is a limited liability
company, its certificate of formation and limited liability company or operating agreement, or
comparable documents, (D) that is a trust or other entity, its declaration or agreement of trust or
other constituent document or comparable documents and (E) that is not an individual, its
comparable organizational documents; and (ii) any shareholders agreement, investors rights
agreement or similar Contract entered into by any security holders of such Person and relating to
such Person.
“Owned Real Property” with respect to Cengage or McGraw-Hill, means all
land, together with all buildings, structures, improvements and fixtures located thereon, and all
easements and other rights and interests appurtenant thereto, owned by Cengage and any of its
Subsidiaries or McGraw-Hill and any of its Subsidiaries, as applicable.
“Permitted Encumbrances” means (i) mechanics’, materialmen’s, carriers’,
workmen’s, repairmen’s, vendors’, operators’ or other like Encumbrances, if any, arising or
incurred in the Ordinary Course that (A) relate to obligations as to which there is no default on
the part of Cengage, McGraw-Hill or any of their respective Subsidiaries, and that do not
materially detract from the value of or materially interfere with the use of any of the assets of the
Party and its Subsidiaries as currently conducted or (B) are being contested in good faith through
appropriate Proceedings and for which adequate reserves have been established in accordance
with GAAP; (ii) Rights-of-Way, covenants, conditions, restrictions and other similar matters of
record affecting title and other title defects of record or Encumbrances (other than those
constituting Encumbrances for the payment of Indebtedness), if any, that do not or would not,
individually or in the aggregate, impair in any material respect the use or occupancy of the assets
of the Party and its Subsidiaries, taken as a whole; (iii) Encumbrances for Taxes or other
governmental charges that are not yet due or payable or that are being contested in good faith
through appropriate Proceedings and for which adequate reserves have been established in
accordance with GAAP; (iv) Encumbrances supporting surety bonds, performance bonds and
similar obligations issued in the Ordinary Course in connection with the businesses of the Party
and its Subsidiaries; (v) Encumbrances not created by the Party or its Subsidiaries that affect the
underlying fee interest of a Cengage Leased Real Property (in the case of Cengage) or McGrawHill Leased Real Property (in the case of McGraw-Hill); (vi) Encumbrances that are disclosed
with specificity on the most recent consolidated balance sheet of the Party included in the
Financial Statements or notes thereto or securing liabilities reflected on such balance sheet;

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 (vii) Encumbrances arising under or pursuant to the Organizational Documents of the Party or
any of its Subsidiaries; (viii) with respect to Rights-of-Way, restrictions on the exercise of any of
the rights under a granting instrument that are set forth therein or in another executed agreement,
that is of public record or to which the Party or any of its Subsidiaries otherwise has access,
between the parties thereto; (ix) as to McGraw-Hill or Cengage, Encumbrances resulting from
any facts or circumstances relating to the other Party or any of its Affiliates; (x) Encumbrances
that do not and would not reasonably be expected to materially impair, in the case of Cengage,
the continued use of a Cengage Owned Real Property or a Cengage Leased Real Property as
presently operated, and in the case of McGraw-Hill, the continued use of an McGraw-Hill
Owned Real Property or an McGraw-Hill Leased Real Property as presently operated; (xi) nonexclusive licenses to Intellectual Property; (xii) restrictions or exclusions that would be shown by
a current title report or other similar report; and (xiii) specified Encumbrances described in
Section 8.7(a)(ii) of such Party’s Disclosure Letter.
“Person” means an individual, corporation (including not-for-profit),
Governmental Entity, general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, unincorporated organization, other entity of any kind or
nature or group (as defined in Section 13(d)(3) of the Exchange Act).
“Personal Data” means a natural person’s name, street address, telephone
number, e-mail address, photograph, identification number, social security number, governmentissued identifier or tax identification number, driver’s license number, passport number, credit
card number, bank information, Internet protocol address, device identifier or any other piece of
information that, alone or together with other information held by a Party and its Subsidiaries,
allows the identification of a natural person.
“Proceeding” means any action, cause of action, claim, demand, litigation, suit,
grievance, citation, summons, subpoena, inquiry, audit, hearing, originating application to a
tribunal, arbitration or other similar proceeding of any nature, civil, criminal, regulatory,
administrative or otherwise, whether in equity or at law, in contract, in tort or otherwise.
“Pro Forma Ratio” means the quotient of (i) the aggregate number of issued and
outstanding shares of Existing McGraw-Hill Common Stock as of immediately prior to the
Parent Merger Effective Time (which, for the avoidance of doubt, shall include McGraw-Hill
Specified Option Delivered Shares, but not McGraw-Hill Specified Option Withheld Shares)
divided by (ii) (A) the aggregate number of issued and outstanding shares of Cengage Common
Stock as of immediately prior to the Parent Merger Effective Time (which, for the avoidance of
doubt, shall include Cengage Specified Option Delivered Shares and Cengage RSU Delivered
Shares, but not Cengage Specified Option Withheld Shares or Cengage RSU Withheld Shares)
minus (B) the aggregate number of Dissenting Shares.
“Real Property” means, collectively, the Owned Real Property and the Leased
Real Property.
“Real Property Lease” means all leases, subleases, licenses and other
agreements under which each such Party and its Subsidiaries leases, subleases, licenses, uses or

