Exhibit 10.3

EXECUTION COPY
 
 
 
June 9, 2010
 

 

 
SERVICE AGREEMENT
 
between
 
EDUCATIONCITY LIMITED
 
- and -
 
MATTHEW DRAKARD
 
 
 
 
 
 
 
 
 
 

 

Weil, Gotshal & Manges
 
One South Place   London   EC2M 2WG
Tel: +44 (0) 20 7903 1000   Fax: +44 (0) 20 7903 0990
 
www.weil.com
 
 
 

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THIS AGREEMENT is made on June 9, 2010 between the following parties
 
(1)  
EDUCATIONCITY LIMITED, a United Kingdom private limited company (the “Company”);
and

 
(2)  
MATTHEW DRAKARD of Top Cottage, Stamford Road, Barnsdale, Rutland LE15 8AB (the
“Executive”).

 
IT IS AGREED as follows:
 
1  
DEFINITIONS

 
1.1  
Definitions

 
In this Agreement the following words and expressions shall have the following
meanings:
 

 
“Act”
means the Employment Rights Act 1996;
       
“Board”
means the board of directors of Archipelago Learning, Inc. from time to time;
       
“CEO”
means the Chief Executive Officer of Archipelago Learning, Inc. from time to
time;
       
“Confidential Information”
means all information that relates to the business, technology, manner of
operation, suppliers, panelists, customers, finances, employees, plans,
proposals or practices of the Company or of any third parties doing business
with the Company, and includes, without limitation, the identities of and other
information regarding the Company’s suppliers, panelists, customers and
prospects, supplier lists, panelist list employee information, business plans
and proposals, software programs, marketing plans and proposals, technical plans
and proposals, research and development, budgets and projections, nonpublic
financial information, and all other information the Company designates as
“confidential” or intends to keep as confidential or proprietary;
       
“Effective Date”
means the date hereof;
       
“Good Reason”
means the occurrence of any of the following events without the Executive’s
express written consent: (i) any breach by the Company of any material provision
of this Agreement or any other written agreement with the Executive, (ii) a
reduction in pay the Executive’s base salary, or (iii) a material reduction or
diminution of the Executive’s duties, responsibilities or authorities, which are
caused by

 
 
 
 
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    an act of the Company (which shall not include the appointment of any
individual pursuant to clause 3.3. or clause 11.3).  The Company shall have 30
days after receipt of notice from the Executive setting forth the specific
conduct that constitutes Good Reason, to cure such conduct that would result in
Good Reason.  The Executive may not resign his employment for Good Reason unless
the Executive has provided the Company with at least 30 days’ prior written
notice of the Executive’s intent to resign for Good Reason (which notice must be
provided within 60 days following (x) the occurrence of the event(s) purported
to constitute Good Reason, or (y) if the Executive did not know of the
occurrence of any of such events, the date on which the Executive had actual
knowledge of the occurrence of any of such events) and has set forth in
reasonable detail the specific conduct that constitutes Good Reason and the
specific provisions of this Agreement on which the Executive relies.         
“Group Company”
means any company which from time to time is:
(a)  a direct or indirect subsidiary undertaking of the Company;
 
(b)  a direct or indirect holding company of the Company;
 
(c)  a direct or indirect subsidiary undertaking of any such holding company; or
 
(d)  an associated company being any company in which the Company or any Group
Company
       has a shareholding of 50% or more or any company which has a shareholding
of 50%
       or more in the Company or any Group Company and “Group” shall mean all
such
       Group Companies at such time;
       
“Incapacity”
any sickness or injury which prevents the Executive from carrying out his
duties;
       
“subsidiary” and “holding company”
have the meanings attributed to them by section 1159 of the Companies Act 2006;
       
“Term”
means the period of the Executive’s employment hereunder;

 
 
 
 
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“Termination Date”
means the date on which the employment of the Executive under this Agreement
shall terminate for whatever reason and derivative expressions shall be
construed accordingly; and
       
“Working Time Regulations”
means the Working Time Regulations 1998.

 
1.2  
Interpretation

 
1.2.1  
Words and phrases which are not defined in this Agreement but which are defined
in the Act, the Companies Act 1985 or the Companies Act 2006 (as the context so
requires) or the Insolvency Act 1986 shall be construed as having those
meanings.

 
1.2.2  
References to any statute or any statutory provision shall be construed as
references to the statute or statutory provision as in force at the date of this
Agreement and as subsequently re-enacted or consolidated and shall include
references to any statute or any statutory provision of which it is a
re-enactment or consolidation.

 
1.2.3  
Unless the context otherwise requires references in this Agreement to the
feminine gender shall, where appropriate, be deemed to include the masculine and
vice versa.

 
1.2.4  
The Schedules to this Agreement form part of (and are incorporated into) this
Agreement.

 
2     
APPOINTMENT AND TERM

 
2.1  
The Company shall employ the Executive and the Executive shall serve the Company
as a Founder on the terms set out in this Agreement.

 
2.2  
The Executive’s employment under this Agreement shall commence on the Effective
Date and continue (subject to the provisions of this Agreement) until terminated
by either party giving to the other not less than 12 months’ previous notice in
writing.

 
2.3  
The Executive represents and warrants to the Company that, by entering into this
Agreement or performing any of his obligations under it, he will not be in
breach of any court order or any express or implied terms of any contract or
other obligation binding on him.

 
2.4  
The Executive warrants that he is entitled to work in the United Kingdom without
any additional approvals and will notify the Company immediately if he ceases to
be so entitled during the Term.

 
2.5  
The Executive’s previous employment with the Company counts as part of the
Executive’s continuous period of employment with the Company which commenced in
August 2003.

 
 
 
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3     
DUTIES

 
3.1  
During the Term the Executive shall:

 
3.1.1  
comply with the requirements under both legislation and regulation as to the
disclosure of inside information;

 
3.1.2  
unless prevented by Incapacity, devote the whole of his time, attention and
abilities to the business of the Company or any other Group Company during
normal office hours and such other times as may be reasonably required for the
proper performance of his duties and he shall not be entitled to any additional
remuneration for work performed outside normal office hours.  For the avoidance
of doubt this clause shall not prevent the Executive, with the prior written
consent of the Company, from holding a non-executive director position;

 
3.1.3  
diligently exercise such powers and perform such duties as may from time to time
be assigned to him by the Board together with such person or persons as the CEO
may appoint to act jointly with him and do so in a competent manner;

 
3.1.4  
comply with all reasonable and lawful directions given to him by the CEO;

 
3.1.5  
promptly make such reports to the CEO in connection with the affairs of the
Company or any Group Company on such matters and at such times as are reasonably
required;

 
3.1.6  
report his own wrongdoing and any wrongdoing or proposed wrongdoing of any other
employee, director or contractor of the Company or any Group Company to the CEO
immediately on becoming aware of it;

 
3.1.7  
use his best endeavours to promote, protect, develop and extend the business of
the Company or any Group Company;

 
3.1.8  
consent to the Company monitoring and recording any use that he makes of the
Company’s electronic communications systems for the purpose of ensuring that the
Company’s rules are being complied with and for legitimate business purposes;
and

 
3.1.9  
comply with any electronic communication systems policy that the Company may
issue from time to time.

 
3.2  
The Executive will not at any time, without the prior consent of the CEO:

 
3.2.1  
incur on behalf of a Group Company any capital expenditure in excess of a sum as
may be authorised from time to time by the CEO; or

 
3.2.2  
enter into, on behalf of a Group Company, any commitment, contract or
arrangement which is otherwise than in the normal course of the Group’s business
or is outside the scope of his normal duties or is of an unusual or onerous or
long term nature; or

 
 
 
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3.2.3  
engage any person on terms that he will receive remuneration in excess of an
annual rate as may be authorised from time to time by the CEO or the termination
of whose employment will require in excess of that number of months’ notice as
may be authorised from time to time by the CEO; or

 
3.2.4  
dismiss an employee of a Group Company without giving proper notice or without
following the Group Company’s normal disciplinary procedure, and the Executive
will immediately report any dismissal effected by him and the reason for it to
the CEO.

 
3.3  
For the avoidance of doubt, the Board shall be entitled at any time to appoint a
further executive, director or employee having responsibilities similar to the
Executive to act jointly with the Executive (provided that the Executive’s
remuneration under this Agreement is not affected by such appointment) and in
that event the Executive shall perform his duties and exercise his powers in a
manner which shall be consistent with such appointment.

 
3.4  
Notwithstanding the provisions of clause 3.1, the Company may at any time
following the giving of notice by either party to terminate this Agreement and
for such period as it may specify not exceeding the length of notice given cease
to provide work for the Executive, in which event during such period the other
provisions of this Agreement including those relating to the Executive’s
remuneration shall continue to have full force and effect but the Executive
shall not, without the prior written consent of the CEO, attend his place of
work or any other premises of the Company or any Group Company (such period
being “Garden Leave”).  The Company may in addition to the above:

 
3.4.1  
(without limitation to Schedule 2) require him not to contact or deal with any
clients, suppliers, agents, professional advisers, brokers, bankers, employees
or contractors of any Group Company; and/or

 
3.4.2  
require the Executive to resign from any or all offices, including
directorships, of any Group Company; and/or

 
3.4.3  
revoke or suspend any powers of attorney and authorised signatories the
Executive may hold for any Group Company; and/or

 
3.4.4  
appoint a further executive director or employee to perform the Executive’s
duties and to exercise his powers or to delegate the Executive’s duties to any
other director or employee who may exercise those powers; and/or

 
3.4.5  
require the Executive to take any outstanding holiday time which is accrued up
to the commencement of the notice period.

 
3.5  
Notwithstanding the provisions of clause 3.1, the Company may at any time
suspend the Executive during any period, for a period of up to fifteen business
days, in which the Company is carrying out a disciplinary investigation into any
alleged acts or defaults of the Executive.  During any period of suspension the
Executive shall continue to receive his salary and contractual benefits but the
Executive shall not be entitled to access to any premises of the Company or any
Group Company, without the prior written consent of the CEO (such period being
“Suspension”).

 
 
 
 
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3.6  
Subject always to clause 5 and the Executive’s right to hold a non executive
director position with the Company’s consent, during the Term the Executive
shall not, without the prior written consent of the CEO, engage in any
activities, public office or other occupation outside his employment which may
detract from the proper and timely performance of his duties under this
Agreement.  The Executive shall not hold office in any company which is not a
Group Company without the prior written approval of the CEO.

 
3.7  
The Executive’s principal place of work shall be at Units 8 & 9 Saddlers Court,
Oakham Office Park, Oakham, Rutland, or such other place as may be reasonably
required by the Company from time to time for the proper performance of his
duties and he shall undertake any travel (nationally or internationally) as may
be reasonably necessary for the proper performance of his duties.

 
4     
HOURS OF WORK

 
4.1  
The Executive’s normal working hours shall be 8:30 AM to 4:30 PM on Mondays and
Fridays and 8:30 AM to 5:00 PM on Tuesdays, Wednesdays, and Thursdays and such
additional hours as are necessary for the proper performance of his duties. The
Executive acknowledges that he shall not receive further remuneration in respect
of such additional hours.

 
4.2  
The parties each agree that the nature of the Executive’s position is such that
his working time cannot be measured and, accordingly, that the appointment falls
within the scope of regulation 20 of the Working Time Regulations.

 
5  
CONFLICTS OF INTEREST AND DEALINGS IN SECURITIES

 
5.1  
Subject to clause 3.6 above, during the Term the Executive shall not whether
alone or jointly with or on behalf of any other person, firm or company and
whether as principal, partner, manager, employee, contractor, director,
consultant, investor or otherwise (except as a representative or nominee of the
Company or any Group Company or otherwise with the prior consent in writing of
the CEO) be engaged, concerned or interested in any other business which:

 
5.1.1  
is wholly or partly in competition with any business carried on by the Company
or any Group Company; or

 
5.1.2  
as regards any goods or services is a supplier to or customer of the Company or
any Group Company.

 
Provided that the Executive may hold (directly or through nominees) by way of
bona fide personal investment any units of any authorised unit trust and up to
five per cent of the issued shares, debentures or other securities of any class
of any company whose shares are listed on a recognised investment exchange or a
designated investment exchange within the meaning of the Financial Services and
Markets Act 2000 or dealt in the Alternative Investment Market.
 
5.2  
The Executive acknowledges that he shall not enter into any transaction which
contravenes the insider dealing provisions contained in Part V of the Criminal
Justice

 
 
 
 
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Act 1993, or the equivalent laws or regulations of any other jurisdiction in
which the Company operates, including the United States Securities Exchange Act
of 1934

 
5.3  
The Executive shall at all times comply with any share dealing rules issued from
time to time by the Board or the Company for directors or officers of the
Company and Group Companies, provided he has received prior written notification
of such rules.

 
5.4  
The Executive agrees to disclose to the CEO any matters relating to his spouse
or civil partner (or anyone living as such), children or parents which may, in
the reasonable opinion of the CEO, be considered to interfere, conflict or
compete with the proper performance of the Executive’s obligations under this
agreement.