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 occupies the Leased Real Property (in each case as tenant, subtenant, licensee, or pursuant to
other occupancy arrangements).
“Registered Intellectual Property” means all Intellectual Property owned by
McGraw-Hill and its Subsidiaries or Cengage and its Subsidiaries, as applicable, that is
registered, recorded or filed under the authority of, with or by any Governmental Entity or
Internet domain name registrar in any jurisdiction, including pending applications for any of the
foregoing.
“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing, or arranging for disposal, into
the indoor or outdoor environment.
“Requisite Cengage Stockholder Approval” means the adoption of this
Agreement by the holders of a majority of the outstanding shares of Cengage Common Stock.
“Requisite McGraw-Hill Stockholder Approval” means the approval of the
Certificate Amendment by the holders of a majority of the outstanding shares of Existing
McGraw-Hill Common Stock.
“Rights-of-Way” means easements, licenses, rights-of-way, permits, servitudes,
leasehold estates, instruments creating an interest in real property, and other similar real estate
interests.
“Subsidiary” means, with respect to any Person, any other Person of which (i) at
least a majority of the securities or ownership interests of such other Person is directly or
indirectly owned or controlled by such Person, or (ii) the power to vote or direct voting of
sufficient voting securities, other voting rights or voting partner interests to elect a majority of
the board of directors or other persons performing similar functions is directly or indirectly
owned or controlled by such Person or by one or more of its Subsidiaries.
“Tax” means all federal, state, local and foreign income, windfall or other profits,
franchise, gross receipts, environmental, customs duty, capital stock, severances, stamp, transfer,
payroll, sales, employment, unemployment, disability, use, real and personal property,
withholding, excise, production, value added, escheat, unclaimed property, occupancy and other
taxes, levies, duties or assessments in each case in the nature of a tax, together with all interest,
penalties and additions to Tax imposed with respect to such amounts and any interest in respect
of such penalties and additions to Tax.
“Tax Return” means all returns and reports (including elections, declarations,
claims for refund, disclosures, schedules, estimates and information returns) supplied to, or
required to be supplied to, a Governmental Entity responsible for the administration or collection
of Tax.
“Treasury Regulations” means Part 1 of Title 26, Chapter I, Subchapter A of the
Code of Federal Regulations.

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 (b)

The following terms are defined elsewhere in this Agreement, as indicated

below:
280G Party ............................................................................................................................... 5.8(c)
Affiliate Agreements .................................................................................................................. 3.20
Agreement .......................................................................................................................... Preamble
Applicable Date ....................................................................................................................... 3.5(a)
Balance Sheet Date .................................................................................................................. 3.6(a)
Bankruptcy and Equity Exception ............................................................................................... 3.3
Burdensome Effect................................................................................................................... 5.3(e)
Cancelled Shares ...................................................................................................................... 2.2(a)
Cengage.............................................................................................................................. Preamble
Cengage Board ..................................................................................................................... Recitals
Cengage Common Stock.............................................................................................................. 2.1
Cengage Continuing Employees .............................................................................................. 5.8(a)
Cengage Disclosure Letter ................................................................................................ Article III
Cengage Indenture ............................................................................................................ Article III
Cengage Intermediate Holdco............................................................................................ Preamble
Cengage Irrevocable Written Consent ................................................................................... 5.14(a)
Cengage Issuer ................................................................................................................... Preamble
Cengage RSU Delivered Shares .......................................................................................... 2.4(c)(i)
Cengage RSU Earned Shares ............................................................................................... 2.4(c)(i)
Cengage RSU Withheld Shares ........................................................................................... 2.4(c)(i)
Cengage Shareholders Agreement .................................................................................... Article III
Cengage Specified Option Delivered Shares ....................................................................... 2.4(c)(i)
Cengage Specified Option Earned Shares ........................................................................... 2.4(c)(i)
Cengage Specified Option Withheld Shares ........................................................................ 2.4(c)(i)
Cengage Tax Representation Letter ......................................................................................... 5.9(b)
Cengage’s Counsel................................................................................................................... 5.9(b)
Certificate Amendment ........................................................................................................ 1.1(c)(i)
Certificate Amendment Effective Time ................................................................................... 1.3(b)
Certificate of Amendment.................................................................................................. 1.3(a)(iii)
Certificate of Issuer Ownership ........................................................................................... 1.3(a)(i)
Certificate of Merger.......................................................................................................... 1.3(a)(iv)
Certificate of Ownership ...................................................................................................... 1.3(a)(i)
Chosen Court ........................................................................................................................... 8.4(b)
Class A Common Stock ..................................................................................................1.1(c)(i)(A)
Class B Common Stock .................................................................................................. 1.1(c)(i)(B)
Class C Common Stock .................................................................................................. 1.1(c)(i)(C)
Closing ......................................................................................................................................... 1.2
Closing Date................................................................................................................................. 1.2
Code ..................................................................................................................................... Recitals
Combined Corporation......................................................................................................... 1.1(c)(i)
Confidentiality Agreement........................................................................................................... 8.8
Continuing Employees ............................................................................................................. 5.8(b)
Converted Cengage Option ................................................................................................ 2.4(a)(iii)
Converted Cengage RSU Award ....................................................................................... 2.4(a)(iv)
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 Converted McGraw-Hill Option .......................................................................................... 2.4(a)(i)
Converted McGraw-Hill RSU Award ................................................................................ 2.4(a)(ii)
D&O Insurance ...................................................................................................................... 5.11(b)
Delaware Secretary ............................................................................................... 1.3(a)(i), 1.3(a)(i)
Delinquent Holder .................................................................................................................... 2.6(b)
DGCL.....................................................................................................................Recitals, Recitals
Disclosure Letter ............................................................................................................... Article III
Dissenting Share .......................................................................................................................... 2.7
Dissenting Stockholder ................................................................................................................ 2.7
DLLCA ................................................................................................................................ Recitals
Encumber ................................................................................................................................. 4.1(a)
Encumbrance............................................................................................................................ 4.1(a)
Existing McGraw-Hill Common Stock ..........................................................................1.1(c)(i)(A)
Extended Outside Date ............................................................................................................ 7.2(a)
FCPA...................................................................................................................................... 3.11(e)
Filings ...................................................................................................................................... 3.4(a)
Financial Statements ................................................................................................................ 3.6(a)
Financing Transaction .............................................................................................................. 5.5(a)
First Extended Outside Date .................................................................................................... 7.2(a)
Governmental Antitrust Entity............................................................................................. 5.3(d)(i)
Holdco Merger ..................................................................................................................... Recitals
Holdco Merger Effective Time ................................................................................................ 1.3(b)
Indemnified Parties ................................................................................................................ 5.11(a)
Insurance Policies ...................................................................................................................... 3.16
Interested Party .......................................................................................................................... 3.20
Issuer Merger ....................................................................................................................... Recitals
Issuer Merger Effective Time .................................................................................................. 1.3(b)
Labor Organization ................................................................................................................ 3.10(a)
Material Contract ................................................................................................................... 3.17(a)
McGraw-Hill ...................................................................................................................... Preamble
McGraw-Hill Acquisition ........................................................................................................ 4.1(b)
McGraw-Hill Board ............................................................................................................. Recitals
McGraw-Hill Continuing Employees ...................................................................................... 5.8(a)
McGraw-Hill Disclosure Letter ........................................................................................ Article III
McGraw-Hill Holding Companies ........................................................................................... 4.1(b)
McGraw-Hill Indenture .................................................................................................... Article III
McGraw-Hill Intermediate Holdco .......................................................................................... 4.1(b)
McGraw-Hill Issuer ........................................................................................................... Preamble
McGraw-Hill Parent................................................................................................................. 4.1(b)
McGraw-Hill Specified Option Delivered Shares ................................................................... 2.4(b)
McGraw-Hill Specified Option Earned Shares........................................................................ 2.4(b)
McGraw-Hill Specified Option Withheld Shares .................................................................... 2.4(b)
McGraw-Hill Stockholders Agreement ................................................................................... 3.1(b)
McGraw-Hill Tax Representation Letter ................................................................................. 5.9(b)
McGraw-Hill US Holdings ...................................................................................................... 4.1(b)
McGraw-Hill’s Counsel ........................................................................................................... 5.9(b)