 
6     
SALARY

 
6.1  
The Executive shall receive an annual salary of £135,000 (subject to the
appropriate deductions for tax and National Insurance) which shall accrue from
day to day and be payable by equal monthly instalments on or about the 27th day
of each calendar month or such salary as may be agreed by the Board on annual
review in accordance with the Company’s usual practice.  The Company is under no
obligation to award an increase following a salary review.

 
6.2  
During the Executive’s employment term, the Executive will be eligible to
receive, in respect of each fiscal year of the Company, (commencing with the
fiscal year ending on 31 December 2010) an annual bonus based on EBITDA and
revenue targets for the Company set by the Board and the CEO in consultation
with the Executive.  For the prorated portion of 2010 remaining after the date
hereof, the revenue target shall be $8,500,000 and the EBITDA target shall be
$2,700,000.  For 2011, the revenue target shall be $21,600,000 and the EBITDA
target shall be $8,000,000.  Revenue shall be assigned 60% of target performance
and EBITDA shall be assigned 40% of target performance.  For purposes of
calculating revenue and EBITDA in 2010 and 2011, revenue and earning in pounds
sterling shall be calculated using an assumed exchange rate of 1.6 USD = 1
GBP.  The annual bonus shall be calculated as follows: (i) for at target
performance: the annual bonus shall be an amount equal to 40% of the Executive’s
base salary; (ii) for performance at 110% of targets or higher: the annual bonus
shall be an amount equal to 50% of the Executive’s base salary; and (iii) for
performance between 100% and 110% of targets, the annual bonus shall be equal to
an amount scaled ratably between 40% to 50% of the Executive’s base salary.  In
no event shall the Company be required to pay an annual bonus equal to greater
than 50% of the Executive’s base salary.  An example calculation of the
Executive’s bonus is attached hereto as SCHEDULE 4.  If performance targets are
not met, the Board shall in good faith consider whether a full or partial annual
bonus should still be paid; in such circumstance, the Board shall consider: (i)
the Executive’s individual performance and efforts; (ii) the performance metrics
achieved; and (iii) the circumstances related to the applicable targets.  The
bonus payments, if any, shall be paid by the Company no later than the 15th day
of the third calendar month of the fiscal year following the fiscal year to
which such annual bonus relates.

 
6.3  
Any bonus payable in accordance with clause 6.2 shall not be pensionable.

 
6.4  
The Executive shall be eligible to receive stock options in Archipelago
Learning, Inc., the Company’s indirect parent, subject to the approval of the
Board and in accordance

 
 
 
 
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with Archipelago Learning, Inc.’s policies.  Any such grants shall be made at
times, in number and on terms and conditions consistent with grants made to
other division directors of Archipelago Learning, Inc. reporting directly to the
CEO.

 
6.5  
The Company may deduct from the salary, or any other sums owed to the Executive,
any money owed to the Company or any Group Company by the Executive.

 
7     
EXPENSES

 
7.1  
The Executive shall be entitled to be reimbursed for all reasonable and
authorised out of pocket expenses (including hotel and travelling expenses but
excluding any car parking fines or road traffic offence fines) reasonably
incurred by him in the proper performance of his duties, subject to the
production of such receipts or other appropriate evidence.

 
7.2  
The Executive shall abide by the Company’s policies on expenses as communicated
to him from time to time.

 
8     
BENEFITS

 
During the term of employment under this Agreement, the Executive will be
entitled to participate in all employee incentive, and welfare benefit plans and
programmes made available generally to other senior executives of the Company in
the country where the Executive resides, as such plans or programmes may be in
effect from time to time (including, without limitation, savings and other
pension and retirement plans or programmes, medical, dental, hospitalisation,
short-term and long-term disability and life insurance plans, accidental death
and dismemberment protection, and any other pension or retirement plans or
programmes and any other employee welfare benefit plans or programmes that may
be sponsored by the Company from time to time and provided that Executive meets
the eligibility requirements and other terms, conditions and restrictions of the
respective plans and programmes, including any plans that supplement the
above-listed types of plans or programmes, whether funded or unfunded, provided
that the Executive shall have no rights to bonus, incentive compensation,
incentive equity or pension benefits except as set forth in clauses 6.2, 6.4 and
9 herein).  Payment for such coverages will be the sole responsibility of the
Executive, unless the Company makes such coverages available to similarly
situated executives on a shared cost basis.
 
9     
PENSION

 
9.1  
There is no entitlement to pensions benefit in relation to the Executive’s
employment, however the Company shall provide access to a designated stakeholder
pension scheme as required by law.  The Company does not make any contributions
to such stakeholder scheme.

 
9.2  
A contracting-out certificate is not in force in respect of the Executive’s
employment.

 
10     
HOLIDAYS

 
10.1  
The Executive shall be entitled (in addition to the usual public and bank
holidays in England and Wales, or days in lieu where the Company requires the
Executive to

 
 
 
 
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work on a public holiday) to 30 days’ holiday on full pay in each holiday year
to be taken at reasonable times subject to the CEO’s reasonable discretion.

 
10.2  
Upon termination of the Executive’s employment the Executive shall either be
entitled to salary in lieu of any outstanding pro rata holiday entitlement or be
required to repay to the Company any salary received in respect of holiday taken
in excess of his pro rata holiday entitlement such salary to be calculated on
the basis of 1/260 of the fixed annual salary payable to the Executive pursuant
to clause 6.1 for each day of outstanding or excess holiday entitlement as
appropriate.

 
10.3  
During any notice period pursuant to clause 3.4, the CEO may require the
Executive to take any outstanding holiday entitlement.  Following expiration of
any notice period, if on termination of this Agreement the Executive has:

 
10.3.1  
any outstanding holiday entitlement the Company will make a payment to the
Executive in lieu of that holiday entitlement subject to any deductions the
Company will be entitled to make in respect of any sums owed by the Executive to
the Company; or

 
10.3.2  
taken holiday in excess of his accrued entitlement, the Company is hereby
authorised to deduct from any sum owed by the Company to the Executive, a sum
representing such excess holiday taken.

 
10.3.3  
For these purposes, one day’s holiday pay will be calculated as 1/260th of the
Salary.

 
11     
ILLNESS OR ACCIDENT

 
11.1  
The Executive shall from time to time at the request and expense of the Company
submit to medical examinations and tests by a medical practitioner nominated by
the Company, the results of which shall, subject to the provision of the Access
to Medical Reports Act 1988 (as applicable), be disclosed to the Company.

 
11.2  
If the Executive is absent from his duties as a result of Incapacity for a
period of seven consecutive days or more he will at the request of the Company
produce a Statement of Fitness for Work to the Company in respect of his
absence.