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 Merger Consideration .............................................................................................................. 2.2(b)
Mergers ................................................................................................................................ Recitals
Multiemployer Plan ................................................................................................................. 3.9(b)
Non-U.S. Benefit Plans .............................................................................................................3.9(i)
OFAC ..................................................................................................................................... 3.11(d)
Original Outside Date .............................................................................................................. 7.2(a)
Other Antitrust Approvals........................................................................................................ 5.3(a)
Outside Date............................................................................................................................. 7.2(a)
Parent Merger....................................................................................................................... Recitals
Parent Merger Effective Time ................................................................................................. 1.3(b)
Party ................................................................................................................................... Preamble
Regulatory Remedy ............................................................................................................ 5.3(d)(ii)
Relevant Legal Restraint .......................................................................................................... 6.1(c)
Reports ..................................................................................................................................... 3.5(a)
Representatives ........................................................................................................................ 5.2(a)
Required FI Approval .............................................................................................................. 5.3(a)
Requisite Regulatory Approvals .............................................................................................. 6.1(b)
Residual Common Stock.................................................................................................1.1(c)(i)(D)
Second Extended Outside Date ................................................................................................ 7.2(a)
Second Request ........................................................................................................................ 5.3(a)
Stockholder Notice.......................................................................................................... 5.14(b)5.14
Surviving Corporation ............................................................................................................. 1.1(a)
Surviving Issuer ....................................................................................................................... 1.1(d)
Tail Period.............................................................................................................................. 5.11(b)
Takeover Statute ........................................................................................................................ 3.12
Term Loan Agreement ...................................................................................................... Article III
Transactions ......................................................................................................................... Recitals
8.8.
Entire Agreement. This Agreement (including any exhibits hereto), the
Cengage Disclosure Letter, the McGraw-Hill Disclosure Letter, the Mutual Non-Disclosure
Agreement, dated as of November 2018, between Cengage and McGraw-Hill (the
“Confidentiality Agreement”) and the Joint Defense Agreement, dated as of November 8,
2018, between McGraw-Hill and Cengage constitute the entire agreement among the Parties with
respect to the subject matter of this Agreement and supersedes all prior and contemporaneous
agreements, negotiations, understandings and representations and warranties, whether oral or
written, with respect to such matters, except for the Confidentiality Agreement, which shall
remain in full force and effect until the Closing.
8.9.
Third-Party Beneficiaries. Cengage and McGraw-Hill hereby agree that
their respective representations, warranties and covenants set forth in this Agreement are solely
for the benefit of the other Parties hereto, in accordance with and subject to the terms of this
Agreement, and this Agreement is not intended to, and does not, confer upon any Person other
than McGraw-Hill, Cengage and their respective successors, legal representatives and permitted
assigns any rights or remedies, express or implied, hereunder, including the right to rely upon the
representations and warranties set forth in this Agreement, except with respect to (a) Section 5.11
and (b) after the Parent Merger Effective Time, the provisions of Article II relating to the
payment of the Merger Consideration, any dividends or other distributions payable pursuant
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 thereto, which shall inure to the benefit of, and be enforceable by, holders of Cengage Common
Stock and Cengage Equity Awards as of immediately prior to the Parent Merger Effective Time
(to the extent necessary to receive the consideration and amounts due to such Persons
thereunder). The representations and warranties in this Agreement are the product of
negotiations among the Parties. Any inaccuracies in such representations and warranties are
subject to waiver by the Parties in accordance with Section 8.2 without notice or liability to any
other Person. In some instances, the representations and warranties in this Agreement may
represent an allocation among the Parties of risks associated with particular matters regardless of
the knowledge of any of the Parties. Consequently, Persons other than the Parties may not rely
upon the representations and warranties in this Agreement as characterizations of actual facts or
circumstances as of the date of this Agreement or as of any other date.
8.10. Fulfillment of Obligations. Whenever this Agreement requires a
Subsidiary of McGraw-Hill to take any action, such requirement shall be deemed to include an
undertaking on the part of McGraw-Hill to cause such Subsidiary to take such action and, after
the Parent Merger Effective Time, on the part of the Combined Corporation to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of Cengage to
take any action, such requirement shall be deemed to include an undertaking on the part of
Cengage to cause such Subsidiary to take such action and, after the Parent Merger Effective
Time, on the part of the Combined Corporation to cause such Subsidiary to take such action.
Any obligation of one Party to another Party under this Agreement, which obligation is
performed, satisfied or fulfilled by an Affiliate of such Party, shall be deemed to have been
performed, satisfied or fulfilled by such Party.
8.11. Non-Recourse. Unless expressly agreed to otherwise by the Parties in
writing, this Agreement may only be enforced against, and any Proceeding in connection with,
arising out of or otherwise resulting from this Agreement, any instrument or other document
delivered pursuant to this Agreement or the transactions may only be brought against the Persons
expressly named as Parties and then only with respect to the specific obligations set forth herein
with respect to such Party. No past, present or future director, Employee (including any officer),
incorporator, manager, member, partner, stockholder, other equity holder or Persons in a similar
capacity, controlling person, Affiliate or other Representative of any Party or of any Affiliate of
any Party, or any of their respective successors, Representatives and permitted assigns, shall
have any liability or other obligation for any obligation of any Party under this Agreement or for
any Proceeding in connection with, arising out of or otherwise resulting from this Agreement,
any instrument or other document delivered pursuant to this Agreement or the Transactions.
8.12. Severability. The provisions of this Agreement shall be deemed severable
and the illegality, invalidity or unenforceability of any provision shall not affect the legality,
validity or enforceability of the other provisions of this Agreement. If any provision of this
Agreement, or the application of such provision to any Person or any circumstance, is illegal,
invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in
order to carry out, insofar as may be legal, valid and enforceable, the intent and purpose of such
illegal, invalid or unenforceable provision, and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be affected by such
illegality, invalidity or unenforceability, nor shall such illegality, invalidity or unenforceability

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 affect the legality, validity or enforceability of such provision, or the application of such
provision, in any other jurisdiction.
8.13.

Interpretation; Construction.

(a)
The table of contents and headings herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise
affect any of the provisions hereof. All article, section, subsection, schedule, annex and exhibit
references used in this Agreement are to articles, sections, subsections, schedules, annexes and
exhibits to this Agreement unless otherwise specified. The exhibits, schedules and annexes
attached to this Agreement constitute a part of this Agreement and are incorporated herein for all
purposes.
(b)
If a term is defined as one part of speech (such as a noun), it shall have a
corresponding meaning when used as another part of speech (such as a verb). Unless the context
of this Agreement clearly requires otherwise, words importing the masculine gender shall
include the feminine and neutral genders and vice versa. The words “includes” or “including”
shall mean “including without limitation,” the words “hereof,” “hereby,” “herein,” “hereunder”
and similar terms in this Agreement shall refer to this Agreement as a whole and not any
particular section or article in which such words appear and any reference to a Law shall such
Law as amended from time to time and any rules and regulations promulgated thereunder.
Currency amounts referenced herein are in U.S. Dollars. The word “or” is not meant to be
exclusive, and shall be interpreted as “and/or.”
(c)
Any documents and agreement referred to herein shall be deemed to have
been “delivered,” “provided,” or “made available” (or any phrase of similar import) to by one
Party to the other for purposes of this Agreement if they have been posted at least two (2)
Business Days prior to the date of this Agreement to the “data rooms” or other “virtual rooms”
prepared by the Parties in connection with the Transactions.
(d)
A “copy” of any Contract or other document or instrument are to refer to a
true, complete and correct copy thereof.
(e)
Whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless Business Days are specified. Whenever any action must be taken
hereunder on or by a day that is not a Business Day, then such action may be validly taken on or
by the next day that is a Business Day.
(f)
All accounting terms used herein and not expressly defined herein shall
have the meanings given to them under GAAP.
(g)
The Parties have participated jointly in negotiating and drafting this
Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision
of this Agreement.

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 8.14. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective successors, legal representatives and permitted
assigns. No Party may assign any of its rights or delegate any of its obligations under this
Agreement, in whole or in part, by operation of Law or otherwise, directly or indirectly, without
the prior written consent of the other Parties.
[Signature page follows]

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 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties to this Agreement as of the date first written above.

CENGAGE LEARNING HOLDINGS II, INC.

By: /s/ Michael Hansen
Name: Michael Hansen
Title: Chief Executive Officer

CENGAGE LEARNING HOLDCO, INC.

By: /s/ Michael Hansen
Name: Michael Hansen
Title: Chief Executive Officer

CENGAGE LEARNING, INC.