 
11.3  
If the Executive shall be absent owing to Incapacity so that he is unable
properly to perform his duties he shall continue to be entitled to his full
salary during the first six months of his absence and thereafter any such salary
shall be paid at the discretion of the Company.  After a consecutive period of
absence of three months, the Company shall be entitled at any time to appoint a
further executive director or employee to perform the Executive’s duties and to
exercise his powers.  If such absence shall continue in aggregate for six months
in any rolling period of 12 months, the Company may terminate the Executive’s
employment by giving the notice specified in clause 12, provided that, in such
event, the notice period required pursuant to clause 2.2 shall be reduced to 6
months.

 
11.4  
The Company shall pay the Executive all sums payable by way of statutory sick
pay in accordance with the legislation in force at the time of absence and any
remuneration paid shall be deemed to be inclusive of statutory sick pay.

 
 
 
 
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11.5  
The Executive’s entitlement under clause 11.3 will cease if at any time during
the six month period the Executive becomes eligible to receive benefits under
any permanent health insurance scheme referred to in clause 8 or any other such
scheme in respect of which any Group Company pays or has paid premiums on behalf
of the Executive, in which case the Company will have no further obligation to
the Executive under this clause.

 
12     
TERMINATION

 
12.1  
The Company shall at all times be entitled to terminate this Agreement pursuant
to clause 12.

 
12.2  
The Company may, at its sole and absolute discretion, terminate the Executive’s
employment forthwith at any time by serving a notice under this clause stating
that this Agreement is being determined in accordance with this clause 12.2 and
undertaking to pay to the Executive salary in lieu of any required period of
notice or unexpired part thereof (subject to tax and National Insurance)
together with any accrued holiday entitlement pursuant to clause 10.2.  Such
payment shall be made in equal monthly instalments for the period of notice
being paid, in line with normal payroll procedure.  Where the Company terminates
this Agreement in accordance with this clause 12 the terms of, inter alia,
clause 13, SCHEDULE 2 and SCHEDULE 3 shall remain in full force and effect.

 
12.3  
Notwithstanding the provisions of clauses 12.1 and 12.2, the Company shall be
entitled, by notifying the Executive in writing, to terminate this Agreement and
the Executive’s employment forthwith without any payment by way of compensation,
damages or otherwise if the Executive shall:

 
12.3.1  
repeatedly refuse or fail to perform any of his duties and responsibilities as
determined from time to time by the CEO, including, without limitation (a) the
Executive’s persistent neglect of duty or chronic unapproved absenteeism (other
than for a temporary or permanent disability) which remains uncured to the
reasonable satisfaction of the CEO following thirty (30) days’ written notice
from the Company of such alleged fault and (b) the Executive’s refusal to comply
with any lawful directive or policy of the Company or any Group Company which
refusal is not cured by the Executive within thirty (30) days of such written
notice from the Company; provided, that the Company shall not be required to
give the Executive more than two cure periods with respect to this
clause 12.3.1;

 
12.3.2  
act (including a failure to act) in a manner which constitutes gross and willful
misconduct or gross negligence in the performance of his duties;

 
12.3.3  
commit a material act of fraud, personal dishonesty or misappropriation relating
to the Company or any Group Company;

 
12.3.4  
commit a material act of dishonesty, embezzlement, unauthorized use or
disclosure of Confidential Information or other intellectual property or trade
secrets, common law fraud or other fraud with respect thereto;

 
 
 
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12.3.5  
breach a material provision of this Agreement or any other written agreement
with the Company or any Group Company;

 
12.3.6  
be indicted for or convicted (or enter a plea of a nolo contendere or equivalent
plea) in a court of competent jurisdiction of a felony or any misdemeanor (or
the applicable local law equivalent) involving material dishonesty or moral
turpitude; or

 
12.3.7  
be guilty of habitual or repeated misuse of, or habitual or repeated performance
of duties under the influence of, alcohol or controlled substances.

 
12.4  
In the event clause 12.3 is exercised, for the purposes of this Agreement, the
Termination Date shall be the date of that written notice terminating the
Executive’s employment is received by the Executive.

 
12.5  
The Company will at all times be entitled to terminate this Agreement pursuant
to clauses 12.2 or 12.3 notwithstanding that such termination may prejudice the
Executive’s eligibility for or entitlement to receive statutory sick pay or
benefits under any permanent health insurance scheme or any other such scheme.

 
12.6  
The proper exercise by the Company of its right of termination under clause 12.3
shall be without prejudice to any other rights or remedies which the Company or
any Group Company may have or be entitled to exercise against the Executive.

 
12.7  
If the employment of the Executive under this Agreement shall be terminated for
the purpose of reconstruction or amalgamation only whether by reason of the
liquidation of the Company or otherwise and he shall be offered employment with
any concern or undertaking resulting from this reconstruction or amalgamation on
terms and conditions no less favourable than the terms of this Agreement then
the Executive shall have no claim against the Company in respect of the
termination of his employment hereunder.

 
12.8  
It will be a condition of participation in any share option scheme operated by a
Group Company in which the Executive participates or will be entitled to
participate that, in the event of the termination of the Executive’s employment
with the Company in circumstances which could give rise to a claim for wrongful
and/or unfair dismissal (whether or not it is known at the time of dismissal
that such a claim may ensue), the Executive will not by virtue of such dismissal
become entitled to any damages or any additional damages in respect of any
rights or expectations of whatsoever nature he may have as a holder of share
options under any such scheme.

 
12.9  
The Executive shall not at any time during any period when he is required to
cease the performance of his duties or after the Termination Date make any
public statements in relation to the Company or any Group Company or any of
their officers or employees without the prior written consent of the CEO.  The
Executive shall not after the Termination Date represent himself as being
employed by or connected with the Company or any Group Company.

 
12.10  
All credit, charge and expense cards and all books, papers, drawings, designs,
documents, records and computer software kept or made by or in the possession

 
 
 
 
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control of the Executive relating to the businesses of the Company and any Group
Company and all other property of the Company and any Group Company are and
remain the property of the Company or such Group Company and the Executive shall
deliver all such items in his possession custody or control at the Termination
Date immediately to the Company.

 
12.11  
If the Executive terminates his employment with the Company with Good Reason he
shall not be obliged to serve his notice period and the Termination Date shall
be the day upon which notice of termination is delivered by the
Executive.  Following such termination the Company shall pay the Executive a
pro-rated bonus (calculated up to the Termination Date) and an amount equal to
his base salary for the notice period payable in equal instalments, in
accordance with the Company’s normal payroll practices, beginning with the first
payroll date following the 45th day after the Termination Date.

 
13     
CONFIDENTIALITY

 
13.1  
The Executive acknowledges that during the Term he shall in the performance of
his duties become aware of trade secrets and other Confidential Information
relating to the Company and the Group Companies their businesses and its or
their clients or customers and their businesses.

 
13.2  
Without prejudice to his general duties at common law in relation to such trade
secrets and other Confidential Information, the Executive shall not during the
Term or at any time after the Termination Date disclose or communicate to any
person or persons or make use (other than in the proper performance of his
duties under this Agreement) and shall use his best endeavours to prevent any
disclosure, communication or use by any other person, of any such trade secrets
or Confidential Information.

 
13.3  
The provisions of this clause shall cease to apply to:

 
13.3.1  
information or knowledge which comes into the public domain otherwise than by
reasons of the default of the Executive;

 
13.3.2  
any use or disclosure authorised by the Board or required by Law;

 
13.3.3  
information or knowledge that was in a third party’s lawful possession before
disclosure by the Executive free of any restriction as to its use or disclosure
(as can be demonstrated by the third party’s written records or other reasonable
evidence) and the third party did not obtain the same (whether directly or
indirectly) from the Executive; or

 
13.3.4  
information or knowledge which is developed by or for a third party at any time
by persons who have had no access to or awareness of the relevant information or
knowledge.

 
13.4  
Clause 13.2 does not prevent the Executive from making a protected disclosure
within the meaning of section 43A of the Act.

 
14     
PROTECTION OF BUSINESS INTERESTS

 
The Executive shall be bound by the provisions of SCHEDULE 2.
 
 
 
 
12

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15     
INTELLECTUAL PROPERTY RIGHTS

 
The Executive shall be bound by the provisions of SCHEDULE 3.
 
16     
DATA PROTECTION

 
16.1  
The Executive consents to any Group Company processing data relating to the
Executive for legal, personnel, administrative and management purposes and in
particular to the processing of any sensitive personal data (as defined in the
Data Protection Act 1998) relating to the Executive, including, as appropriate:

 
16.1.1  
information about the Executive’s physical or mental health or condition in
order to monitor sick leave and take decisions as to the Executive’s fitness for
work;

 
16.1.2  
the Executive’s racial or ethnic origin or religious or similar information in
order to monitor compliance with equal opportunities legislation; and

 
16.1.3  
information relating to any criminal proceedings in which the Executive has been
involved for insurance purposes and in order to comply with legal requirements
and obligations to third parties.

 
16.2  
The Company may make such information available to any Group Company, those who
provide products or services to the Company or any Group Company (such as
advisers and payroll administrators), regulatory authorities, potential or
future employers, governmental or quasi-governmental organisations and potential
purchasers of the Company or the business in which the Executive works.

 
16.3  
The Executive consents to the transfer of such information to any Group Company
and any Group Company’s business contacts outside the European Economic Area in
order to further their business interests even where the country or territory in
question does not maintain adequate data protection standards.

 
17     
DISCIPLINARY AND GRIEVANCE PROCEDURE

 
17.1.1  
The Executive is subject to the Company’s disciplinary and grievance procedures
as in effect from time to time, copies of which are available from the
CEO.  These procedures do not form part of the Executive’s contract of
employment.

 
17.1.2  
If the Executive wishes to raise a grievance, he may apply in writing to the
CEO, in accordance with the Company’s grievance procedure.

 
18     
UNION

 
There are no collective agreements which directly affect the terms and
conditions of the Executive’s employment.  The Executive may belong to a trade
union but has no right to individual or collective representation, other than
the legal right to be accompanied during disciplinary or grievance procedures.
 
 
 
13

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19     
NOTICES

 
Any notice to be given under this Agreement shall be in writing.  Notices may be
served by either party by personal service or by recorded delivery or by first
class post addressed to the other party or by leaving such notice at (in the
case of the Company) its registered office for the time being and (in the case
of the Executive) his last known address and any notice given shall be deemed to
have been served at the time at which the notice was personally served or if
sent by recorded delivery at the time of delivery as recorded or if sent by
first class post on the second working day after posting or in the case of being
left as appropriate at the registered office or last known address, the date on
which it was so left.
 
20     
GENERAL

 
20.1  
The information in this Agreement constitutes a written statement of the terms
of employment of the Executive in accordance with the provisions of the Act.

 
20.2  
This Agreement (including its Schedules) constitutes the entire and only legally
binding agreement between the parties relating to the employment of the
Executive by the Company or any Group Company and replaces any previous
employment agreements or arrangements.

 
20.3  
No failure or delay by either party in exercising any remedy, right, power or
privilege under or in relation to this Agreement shall operate as a waiver of
the same nor shall any single or partial exercise of any remedy, right, power or
privilege preclude any further exercise of the same or exercise of any other
remedy, right, power or privilege.

 
20.4  
If any provision of this Agreement shall be, or become, void or unenforceable
for any reason within any jurisdiction, this shall affect neither the validity
of that provision within any other jurisdiction nor any of the remaining
provisions of this Agreement.

 
20.5  
No variation of this Agreement of any of the documents referred to in it shall
be valid unless it is in writing and signed by or on behalf of each of the
parties.

 
20.6  
This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be an original, and all the counterparts
together shall constitute one and the same instrument.

 
20.7  
The Contracts (Rights of Third Parties) Act 1999 shall not apply to this
Agreement and no person other than the Executive and the Company shall have any
rights under it.  The terms of this Agreement or any of them may be varied,
amended or modified or this Agreement may be suspended, cancelled or terminated
by agreement in writing between the parties or this Agreement may be rescinded
(in each case), without the consent of any third party.

 
20.8  
This Agreement and the rights and obligations of the parties hereto shall be
governed by and construed in accordance with the laws of England and Wales.

 
20.9  
In the event of any claim, dispute or difference arising out of or in connection
with this Agreement the parties hereto irrevocably agree and submit to the
exclusive jurisdiction of the Courts of England and Wales.

 
 
 
 
14

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This Agreement has been entered into and takes effect on the date stated at the
beginning of it.
 

 

 
EXECUTED AS A DEED by
EDUCATIONCITY
LIMITED                                 .......................................
 

acting
by                                                                       .......................................
Director

and                                                                              
.......................................
Director/Secretary
 
 
 
 
 
 
 
 
 
 
 

 
15

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SIGNED AS A DEED by
MATTHEW
DRAKARD                                          .......................................
 