By: /s/ Michael Hansen
Name: Michael Hansen
Title: Chief Executive Officer

[Signature Page to Merger Agreement]

 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties to this Agreement as of the date first written above.

MCGRAW-HILL EDUCATION, INC.

By: /s/ Nana Banerjee
Name: Nana Banerjee
Title: President

MCGRAW-HILL GLOBAL EDUCATION
HOLDINGS, LLC

By: /s/ Nana Banerjee
Name: Nana Banerjee
Title: President

[Signature Page to Merger Agreement]

 Exhibit A
Summary of Proposed Governance Arrangements of the Combined Corporation

(attached)

EXECUTION VERSION

EXHIBIT A
SUMMARY OF PROPOSED GOVERNANCE ARRANGEMENTS OF THE COMBINED CORPORATION
The following is a description of the material terms of the proposed amended and
restated certificate of incorporation of the Combined Corporation (the “Certificate of
Incorporation”) to be filed with the Certificate of Merger and the Class B Stockholders
Agreement. For purposes of this Exhibit A: (i) the Affiliates of Apollo Global Management, LLC
that own shares of the Class A Common Stock are referred to herein, collectively, as the “Apollo
Stockholder”; (ii) the Apollo Stockholder together with any other holders of the Class A
Common Stock are referred to herein, collectively, as the “Class A Stockholders”; (iii) the
Affiliates of KKR & Co. Inc. that own shares of the Class B Common Stock are referred to
herein, collectively, as the “KKR Stockholder”; (iv) the Affiliates of Apax Partners LLP that
own shares of the Class B Common Stock are referred to herein, collectively, as the “Apax
Stockholder”; (v) the Affiliates of Searchlight Capital Partners that own shares of the Class B
Common Stock are referred to herein, collectively, as the “Searchlight Stockholder” and,
together with the KKR Stockholder, the Apax Stockholder and any other holders of the Class B
Common Stock, the “Class B Stockholders”; (vi) the holders of the Class C Common Stock are
referred to herein, collectively, as the “Class C Stockholders”; and (vii) the holders of any
shares of Common Stock (regardless of class) of the Combined Corporation are referred to
herein, collectively, as the “Stockholders.” “Common Stock” refers to the Class A Common
Stock, the Class B Common Stock and the Class C Common Stock, collectively, and “Voting
Common Stock” refers to the Class A Common Stock and the Class B Common Stock,
collectively. All terms capitalized but not defined herein shall have the meanings associated
with them as set forth in the Agreement.
General

The name of the Combined Corporation shall be “●” and the Combined
Corporation shall be authorized to engage in any lawful act or activity for
which corporations may be organized under the DGCL.
The Combined Corporation shall be entitled to issue, and the
Stockholders may hold, fractional shares of Common Stock.
A Stockholder’s “Equity Percentage” means, at any applicable time, a
percentage equal to the aggregate number of shares of Voting Common
Stock owned by such Stockholder and its Affiliates divided by the
aggregate number of issued and outstanding, on a basic basis, shares of
Voting Common Stock, in each case at such time.
A Stockholder’s “Original Equity Percentage” means, at any applicable
time, a percentage equal to the aggregate number of shares of Voting
Common Stock owned by a Stockholder and its Affiliates at such time
divided by the total number of shares of Voting Common Stock owned by
a Stockholder and its Affiliates as of the Parent Merger Effective Time.

Rights, Privileges
and Limitations of
the Combined

Each share of the Common Stock (regardless of class) shall entitled to the
same economic rights, but (i) the Class A Stockholders and the Class B
Stockholders shall have the right to nominate directors and vote in the

W/3362978

 Corporation
Common Stock

election of the board of directors of the Combined Corporation (the
“Board of Directors”) and on other matters as set forth below and (ii)
each share of Class C Common Stock will be non-voting and the Class C
Stockholders will not have preemptive rights or tag along rights.
To ensure that, after giving effect to any Dissenting Shares, holders of
Cengage Common Stock and Existing McGraw-Hill Common Stock
receive the appropriate economics in the Combined Corporation, the
Combined Corporation after Closing may pay a special dividend
exclusively to the holders of Class A Common Stock equal to fifty percent
(50%) of the aggregate amount actually paid by the Company with
respect to such Dissenting Shares.

Sunset Events

The Residual Common Stock will be authorized, but shall remain
unissued until immediately prior to the closing of an initial public
offering of shares of the Combined Corporation or entity formed to
facilitate such initial public offering (an “IPO”). Immediately prior to an
IPO, each share of Class A Common Stock, Class B Common Stock and
Class C Common Stock shall automatically convert into one (1) share of
Residual Common Stock on a one-for-one basis (such exchange, a
“Conversion”). A Conversion may also be effected if approved by the
Requisite Board Majority (as defined below) and the requisite
Stockholders (as set forth under “Stockholder Action”).

Management
Shares and Equity
Awards

Any shares delivered upon the exercise of equity awards and any other
share issuances to employees or consultants of the Combined
Corporation or its Subsidiaries pursuant to any equity plans approved by
the Board of Directors from and after the Parent Merger Effective Time
shall be shares of Class C Common Stock.

Stockholder
Action

Prior to an IPO, the following matters (in addition to any matters
requiring a class vote under Delaware law) shall require the prior
approval of the Class A Stockholders and Class B Stockholders
representing a majority of the issued and outstanding shares of Class A
Common Stock and Class B Common Stock, respectively, voting as
separate classes:


any Conversion (other than in connection with an IPO);



any amendment, alteration, modification, waiver or repeal of any
provision of the Certification of Incorporation, including any filing of
a certificate of designation, or the by-laws of the Combined
Corporation, including by means of merger, consolidation or
otherwise, that adversely affects the voting powers, preferences, or
other special rights or privileges, or restricts the rights, privileges,
powers or immunities of any class of Common Stock;



any non-pro rata dividend, distribution, redemption, repurchase or
-2-

 other transaction (subject to agreed exceptions);


any affiliate transaction or amendment thereto (subject to agreed
exceptions, including for reasonable and mutually agreed fees
payable to the Apollo Stockholder or its Affiliate and/or to the KKR
Stockholder or its Affiliate in respect of capital markets transactions)
(provided, that, for the avoidance of doubt, transactions with KKR
Capstone at market rates will require the approval of a Requisite
Board Majority and not a Stockholder vote); and



any issuance that would result in any Person or group (as defined in
the Exchange Act) having an Equity Percentage of fifty percent (50%)
or more.

At any meeting of Stockholders, a stockholder may vote by proxy
executed in writing (or in such manner prescribed by the DGCL) by such
stockholder, or by such stockholder’s duly authorized attorney in fact.
Stockholders representing a majority of the outstanding shares of
Common Stock entitled to vote generally in the election of directors
represented in person or by proxy shall constitute a quorum at a meeting
of stockholders, except that when specified business is to be voted on by
a class or series of Common Stock voting separately as a class,
Stockholders representing a majority of the outstanding shares of such
class or series shall constitute a quorum of such class or series for the
transaction of such business.
Except as otherwise provided in this term sheet, the affirmative vote of a
majority of the shares present in person or represented by proxy at the
meeting and entitled to vote on the matter shall be the act of the
Stockholders.
In the case of action to be taken by the Stockholders by written consent,
no written consent shall be effective to take the action referred to therein
unless written consents signed by a sufficient number of Stockholders to
take such action are delivered to and received by the Combined
Corporation in accordance with the DGCL.
Board of Directors

Prior to an IPO, the Combined Corporation shall have a nine (9)-person
Board of Directors constituted as follows:


Stockholders that hold a majority of the outstanding shares of Class A
Common Stock shall be entitled to nominate three (3) directors for
election to the Board of Directors (each a “Class A Director”) and one
(1) Independent Director (the “Class A Independent Director”);



Stockholders that hold a majority of the outstanding shares of Class B
Common Stock shall be entitled to nominate for election to the Board

-3-

 of Directors three (3) directors (each a “Class B Director”) and one (1)
Independent Director (the “Class B Independent Director”); and


the CEO will be nominated for election to the Board of Directors.

An “Independent Director” is any person that is not a current director,
officer, associate, limited partner or employee of any Stockholder or its
Affiliates or an officer or employee of any portfolio company of a
Stockholder, and who is, in the reasonable and good faith judgment of
the Stockholders nominating such director, has relevant experience and
qualifications to serve as a director of the Combined Corporation.
Prior to an IPO, the Board of Directors shall be divided into three (3)
classes, as nearly equal in number as is reasonably possible, with the
term of office of the first (1st) class to expire at the first (1st) annual
meeting of stockholders following the Closing, the term of office of the
second (2nd) class to expire at the second (2nd) annual meeting of
stockholders following the Closing, and the term of office of the third
(3rd) class to expire at the third (3rd) annual meeting of stockholders
following the Closing. At each annual meeting of stockholders,
commencing with the fourth (4th) annual meeting of stockholders
following the Closing, directors elected to succeed those directors whose
terms then expire shall be elected for a term of office to expire at the third
(3rd) succeeding annual meeting of stockholders after their election, with
each director to hold office until such director’s respective successor is
elected and qualified or until such director’s earlier death, resignation or
removal.
All directors shall be elected by a plurality of the votes cast; provided,
that (i) the Class A Stockholders, voting as a separate class, shall solely be
entitled at each meeting called for the purpose of electing directors to
vote on the election of the Class A Directors and the Class A Independent
Director, and (ii) the Class B Stockholders, voting as a separate class,
shall solely be entitled at each meeting called for the purpose of electing
directors to vote on the election of the Class B Directors and the Class B
Independent Director.
Each committee of the Board of Directors shall be comprised of at least
one (1) Class A Director and one (1) Class B Director. Each Class A
Director and Class B Director shall be entitled to attend any meeting of
any committee of the Board of Directors, regardless of membership, in
order to observe such meeting.1
Prior to a Conversion, the Class A Stockholders shall have the sole right
to remove and replace the Class A Directors and Class A Independent

1

Note to Draft: Committee composition and size otherwise TBD.
-4-

 Director and the Class B Stockholders shall have the sole right to remove
and replace the Class B Directors and Class B Independent Director, and
in each case may do so at any time and for any reason, by the vote of a
majority of the issued and outstanding shares of the applicable class.
Following a Conversion, Stockholders may only remove directors for
cause.
Any vacancies resulting on the Board of Directors shall be filled in the
manner described above.
Prior to an IPO, each Stockholder may appoint a non-voting observer to
the Board of Directors so long as such Stockholder and its Affiliates have
an Equity Percentage of at least seven percent (7%); provided, that no
observer shall be entitled to compensation for their services but shall be
entitled to reimbursement of reasonable, documented out-of-pocket
expenses incurred in connection with attendance at meetings of the
Board of Directors; provided, further, that for the avoidance of doubt, the
observer shall be subject to customary confidentiality obligations and
generally applicable board policies, and the Stockholder(s) that
appointed such observer shall be responsible for the observer’s
compliance therewith.
Board Action