In the presence
of                                                          .......................................
Signature of Witness

 .......................................
Name of Witness
 
 
 
 
 
 
 
 
 
 
 

 
16

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SCHEDULE 1
POWER OF ATTORNEY
 
By this Power of Attorney made on June 9, 2010, I, Matthew Drakard of Top
Cottage, Stamford Road, Barnsdale, Rutland LE15 8AB in accordance with the terms
of the service agreement (the “Service Agreement”) of even date between myself
and EducationCity Limited (the “Company”) HEREBY APPOINT the Company to act as
my attorney with authority in my name and on my behalf (so that words and
expressions defined in the Service Agreement shall have the same meanings
herein):
 
1  
to sign or execute any and all agreements, instruments, deeds or other papers
and to do all such things in my name as may be necessary or desirable to
implement my obligations in connection with clause 15 and SCHEDULE 3 of the
Agreement; and

 
2  
to appoint any substitute and to delegate to that substitute all or any powers
conferred by this Power of Attorney.

 
I declare that this Power of Attorney, having been given by me to secure my
obligations in connection with the Service Agreement, shall be irrevocable in
accordance with section 4 of the Powers of Attorney Act 1971.
 

 
IN WITNESS whereof this Power of Attorney has been duly executed.
 
 
EXECUTED as a DEED and
Delivered by
MATTHEW DRAKARD
in the presence of: 
)
)
)
)

 

 
 
Witness name:
 
Address:
 
Occupation:
 
 
 
 
 
 
 

S-1-1
 
 

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SCHEDULE 2
 
PROTECTION OF BUSINESS INTERESTS
 
1  
In this Schedule the following words and expressions shall have the following
meanings:

 
“Business” means the business or businesses of the Company or any Group Company
in or with which the Executive has been involved or concerned, including
providing online instruction, practice, assessment and/or reporting products,
tools and/or services to the equivalent of the K-12 (in the United States)
education space, at any time during the period of 12 months prior to the
Termination Date;
 
“directly or indirectly” means the Executive acting either alone or jointly with
or on behalf of any other person, firm or company, whether as principal,
partner, manager, employee, contractor, director, consultant, investor or
otherwise;
 
“Key Personnel” means any person who is at the Termination Date or was at any
time during the period of 12 months prior to the Termination Date employed or
engaged as a consultant in the Business in an executive technical or senior
managerial capacity and with whom the Executive has had dealings other than in a
de minimis way during the course of the last 12 months of his employment under
this Agreement;
 
“Prospective Customer” means any person firm or company who has been engaged in
negotiations, with which the Executive has been personally involved, with the
Company or any Group Company with a view to purchasing goods and services from
the Company or any Group Company in the period of three months prior to the
Termination Date;
 
“Relevant Area” means any country in which the Executive has been involved or
concerned with the Business other than in a de minimis way at any time during
the period of 12 months prior to the Termination Date;
 
“Relevant Customer” means any person firm or company who at any time during the
12 months prior to the Termination Date was a customer of the Company or any
Group Company, with whom or which the Executive directly dealt other than in a
material way or for whom or which the Executive was responsible on behalf of the
Company or any Group Company at any time during the said period (or the Term if
shorter);
 
“Relevant Goods and Services” means any goods and services competitive with
those supplied by the Company or any Group Company at any time during the 12
months prior to the Termination Date in the supply of which the Executive was
directly involved or concerned in a material way at any time during the said
period;
 
“Relevant Period” means the period of 12 months from the Termination Date less
any period during which the Executive has not been provided with work pursuant
to clause 3.4 of this Agreement;
 

S-2-1
 
 

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“Relevant Supplier” means any person firm or company who at any time during the
12 months prior to the Termination Date was a supplier of any goods or services
(other than utilities and goods or services supplied for administrative
purposes) to the Company or any Group Company and with whom or which the
Executive had personal dealings during the course of his employment under this
Agreement other than in a de minimis way; and
 
“Termination Date” means the date on which the employment of the Executive under
this Agreement shall terminate.
 
2  
The Executive shall not without the prior written consent of the Board directly
or indirectly at any time during the Relevant Period:

 
2.1  
solicit away from the Company or any Group Company;

 
2.2  
endeavour to solicit away from the Company or any Group Company;

 
2.3  
employ or engage; or

 
2.4  
endeavour to employ or engage;

 
any Key Personnel.
 
3  
The Executive shall not without the prior written consent of the Board directly
or indirectly at any time within the Relevant Period:

 
3.1  
solicit the custom of; or

 
3.2  
deal with,

 
any Relevant Customer or Prospective Customer in respect of any Relevant Goods
or Services; or
 
3.3  
interfere; or

 
3.4  
endeavour to interfere,

 
with the continuance of supplies to the Company and/or any Group Company (or the
terms relating to those supplies) by any Relevant Supplier.
 
4  
The Executive shall not without the prior written consent of the Board directly
or indirectly at any time within the Relevant Period engage or be concerned or
interested in any business within the Relevant Area which:

 
4.1  
competes; or

 
4.2  
will at any time during the Relevant Period compete with the Business provided
that the Executive may hold (directly or through nominees) by way of bona fide
personal investment any units of any authorised unit trust and up to five per
cent of the issued shares, debentures or securities of any class of any company
whose shares are listed on a recognised investment exchange or a designated
investment exchange within the

 

S-2-2
 
 

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4.3  
meaning of the Financial Services and Markets Act 2000 or dealt in the
Alternative Investment Market.

 
5  
The Executive acknowledges (having taken appropriate legal advice) that the
provisions of this Schedule are fair and reasonable and necessary to protect the
goodwill and interests of the Company and the Group Companies and shall
constitute separate and severable undertakings given for the benefit of the
Company and each Group Company and may be enforced by the Company on behalf of
any of them.

 
6  
If any of the restrictions or obligations contained in this Schedule is held not
to be valid on the basis that it exceeds what is reasonable for the protection
of the goodwill and interests of the Company and the Group Companies but would
be valid if part of the wording were deleted then such restriction or obligation
shall apply with such deletions as may be necessary to make it enforceable.

 
7  
The Executive acknowledges and agrees that he shall be obliged to draw the
provisions of this Schedule to the attention of any third party who may at any
time before or after the termination of the Executive’s employment hereunder
offer to engage the Executive in any capacity and for whom or with whom the
Executive intends to work.

 
8  
The Executive acknowledges that, on the date hereof, the Executive is also
entering into a Share Purchase Agreement by and among the Executive, the Company
and Archipelago Learning Holdings UK Limited and certain other parties thereto,
which contains covenants related to the protection of business interests,
including with regard to non-competition, non-solicitation and
confidentiality.  The Executive acknowledges and agrees that such provisions of
such Share Purchase Agreement and his obligations thereunder are separate and
independent of clause 13 of this Agreement and the provision of this Schedule
and do not conflict with, and are not modified by, nor modify, the provisions of
clause 13 of this Agreement nor the provisions of this Schedule.

 
 
 
 
 
 
 
 
 
 
 
 
S-2-3
 
 

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SCHEDULE 3
INTELLECTUAL PROPERTY RIGHTS
 
1  
DEFINITIONS

 
In this Schedule the following words and expressions shall have the following
meanings:
 
“Copyright Work” means any work of which the Executive is the author in which
copyright subsists by virtue of the Copyright, Designs and Patents Act 1988 and
any statutory amendment or replacement thereof and which relates directly or
indirectly to the business of the Company or any Group Company or arises out of
the work performed by the Executive for the Company or any Group Company;
 
“Design” means any design of which the Executive is the designer in which design
right subsists by virtue of the Copyright, Designs and Patents Act 1988 and any
statutory amendment or replacement thereof and which relates directly or
indirectly to the business of the Company or any Group Company or arises out of
the work performed by the Executive for the Company or any Group Company;
 
“Know How” means trade secrets, confidential information, know how, technical or
commercial knowledge, manufacturing or business processes and methods which
relate directly to the business of the Company or any Group Company (the
“Relevant Information”), but only to the extent that such Relevant Information
arises out of the work performed by the Executive for the Company or any Group
Company and relates specifically and solely to the operations of the Company or
any Group Company and excluding, for the avoidance of doubt, any information,
knowledge, processes or methods that are linked to the industry in which the
Group Companies operate but that are not directly, specifically and solely
connected to the Company or any Group Company;
 
“Intellectual Property” means any Copyright Work, Design, Know How, Invention,
Registered Design or Trademark;
 
“Invention” means any discovery, invention or improvement in relation to goods
and/or services made by the Executive alone or with others and which relates
directly or indirectly to the business of the Company or any Group Company or
arises out of work performed by the Executive for the Company or any Group
Company;
 
“Registered Design” means any design of which the Executive is the designer and
which is registrable pursuant to the Registered Designs Act 1949 as amended or
replaced from time to time and which relates directly or indirectly to the
business of the Company or any Group Company or arises out of the work performed
by the Executive for the Company or any Group Company; and
 
“Trade Mark” means any trade mark, service mark or trade name which relates
directly or indirectly to the business of the Company or any Group Company or
arises out of the work performed by the Executive for the Company or any Group
Company;
 
 
 
S-3-1

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and derivative expressions shall be construed accordingly.
 
2  
INVENTIONS

 
2.1  
All rights in Inventions made during the Term of this Agreement whether or not
the same are made in the course of the duties of the Executive and which do not
by statue belong to the Company or any Group Company shall belong to and are
hereby assigned to the Company absolutely.

 
2.2  
The Executive shall not, without the prior written consent of the Company and
whether during or after the period of his employment by the Company, disclose an
Invention to any third party or use the same for the benefit of himself or any
third party but shall maintain absolute confidentiality in relation to that
Invention.

 
2.3  
Immediately on making any Invention and in any event upon request by the
Company, the Executive shall disclose to the Company all information (in
whatever form the same may exist) in his possession or control relating to the
Invention.

 
2.4  
At the request and expense of the Company, the Executive shall execute all
documents and do all acts and things which are in the opinion of the Company
necessary or desirable:

 
2.4.1  
to vest in the Company or any person the Company may nominate the rights
referred to in paragraph 2.1;

 
2.4.2  
to provide confirmation that a particular right in an Invention has vested in
the Company;

 
2.4.3  
to enable applications for patents or other registered rights to be made and
prosecuted in any part of the world; and

 
2.4.4  
to vest absolutely any patent or other registered right obtained by or on behalf
of the Executive in respect of Invention in the Company or any person the
Company may nominate.

 
2.5  
The provisions of paragraph 2 of this Schedule shall be without prejudice to the
rights of the Executive under sections 39 and 40 of the Patents Act 1977.

 
3  
COPYRIGHT AND DESIGN RIGHT

 
3.1  
All rights arising during the Term of this Agreement in and to:

 
3.1.1  
Copyright Works;

 
3.1.2  
Designs;

 
3.1.3  
Registered Designs; and

 
3.1.4  
Know How

 
and which do not by statute belong to the Company or any Group Company shall
belong to and are hereby assigned to the Company whether or not the work or
design
 

S-3-2

 
 

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in which such right or rights subsist was made or designed during the course of
the duties of the Executive.
 
3.2  
At the request and expense of the Company, the Executive shall execute all
documents and do all acts and things which are in the opinion of the Company
necessary or desirable:

 
3.2.1  
to vest in the Company or any person the Company may nominate the rights
referred to in paragraph 3.1;

 
3.2.2  
to provide confirmation that a particular right in a Copyright Work, Design,
Registered Design or Know How has vested in the Company;

 
3.2.3  
to enable applications for registered rights to be made and prosecuted in any
part of the world; and

 
3.2.4  
to vest absolutely any registered rights obtained by the Executive in respect of
any Copyright Works, Designs, Registered Designs or Know How in the Company or
any person the Company may nominate.

 
3.3  
The Executive waives all his present and future moral rights which arise under
the Copyright Designs and Patents Act 1988, and all similar rights in other
jurisdictions relating to any copyright, and agrees not to support, maintain nor
permit any claim for infringement of moral rights in such copyright works.

 
4  
JOINT AUTHORSHIP AND JOINT INVENTION

 
4.1  
Where any Invention is made by the Executive together with any other person or
persons the Executive shall use his best endeavours to procure that the other
person or persons assign to the Company their interest in the Invention.

 
4.2  
Where the Executive is joint author or joint designer with any other person or
persons of any work, material and/or design in which any of the rights referred
to in paragraph 3 of this Schedule subsist, he shall use his best endeavours to
procure that the joint authors assign their interest in the right or rights in
question to the Company.

 
5  
USE OF INTELLECTUAL PROPERTY

 
The Company will be entitled to make such use of the Intellectual Property as it
deems appropriate.  The Executive will not use the Intellectual Property in any
manner, save as is necessary in performing his duties pursuant to this
Agreement, and will not disclose, or permit any third party to use or disclose,
the Intellectual Property, in any manner, at any time ether during or after
termination of this Agreement.
 
6  
REGISTRATION

 
The Executive shall not:
 
6.1  
register or take any steps to register any Invention, Copyright Work, Design,
Registered Design, Know How or Trade Mark with the UK Patents Office or any
equivalent or similar registration body anywhere in the world; or

 
 
 
 
S-3-3
 
 

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6.2  
register any domain name which relates directly or indirectly to the business of
the Company or any Group Company or arises out of the work performed by the
Executive for the Company or any Group Company with any domain name registration
authority or body anywhere in the world.

 
7  
PAPERS AND RECORDS

 
The Executive shall immediately after the Termination Date deliver to the
Secretary of the Company or such other person as the CEO may nominate in writing
all books, papers, drawings, designs, records and computer software in his
possession or under his control at that date which relate to or concern any
Invention, or any Copyright Work, Design, Registered Design or Know How.
 
8  
ENFORCEMENT

 
The Executive agrees to give all necessary assistance to the Company to enable
it to enforce its intellectual property rights against third parties, to defend
claims for infringement of third party intellectual property rights and to apply
for registration of Intellectual Property Rights, where appropriate throughout
the world, and for the full term of those rights.
 
9  
POWER OF ATTORNEY

 
The Executive shall at the time of signing this Agreement appoint as his
attorney (in the form set out in SCHEDULE 1) the Company to sign or execute any
and all agreements, instruments, deeds or other papers and do all things in the
name of the Executive as may be necessary or desirable to implement the
obligations of the Executive under this Schedule.
 
 
 
 
 
 

 

S-3-4
 
 

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SCHEDULE 4
SAMPLE BONUS CALCULATION
The following example is for illustrative purposes only and is not intended as a
guide to or indicative of the Executive’s actual annual salary or potential
annual performance targets.

Pursuant to clause 6.2, if:
(i) the Executive’s annual salary is £100,000; and
(ii) the target performance set by the Board and the CEO in consultation with
the Executive is: (a) 60%: EBITDA of the Company, inclusive of its subsidiary,
of £1,000,000; and (b) 40%: revenue of the Company, inclusive of its subsidiary,
of £2,000,000;

Then:

(A) if EBITDA is £999,999 and revenue is £1,999,999, then the Executive shall
receive no annual bonus for such year, provided that the Board shall in good
faith consider whether a full or partial annual bonus should still be paid; in
such circumstance, the Board shall consider: (i) the Executive’s individual
performance and efforts; (ii) the performance metrics achieved; and (iii) the
circumstances related to the applicable targets.

(B) if EBITDA is £1,000,000 and revenue is £2,000,000, the Executive shall
receive an annual bonus for such year of £40,000.  Calculated as follows:
(i) for EBITDA: £1,000,000/£1,000,000 = 100%.  At 100% of target, bonus is equal
to 40% of annual salary of £100,000 = £40,000, multiplied by percentage of bonus
assigned to EBITDA target: £40,000 * 60% = £24,000; and
(ii) for revenue: £2,000,000/£2,000,000 = 100%.  At 100% of target, bonus is
equal to 40% of annual salary of £100,000 = £40,000, multiplied by percentage of
bonus assigned to revenue target: £40,000 * 40% = £16,000.
(iii) £24,000 (EBITDA bonus) + £16,000 (revenue bonus) = £40,000.

(C) if EBITDA is £1,050,000 and revenue is £2,000,000, the Executive shall
receive an annual bonus for such year of £43,000.  Calculated as follows:
(i) for EBITDA: £1,050,000/£1,000,000 = 105%.  At 105% of target, bonus is equal
to 45% (40% + (105%-100%) = 45%) of annual salary of £100,000 = £45,000,
multiplied by percentage of bonus assigned to EBITDA target: £45,000 * 60% =
£27,000; and
(ii) for revenue: £2,000,000/£2,000,000 = 100%.  At 100% of target, bonus is
equal to 40% of annual salary of £100,000 = £40,000, multiplied by percentage of
bonus assigned to revenue target: £40,000 * 40% = £16,000.
(iii) £27,000 (EBITDA bonus) + £16,000 (revenue bonus) = £43,000.

(D) if EBITDA is £1,200,000 and revenue is £2,140,000 the Executive shall
receive an annual bonus for such year of £48,800.  Calculated as follows:
(i) for EBITDA: £1,200,000/£1,000,000 = 120%.  At 120% of target, bonus is equal
to 50% (above target bonus is capped at 50%) of annual salary of £100,000 =
£50,000, multiplied by percentage of bonus assigned to EBITDA target: £50,000 *
60% = £30,000; and
 
 
 
S-4-1

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(ii) for revenue: £2,140,000/£2,000,000 = 107%.  At 107% of target, bonus is
equal to 47% (40% + (107%-100%) = 47%) of annual salary of £100,000 = £47,000,
multiplied by percentage of bonus assigned to revenue target: £47,000 * 40% =
£18,800.
(iii) £30,000 (EBITDA bonus) + £18,800 (revenue bonus) = £48,800.

(E) if EBITDA is £1,200,000 and revenue is £1,990,000, the Executive shall
receive an annual bonus of £30,000.  Calculated as follows:
(i) for EBITDA: £1,200,000/£1,000,000 = 120%.  At 120% of target, bonus is equal
to 50% (above target bonus is capped at 50%) of annual salary of £100,000 =
£50,000, multiplied by percentage of bonus assigned to EBITDA target: £50,000 *
60% = £30,000; and
(ii) for revenue: £1,990,000/£2,000,000 = 99.5%.  At 99.5% of target, no bonus
is paid, provided that the Board shall in good faith consider whether a full or
partial annual bonus should still be paid; in such circumstance, the Board shall
consider: (i) the Executive’s individual performance and efforts; (ii) the
performance metrics achieved; and (iii) the circumstances related to the
applicable targets.
(iii) £30,000 (EBITDA bonus) + £0 (revenue bonus) = £30,000.

(F) if EBITDA is £1,110,000 and revenue is £2,210,000, the Executive shall
receive an annual bonus for such year of £50,000. Calculated as follows:
(i) for EBITDA:  £1,110,000/£1,000,000 = 111%.  At 111% of target, bonus is
equal to 50% (above target bonus is capped at 50%) of annual salary of £100,000
= £50,000, multiplied by percentage of bonus assigned to EBITDA target: £50,000
* 60% = £30,000; and
(ii) for revenue: £2,210,000/£2,000,000 = 110.05%.  At 110.5% of target, bonus
is equal to 50% (above target bonus is capped at 50%) of annual salary of
£100,000 = £50,000, multiplied by percentage of bonus assigned to revenue
target: £50,000 * 40% = £20,000.
(iii) £30,000 (EBITDA bonus) + £20,000 (revenue bonus) = £50,000.

Though subject to change by the Company, it is initially intended that “revenue”
mean invoiced sales and “EBTIDA” mean adjusted cash EBITDA.

 
 
 
 
 
 
S-4-2