Each director shall have one (1) vote.
Prior to an IPO, at all meetings of the Board of Directors or any
committee thereof, (i) a majority of the votes of the entire Board of
Director or such committee, as applicable, shall constitute a quorum for
the transaction of business, so long as there is at least one (1) Class A
Director and one (1) Class B Director present (provided, that if a quorum
is not present for any two (2) consecutive meetings duly called, each with
at least five (5) Business Days’ advance notice to all directors, another
meeting may be called and the quorum for such meeting shall be a
majority of the votes of the entire Board of Directors or such committee,
as applicable), (ii) any action of the Board of Directors may be taken if
approved by a Requisite Board Majority and (iii) any action of a
committee of the Board of Directors may be taken if approved by a
Requisite Committee Majority.
A “Requisite Board Majority” means the vote of at least five directors
(other than the CEO). A “Requisite Committee Majority” means the
vote of a majority of the members of such committee, including at least
(A) one (1) Class A Director or the Class A Independent Director and
(B) one (1) Class B Director or the Class B Independent Director.
Any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting
if all members of the Board of Directors or committee, as the case may be,
consent thereto in writing, or by electronic transmission and the writing
-5-

 or writings or electronic transmission or transmissions are filed with the
minutes of proceedings of the Board of Directors, or committee thereof.
The Board of Directors will hold regular quarterly meetings. Special
meetings of the Board of Directors may be called at the request of a
majority of the Board of Directors then in office.
Issuances /
Preemptive Rights

Prior to a Conversion, any issuance of a share of Class A Common Stock
shall be accompanied by a corresponding issuance of a share of Class B
Common Stock, unless otherwise determined by the Board of Directors.
Prior to an IPO, each Stockholder (other than any Class C Stockholder)
shall have preemptive rights in connection with any issuance of new
equity securities, including securities convertible into equity securities,
subject to any limitations in the Certificate of Incorporation and the
following exceptions:


the issuance of shares at the Certificate Amendment Effective Time
and the Parent Merger Effective Time;



issuances of shares of Class C Common Stock (including upon
exercise of options or awards) to employees, officers, directors and
consultants of the Combined Corporation pursuant to any plan or
arrangement adopted by the Board of Directors;



issuances of shares of Common Stock (regardless of class) upon
conversion or exercise of any outstanding options, warrants or other
securities convertible into, or exchangeable for, shares of Common
Stock;



issuances of shares of in connection with any stock splits, stock
dividends or recapitalizations;



pro rata share dividends or distributions;



issuances by the Combined Corporation to a wholly owned
Subsidiary;



issuances pursuant to IPO;



issuances as a bona-fide “equity kicker” to a lender in connection
with a debt financing from a lender that is not a Stockholder or any
Affiliate thereof;



issuances to a bona fide third party in connection with any business
combination or acquisition transaction or any joint venture or
strategic partnership; and

-6-

 

issuances to which the Combined Corporation has received a written
waiver of preemptive rights from each eligible Stockholder.

In any issuance subject to preemptive rights, each Stockholder (other
than any Class C Stockholder) may, at its option, subscribe for a number
of new securities in the proposed issuance of the same class up to its pro
rata percentage (based on such Stockholder’s Equity Percentage) of such
new securities to be issued. It is understood and agreed that the Board of
Directors will need to issue different classes of shares of Common Stock
to permit each Stockholder (other than any Class C Stockholder) to
exercise such Stockholder’s preemptive right.
Tag Along Rights

Prior to an IPO, and subject to any other limitations, each Stockholder
(other than Class C Stockholders) shall have customary tag-along rights
in any proposed transfer by a Stockholder or group (as defined in the
Exchange Act) with an Equity Percentage of twenty-five percent (25%) or
more.
Tag along rights shall terminate upon an IPO.

Ownership
Limitations

Ownership Limitation. Prior to any Conversion, no Stockholder or group
(as defined in the Exchange Act) shall be permitted to acquire shares of
Common Stock such that it would beneficially own, at any time, in excess
of fifty percent (50%) of the outstanding shares of the Common Stock.
Any attempt to own shares of Common Stock in violation of this
restriction shall result in such acquisition (or attempted acquisition)
being null and void. In addition, any Stockholder that purports to
acquire (or attempts to acquire) any shares of Common Stock in violation
of this ownership restriction shall indemnify and hold the Combined
Corporation and each other Stockholder harmless against any and all
losses, claims, damages or liabilities to any such Person in connection
with or as a result of such purported acquisition (or attempted
acquisition).
Stockholder Limitation. Prior to any Conversion, no holder of shares of
Class A Common Stock shall acquire shares of Class B Common Stock
(and vice versa) unless issued by the Combined Corporation after the
Parent Merger Effective Time and approved by the Board of Directors.
Any acquisition or attempted acquisition in violation of these restrictions
shall be deemed to be null and void.
The above limitations shall terminate upon an IPO.

IPO; Registration
Rights

Ability to Cause IPO. A Requisite Board Majority shall have the power to
effect an IPO at any time (including by requiring the Stockholders to
cooperate to implement an IPO, etc.); provided, that any actions taken by
the Board of Directors or the Combined Corporation in connection with
an IPO shall not alter in any substantive respect the rights granted to
-7-

 each Stockholder under “Customary Registration Rights” (it being
understood and agreed that the Combined Corporation, or another entity
created to effect the IPO, may enter into a new shareholders or
registration rights agreement with such Stockholders in lieu of including
such provisions in the post-IPO corporation’s organizational documents).
On or after the third (3rd) anniversary of the Closing Date, (1) any Class A
Stockholder or group of Class A Stockholders or (2) any Class B
Stockholder or group of Class B Stockholders, in each of case (1) and (2)
that had, collectively, an Equity Percentage of at least seventeen and onehalf percent (17.5%) as of the Closing Date may cause the Combined
Corporation to effect a demand registration with a minimum primary
offering so long as each Stockholder effecting such demand holds an
Original Equity Percentage of at least fifty percent (50%) at the time of
such demand.
The Certificate of Incorporation will include appropriate provisions to
best maintain pre-IPO governance protections of the parties while
complying with the governance requirements applicable to noncontrolled listed companies.
Customary Registration Rights. On or after the IPO, the Apollo
Stockholder, the KKR Stockholder, the Apax Stockholder and Searchlight
Stockholder shall be entitled to a pro rata number of demand
registration/shelf-takedown rights based on its Equity Percentage as of
the Parent Merger Effective Time, so long as at the time of such demand
such Stockholder has an Original Equity Percentage of twenty-five
percent (25%) or more.
In addition, the Stockholders shall be entitled to customary piggyback
registration rights in any underwritten primary or secondary offering
(subject to customary cutbacks), and shall agree to enter into customary
post-IPO stockholder arrangements (including customary market
standoff provisions).
Amendments

Amendments to the Combined Corporation’s Certificate of Incorporation
may be made by the Board of Directors, subject to any Stockholder’s
applicable approval right; provided, that any amendment to the
Certificate of Incorporation or waiver of the terms or conditions thereof,
in each case, that would materially and adversely affect a Stockholder
relative to all other Stockholders shall require the prior written consent of
such Stockholder.
The Combined Corporation’s by-laws may be amended by the Board of
Directors.

Forum Selection

The Combined Corporation’s organizational documents shall contain

-8-

 forum selection provisions.
Information Rights

Stockholders shall continue to receive information about the Combined
Corporation by virtue of the information rights of the bondholders under
the Cengage and McGraw-Hill indentures.

-9-

 Exhibit 
Cengage Irrevocable Written Consent

(attached)

Exhibit B
WRITTEN CONSENT OF STOCKHOLDERS IN LIEU OF A MEETING
May 1, 2019
The undersigned, being the stockholders of Cengage Learning Holdings II, Inc., a
Delaware corporation (the “Company”), holding a majority of the outstanding shares of common
stock, par value $0.01 per share, of the Company (the “Stockholders”), acting by written consent
in lieu of a special meeting, pursuant to the provisions of Section 228 of the General Corporation
Law of the State of Delaware (the “DGCL”) and Section 9.2 of the Amended and Restated
Certificate of Incorporation of the Company, hereby consent in writing to the adoption without a
meeting of the following resolutions and to the taking of each of the actions contemplated hereby
as of the date first written above:
WHEREAS, the Board of Directors of the Company (the “Board”) has unanimously
(a) determined that the Agreement and Plan of Merger (the “Merger Agreement”), dated as of May
1, 2019, by and among the Company, McGraw-Hill Education, Inc., a Delaware corporation,
McGraw-Hill Global Education Holdings, LLC (“McGraw-Hill Issuer”), a Delaware limited
liability company, Cengage Learning Holdco, Inc., a Delaware corporation, and Cengage
Learning, Inc., a Delaware corporation, and the transactions contemplated by thereby, including
the merger of the Company with and into McGraw-Hill Issuer, with McGraw-Hill Issuer surviving
(the “Parent Merger”), are fair to, and in the best interests of, the Company and its stockholders
and (b) approved and declared advisable the Merger Agreement and the transactions contemplated
by the Merger Agreement, including the Parent Merger, on the terms and subject to the conditions
set forth in the Merger Agreement; and
WHEREAS, in accordance with the resolutions of the Board approving the Merger
Agreement, the Company has executed and delivered the Merger Agreement and submitted the
Merger Agreement and the Parent Merger to the stockholders of the Company for their adoption
and approval.
Approval of Merger Agreement
NOW, THEREFORE, BE IT RESOLVED, that the Merger Agreement and the transactions
contemplated thereby, including the Parent Merger, be, and they hereby are, adopted, ratified,
approved and authorized in all respects by the Stockholders;
RESOLVED, that each of the undersigned hereby affirmatively waives and agrees not to
exercise any dissenters’ right, appraisal right or similar right such Stockholder may have under
applicable law (including Section 262 of the DGCL) arising in connection with the Parent Merger;
and
RESOLVED, that the undersigned hereby waives compliance with any and all notice
requirements imposed by the DGCL or other applicable law.
The actions taken by this written consent shall have the same force and effect as if taken at a
meeting of the stockholders of the Company, duly called and constituted pursuant to the DGCL.
This written consent and the actions taken hereby shall be binding upon and shall inure to the
1

 benefit of the stockholders and their respective successors, assigns and transferees. This written
consent shall be irrevocable, and any vote, consent or other action by any of the undersigned that
is not in accordance with this written consent will be considered null and void; provided, and
notwithstanding anything else to the contrary herein, this written consent shall terminate and be of
no further force and effect upon the expiration or termination of the Merger Agreement, if such
expiration or termination occurs prior to the Parent Merger Effective Time (as defined in the
Merger Agreement).
[Signature Page Follows]

2

 IN WITNESS WHEREOF, the Stockholders have executed this written consent as of the
date first written above.

STOCKHOLDERS:

[KKR STOCKHOLDERS]

By:
Name:
Title:

[SCP STOCKHOLDERS]

By:
Name:
Title:

[APAX STOCKHOLDERS]

By:
Name:
Title: