Exhibit
10.9


 


INVESTOR AND REGISTRATION RIGHTS AGREEMENT


 


THIS
INVESTOR REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is made as of October 20, 2010, by and among:


 


(1)          Xueda Education Group, a company incorporated in the
Cayman Islands (the “Company”);


 


(2)          WP X Investments IV Ltd. (the “Investor”).


 


The
parties listed above are referred to herein collectively as “Parties” and individually as a “Party.”


 


RECITALS


 


A.                                   The Company and the Investor have entered into a Subscription Agreement
dated as of October 20, 2010 (the “Subscription
Agreement”); and


 


B.                                     In connection with the Subscription Agreement and in order to induce the
Investor to consummate the transactions contemplated under the Subscription
Agreement, the Company and the Investors have agreed to enter into this
Agreement.


 


WITNESSETH


 


NOW,
THEREFORE, in consideration of the premises set forth above, the mutual
promises and covenants set forth herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:


 


1.                                      Interpretation


 


1.1                               Definitions.
The following terms shall have the meanings ascribed to them below:


 


“Affiliate” means, with respect to a specified person, a
person that directly or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.


 


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“Applicable Securities Laws” means the securities law of the
United States, including the Exchange Act and the Securities Act, and any
applicable securities law of any state of the United States.


 


“Board” or “Board of Directors”
means the board of directors of the Company.


 


“Business Day” means any day that is not a Saturday, Sunday,
public holiday or other day on which commercial banks are required or
authorized by law to be closed in the PRC, the Cayman Islands or the City of
New York.


 


“Commission” means the Securities and Exchange Commission of
the United States or any other federal agency at the time administering the
Securities Act.


 


“Ordinary Shares” means the ordinary shares, par value
US$0.0001, of the Company.


 


“Exchange Act” means the United States Securities Exchange
Act of 1934, as amended.


 


“Existing Registration Right Holder” means any holder of Registrable
Securities other than the Investor.


 


“Form F-3” means Form F-3 promulgated by the
Commission under the Securities Act or any successor form or substantially
similar form then in effect.


 


“Form S-3” means Form S-3 promulgated by the
Commission under the Securities Act or any successor form or substantially
similar form then in effect.


 


“Governmental Authority” means any nation or government or
any nation, province or state or any other political subdivision thereof; any
entity, authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including any government authority, agency, department, board, commission or
instrumentality of the PRC or any other country, or any political subdivision
thereof, any court, tribunal or arbitrator, and any self-regulatory
organization.


 


“Holder” means any holder of the Registrable Securities.


 


“IPO” means the Company’s underwritten registered initial
public offering of American depositary shares on the New York Stock Exchange.


 


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“Law” means any constitutional provision, statute or other
law, rule, regulation, official policy or interpretation of any Governmental
Authority and any injunction, judgment, order, ruling, assessment or writ
issued by any Governmental Authority.


 


“Person” means any individual, corporation, partnership,
limited partnership, proprietorship, association, limited liability company,
firm, trust, estate or other enterprise or entity.


 


“PRC” means the People’s Republic of China, but solely for
the purposes of this Agreement, excluding the Hong Kong Special Administrative
Region, Macau Special Administrative Region and Taiwan.


 


“Registration” means a registration effected by preparing and
filing a Registration Statement and the declaration or ordering of the
effectiveness of that Registration Statement; and the terms “Register” and “Registered”
have meanings concomitant with the foregoing.


 


“Registrable Securities” means (i) all of the Ordinary
Shares acquired by the Investor, pursuant to the Subscription Agreement and the
Shares Purchase Agreement, (ii) any and all Ordinary Shares that the
Investor may acquire in connection with the Company’s IPO and (iii) all “Registrable
Securities” as defined in the Shareholders Agreement (as defined below).


 


“Registration Statement” means a registration statement
prepared on Form F-1, F-3, S-1 or S-3 under the Securities Act (including,
without limitation, Rule 415 under the Securities Act).


 


“Securities Act” means the United States Securities Act of
1933, as amended.


 


“Shareholders Agreement” means the Shareholders Agreement
dated as of August 28, 2009 by and among the Company and other parties
thereof, as such agreement may be amended and restated.


 


“Shares Purchase Agreement” means the share purchase
agreement dated as of the date hereof by and among the Investor and certain
selling shareholders of the Company.


 


“U.S.” means the United States of America.


 


1.2                               Interpretation.
For all purposes of this Agreement, except as otherwise expressly provided, (i) the
terms defined in this Section 1 shall have the meanings assigned to
them in this Section 1 and include the plural as well as the
singular, (ii) all references in this Agreement to designated “Sections”
and other subdivisions are to the designated Sections and other


 


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subdivisions
of the body of this Agreement, (iii) pronouns of either gender or neuter
shall include, as appropriate, the other pronoun forms, (iv) the words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular Section or other
subdivision, (v) all references in this Agreement to designated schedules,
exhibits and annexes are to the schedules, exhibits and annexes attached to
this Agreement unless explicitly stated otherwise, (vi) “or” is not
exclusive, (vii) the term “including” will be deemed to be followed by “,
but not limited to,” (viii) the terms “shall,” “will,” and “agrees” are
mandatory, and the term “may” is permissive, and (ix) the term “day” means
“calendar day.”


 


2.                                      Corporate Governance.


 


2.1                               Board of Directors.
Starting from the closing of the IPO and so long as the Investor, together with
its affiliates as defined in Rule 405 under the Securities Act, continues
to hold at least 5% of the Company’s outstanding voting securities, the
Investor shall have the right to appoint one (1) director to the Board of
Directors of the Company (the “WP Director”)
for a term of one (1) year from the date of such appointment (the “Appointment Term”); and prior to the expiration of the
Appointment Term the WP Director may only be removed or replaced by the
Investor; provided  that for the purpose of enabling the Company
to comply with requirements to maintain an independent board of directors as a
public company, if requested by the Company’s management, the Investor shall
promptly procure the resignation of the WP Director from the Board of Directors
of the Company.


 


2.2                               D&O Insurance.
The Company shall, as promptly as practicable and in any event prior to the
appointment of the WP Director, purchase, and thereafter shall maintain,
directors’ and officers’ insurance on terms with sufficient coverage as
reasonably determined by the Company, in relation to any person who is or was a
director, against any liability asserted against the person and incurred by the
person in that capacity, including the WP Director.


 


2.3                               Additional Covenants.  The Company shall ensure that the
rights granted hereunder are effective and that the Investor enjoys the
benefits thereof. Such actions include, without limitation, to cause the
nomination and election of the director as provided above.


 


3.                                      Registration Rights.


 


3.1                               Demand Registration.


 


(a)                                  Request by Holders.


 


If
the Company shall, at any time or from time to time after the date that is six (6) months
after the closing of the IPO, receive a written request from the Investor that
the Company file a Registration Statement under the Securities Act covering


 


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the
registration of at least fifty percent (50%) of the Registrable Securities held
by the Investor, then the Company shall, within ten (10) Business Days of
the receipt of such written request, give written notice of such request to all
Existing Registration Right Holders, and use its best efforts to effect, as
soon as practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request to be registered and included
in such registration; provided that the Company shall not be obligated
to effect any such registration if the Company has, within the six (6) month
period preceding the date of such request, already effected a registration
under the Securities Act pursuant to this Section 3.1 or Section 3.3
or in which the Holders had an opportunity to participate pursuant to Section 3.2,
other than a registration from which the Registrable Securities of the Investor
has been excluded (with respect to all or any portion of the Registrable
Securities the Investor requested be included in such registration) pursuant to
Section 3.2(a). The Company shall not be obligated to effect more
than two (2) such demand registrations for the Investor pursuant to this Section 3.1(a).


 


(b)                                 Underwriting. If the Investor who
initiates the registration request under this Section 3.1 (such
Investor, the “Initiating Holder”) intends to
distribute the Registrable Securities covered by its request by means of an
underwriting, then it shall so advise the Company as a part of its request made
pursuant to this Section 3.1(a) and the Company shall include
such information in the Request Notice. In such event, the right of any Holder
to include its Registrable Securities in such registration shall be conditioned
upon such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in voting power of the Initiating Holder and other
Holders) to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected for such underwriting by the Holders representing a majority in voting
power of the Registrable Securities requested to be registered and reasonably
acceptable to the Company. Notwithstanding any other provision of this Section 3.1,
if the underwriter(s) advise(s) the Company in writing that marketing
factors require a limitation of the number of securities to be underwritten,
then the Company shall so advise all Holders of Registrable Securities which
would otherwise be registered and underwritten pursuant hereto, and the number
of Registrable Securities that may be included in the underwriting shall be
reduced as required by the underwriter(s) and allocated among the Holders
of Registrable Securities on a pro rata basis according to the number of
Registrable Securities then outstanding held by each Holder requesting
registration (including the Initiating Holder); provided, however,
that the number of Registrable Securities held by the Investor to be included
in such underwriting and registration shall not be reduced unless all other
securities (other than Registrable Securities held by Existing Registration
Right Holders) are first entirely excluded from the underwriting and
registration (including, without limitation, any securities which the Company
may seek to include in the underwriting for its own account and all shares that
are not Registrable Securities


 


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and
are held by any other person, including, without limitation, any person who is
an employee, officer or director of the Company or any subsidiary of the Company); provided  further, that at least 25% of any Registrable
Securities requested by the Investor to be included in such underwriting and
registration shall be so included.  If
the Investor disapproves of the terms of any such underwriting, the Investor
may elect to withdraw therefrom by written notice to the Company and the
underwriter(s), delivered at least ten (10) Business Days prior to the
effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration.


 


(c)                                  Deferral. Notwithstanding the
foregoing, if the Company shall furnish to the Investor requesting registration
pursuant to this Section 3.1(a), a certificate signed by its
President or Chief Executive Officer stating that in the good faith judgment of
the Board, it would be materially detrimental to the Company and its
shareholders for such Registration Statement to be filed at such time, then the
Company shall have the right to defer such filing for a period of not more than
ninety (90) days after receipt of the request of the Initiating Holder; provided,
however, that the Company may not utilize this right more than once in
any twelve (12) month period; provided, further, that the Company
shall not register any other of its Ordinary Shares during such twelve (12)
month period. A demand right shall not be deemed to have been exercised until
such deferred registration shall have been effected.


 


3.2                               Piggyback Registrations.


 


(a)                                  The Company shall notify the Investor in writing at least thirty (30)
days prior to filing any Registration Statement under the Securities Act for
purposes of effecting a public offering of securities of the Company (including,
but not limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements filed under Section 3.3
of this Agreement or relating to any employee benefit plan or a corporate
reorganization), and shall afford the Investor an opportunity to include in
such Registration Statement all or any part of the Registrable Securities then
held by the Investor. If the Investor desires to include in any such
registration statement all or any part of the Registrable Securities held by
it, it shall within twenty (20) days after receipt of the above-described
notice from the Company so notify the Company in writing and in such notice
shall inform the Company of the number of Registrable Securities the Investor
wishes to include in such registration statement. If the Investor decides not
to include all of its Registrable Securities in any registration statement
thereafter filed by the Company, the Investor shall nevertheless continue to
have the right to include any Registrable Securities in any subsequent
registration statement or registration statements as may be filed by the
Company


 


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with
respect to offerings of its securities, all upon the terms and conditions set
forth herein.


 


(b)                                 Underwriting. If a registration
statement under which the Company gives notice under this Section 3.2(a) is
for an underwritten offering, then the Company shall so advise the Investor. In
such event, the right of any of the Investor’s Registrable Securities to be
included in a registration pursuant to this Section 3.2(a) shall
be conditional upon the Investor’s participation in such underwriting and the
inclusion of the Investor’s Registrable Securities in the underwriting to the
extent provided herein.  If the Investor
proposes to distribute its Registrable Securities through such underwriting
shall enter into an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting.  If the managing underwriter(s) determine(s) in
good faith that marketing factors require a limitation of the number of
Ordinary Shares to be underwritten, then the managing underwriter(s) may
exclude Ordinary Shares from the registration and the underwriting, and the
number of Ordinary Shares that may be included in the registration and the
underwriting shall be allocated, first, to the Company, second,
to each of the Holders requesting inclusion of their Registrable Securities in
such registration statement on a pro rata basis based on the total number of
Registrable Securities then held by such Holder, and third, to holders
of other securities of the Company; provided, however, that the
right of the underwriter(s) to exclude shares (including Registrable
Securities) from the registration and underwriting as described above shall be
restricted so that (i) the number of Registrable Securities included in
any such registration is not reduced below twenty-five percent (25%) of the aggregate number of shares of Registrable Securities for which
inclusion has been requested; and (ii) all shares that are not Registrable
Securities and are held by any other person, including, without limitation, any
person who is an employee, officer or director of the Company (or any
subsidiary of the Company) shall first be excluded from such registration and
underwriting before any Registrable Securities are so excluded.  If the Investor disapproves of the terms of
any such underwriting, the Investor may elect to withdraw therefrom by written
notice to the Company and the underwriter(s), delivered at least ten (10) Business
Days prior to the effective date of the registration statement. Any Registrable
Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration.


 


(c)                                  Not Demand Registration.
Registration pursuant to this Section 3.2 shall not be deemed to be
a demand registration as described in Section 3.1 above. There
shall be no limit on the number of times the Holders may request registration
of Registrable Securities under this Section 3.2.


 


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3.3                               Form F-3 or Form S-3 Registration.


 


(a)                                  In case the Company shall receive from the Investor a written request or
requests that the Company effect a registration on Form F-3 or Form S-3 or any comparable or successor form and any related qualification or compliance with respect to all or any
part of the Registrable Securities owned by the Investor, then the Company
shall promptly give written notice of the proposed registration and the
Investor’s request therefor, and any related qualification or compliance, to
all other Holders of Registrable Securities; and as soon as practicable, effect
such registration and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of such
Registrable Securities of the Investor as are specified in such request,
together with all or such portion of the Registrable Securities of any other Holders
joining in such request as are specified in a written request given within
twenty (20) days after the Company provides the notice contemplated above.


 


(b)                                 Notwithstanding anything to the contrary provided above, the Company
shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 3.3:


 


(1)                                  if Form F-3 or Form S-3 is not available for such offering by
the Holders;


 


(2)                                  if the aggregate anticipated price to the public of any Registrable
Securities which such Holders propose to sell pursuant to such registration,
together with the aggregate anticipated price to the public of any other
securities of the Company entitled to inclusion in such registration, is less
than US$500,000 (or the equivalent thereof in other currencies);


 


(3)                                  if the Company shall furnish to the Holders a certificate signed by the
President or Chief Executive Officer stating that in the good faith judgment of
the Board, it would be materially detrimental to the Company and its shareholders
for such Form F-3 or Form S-3 Registration to be effected at such
time, in which event the Company shall have the right to defer the filing of
the Form F-3 or Form S-3 registration statement no more than once
during any twelve (12) month period for a period of not more than ninety (90)
days after receipt of the request of the Investor or other Holders under this Section 3.3(a);
provided, that the Company shall not register any of its other Shares
during such ninety (90) day period; or


 


(4)                                  if the Company has, within the six (6) month period preceding the
date of such request, already effected a registration under the Securities Act
other than a registration from which the Registrable Securities of Holders have
been excluded (with respect to all or any portion of the Registrable Securities
the Holders requested be included in such registration) pursuant to Section 3.1(b) or
Section 3.2(b).


 


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(c)                                  Not Demand Registration.
Form F-3 or Form S-3 registrations shall not be deemed to be demand
registrations as described in Section 3.1 above. Except as
otherwise provided herein, there shall be no limit on the number of times the
Holders may request registration of Registrable Securities under this Section 3.3.


 


3.4                               Expenses.
All expenses, other than the underwriting discounts and selling commissions
(which shall be borne by the Holders requesting Registration on a pro rata
basis in proportion to their respective numbers of Registrable Securities sold
in such Registration) applicable to the sale of Registrable Securities pursuant
to this Agreement, incurred in connection with Registrations, filings or
qualifications pursuant to this Agreement, including (without limitation) all
Registration, filing and qualification fees, printers’ and accounting fees,
fees and disbursements of counsel for the Company and reasonable fees and
disbursement of the Investor’s counsel, shall be borne by the Company. The
Company shall not, however, be required to pay for any expenses of any Registration
proceeding begun pursuant to this Agreement if the Registration request is
subsequently withdrawn at the request of a majority-in-interest of the Holders
requesting such Registration (in which case all participating Holders shall
bear such expenses pro rata based upon the number of Registrable Securities
that were to be thereby Registered in the withdrawn Registration).


 


3.5                               Obligations of the Company. Whenever required to effect the registration of any Registrable
Securities under this Agreement the Company shall, as expeditiously as
reasonably possible:


 


(a)                                  Registration Statement.
Prepare and file with the SEC a Registration Statement with respect to such
Registrable Securities, use its best efforts to cause such Registration
Statement to become effective and, upon the request of the Holders of a
majority of the Registrable Securities registered thereunder, keep such
Registration Statement effective for a period of up to 90 days or, in the case
of Registrable Securities registered under Form F-3 or Form S-3 in
accordance with Rule 415 under the Securities Act or a successor rule,
until the distribution contemplated in the registration statement has been
completed; provided, however, that (i) such 90 day period
shall be extended for a period of time equal to the period any Holder refrains
from selling any securities included in such registration at the request of the
underwriter(s), and (ii) in the case of any registration of Registrable
Securities on Form F-3 or Form S-3 which are intended to be offered
on a continuous or delayed basis, such 90 day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold.


 


(b)                                 Amendments and Supplements.
Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement.


 


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(c)                                  Prospectuses. Furnish to the Investor
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by them that are included in such
registration.


 


(d)                                 Blue Sky. Use its best efforts to
register and qualify the securities covered by such registration statement
under such other securities or “blue sky” laws of such jurisdictions as shall
be reasonably requested by the Investor, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act.


 


(e)                                  Underwriting. In the event of any
underwritten public offering, enter into and perform its obligations under an
underwriting agreement in usual and customary form, with the managing
underwriter(s) of such offering. If the Investor participates in such
underwriting, the Investor shall also enter into and perform its obligations
under such an agreement.


 


(f)                                    Notification. Notify the Investor if
the Investor has Registrable Securities covered by such Registration Statement
at any time when a prospectus relating thereto is required to be delivered
under the Securities Act of (i) the issuance of any stop order by the SEC
in respect of such Registration Statement, or (ii) the happening of any
event as a result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and at the request of the Investor, prepare and furnish to the
Investor a reasonable number of copies of a supplement or amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Ordinary Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
incomplete in light of the circumstances then existing.


 


(g)                                 Opinion and Comfort Letter.
Furnish, at the request of the Investor, on the date that such Registrable
Securities are delivered to the underwriter(s) for sale, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) opinion letters,
dated as of such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to
the Investor, addressed to the


 


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underwriters,
if any, and to the Investor and (ii) a “comfort” letter, dated as of such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and reasonably
satisfactory to the Investor, addressed to the underwriters, if any, and to the
Investor.


 


(h)                                 Transfer Agent and CUSIP.
Provide a transfer agent and registrar for all Registrable Securities covered
by such registration statement and held by the Investor and, where applicable,
a CUSIP number for all those Registrable Securities, in each case not later
than the effective date of the Registration.


 


(i)                                     Further Actions. Take all
reasonable action necessary to list the Registrable Securities on the primary
exchange upon which the Company’s securities are traded.


 


3.6                               Furnish Information.
It shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Section 3 that the Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of such securities as shall be
required to timely effect the Registration of its Registrable Securities.


 


3.7                               Indemnification.
In the event any Registrable Securities are included in a registration
statement under this Section 3:


 


(a)                                  Indemnification by the Company.
To the extent permitted by law, the Company shall indemnify and hold harmless
the Investor, its partners, officers, directors, legal counsel, any underwriter
(as defined in the Securities Act) for the Investor and each Person, if any,
who controls the Investor or underwriter within the meaning of the Securities
Act or the Exchange Act, against all losses, claims, damages and liabilities
(joint or several; or actions, proceedings or settlements in respect thereof)
to which they may become subject under laws which are applicable to the Company
and relate to action or inaction required of the Company in connection with any
registration, qualification or compliance, insofar as such losses, claims,
damages or liabilities (or actions, proceedings or settlements in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a “Violation”):


 


(i)                                     any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto;


 


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(ii)                                  the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; or


 


(iii)                               any violation or alleged violation by the Company of the Applicable
Securities Law, or any rule or regulation promulgated under the Applicable
Securities Law;


 


and the Company shall
reimburse the Investor and its partners, officers, directors, legal counsel,
underwriter and controlling Person for any legal or other expenses reasonably
incurred by them, as such expenses are incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 3.7(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by the
Investor, partner, officer, director, legal counsel, underwriter or controlling
Person of such Investor.


 


(b)                                 Indemnification by the Investor.
To the extent permitted by law, the Investor shall, if Registrable Securities
held by the Investor are included in the securities as to which such
registration, qualifications or compliance is being effected, indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each Person, if any, who controls the Company
within the meaning of the Securities Act and any underwriter and any other
Holder selling securities under such registration statement or any of such
other Holder’s partners, directors, officers, legal counsel or any person who
controls such Holder within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, legal counsel, controlling
Person, underwriter or such other Holder, partner or director, officer or
controlling Person of such other Holder may become subject under the Securities
Act, the Exchange Act or other United States federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any of the following statements, omissions or
Violations, in each case to the extent (and only to the extent) that such
statement, omission or Violation occurs in sole reliance upon and in conformity
with written information furnished by the Investor expressly for use in
connection with such registration:


 


(i)                                     untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final


 


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prospectus
contained therein or any amendments or supplements thereto; or


 


(ii)                                  omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading,


 


and the Investor shall
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, controlling Person, underwriter or other Holder,
partner, officer, director or controlling Person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this Section 3.7(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Investor, which
consent shall not be unreasonably withheld; and provided, further,
that except for liability for willful fraud or misrepresentation, in no event
shall any indemnity under this Section 3.7(b) exceed the net
proceeds received by the Investor in such registration.


 


(c)                                  Notice. Promptly after receipt
by an indemnified party of notice of the commencement of any action (including
any governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, as incurred, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of liability to the indemnified
party under this Section 3.7 to the extent the indemnifying party
is prejudiced as a result thereof, but the omission to so deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 3.7.


 


(d)                                 Contribution.  In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any indemnified party makes a claim for indemnification
pursuant to this Section 3.7 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last


 


13

















 


right
of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 3.7 provides for
indemnification in such case, or (ii) contribution under the Securities
Act may be required on the part of any indemnified party in circumstances for
which indemnification is provided under this Section 3.7; then, and
in each such case, the indemnified party and the indemnifying party will
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so that
a Holder (together with its related persons) is responsible for the portion
represented by the percentage that the public offering price of its Registrable
Securities offered by and sold under the registration statement bears to the
public offering price of all securities offered by and sold under such
registration statement, and the Company and other selling Holders are
responsible for the remaining portion. 
The relative fault of the indemnifying party and of the indemnified
party shall be determined by a court of law by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided, however, that, in any such case: (A) no
Holder will be required to contribute any amount in excess of the net proceeds
to such Holder from the sale of all such Registrable Securities offered and
sold by such Holder pursuant to such registration statement; and (B) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.


 


(e)                                  Survival; Consents to Judgments and Settlements. The obligations of the Company and Holders under this Section 3.7
shall survive the completion of any offering of Registrable Securities in a
registration statement, regardless of the expiration of any statutes of
limitation or extensions of such statutes. No indemnifying party, in the
defense of any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.


 


3.8                               No Registration Rights to Third Parties. Without the prior written consent of the Investor, the Company
covenants and agrees that it shall not grant, or cause or permit to be created,
for the benefit of any Person any registration rights of any kind relating to
any securities of the Company that is more favorable to such third-party than
those have been granted to the Investor.


 


3.9                               Rule 144 Reporting. With a view to making available to the Investor the benefits of
certain rules and regulations of the SEC which may at any time permit the
sale of the


 


14

















 


Registrable Securities to
the public without registration or pursuant to a registration on Form F-3
or Form S-3, after such time as a public market exists for the Ordinary
Shares, the Company agrees to:


 


(a)                                  Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
after the effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public;


 


(b)                                 File with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements); and


 


(c)                                  So long as the Investor owns any Registrable Securities, to furnish to
the Investor forthwith upon request (i) a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 (at any
time after ninety (90) days after the effective date of the Company’s initial
public offering), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), or its qualification as a
registrant whose securities may be resold pursuant to Form F-3 or  Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of
the Company and (iii) such other reports and documents of the Company as
the Investor may reasonably request in availing itself of any rule or
regulation of the SEC that permits the selling of any such securities without
registration or pursuant to Form F-3 or Form S-3.


 


3.10                        Termination.
The Company shall have no obligations to register any Registrable Securities
proposed to be sold by the Investor more than 2 years after the Public Offering
or if, in the written opinion of counsel to the Company (with such opinion to
be addressed to the Investor), all such Registrable Securities proposed to be
sold by the Investor may then be freely sold without registration and without
restriction (including, volume limitations) pursuant to Rule 144
promulgated under the Securities Act.


 


4.                                      Miscellaneous.


 


4.1                               Governing Law.
This Agreement shall be governed by and construed under the Laws of the State
of New York, without regard to principles of conflicts of law thereunder.


 


15

















 


4.2                               Dispute Resolution.


 


(a)                                  Any dispute arising out of or relating to this Agreement, including any
question regarding its existence, validity or termination (“Dispute”) shall be referred to and finally
resolved by arbitration at the Hong Kong International Arbitration Centre in
accordance with the Hong Kong International Arbitration Centre Administered
Arbitration Rules then in force. 
There shall be three arbitrators. 
The language to be used in the arbitration proceedings shall be
English.  Each of the parties hereto
irrevocably waives any immunity to jurisdiction to which it may be entitled or
become entitled (including without limitation sovereign immunity, immunity to pre-award
attachment, post-award attachment or otherwise) in any arbitration proceedings
and/or enforcement proceedings against it arising out of or based on this
Agreement or the transactions contemplated hereby.


 


4.3                               Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. Facsimile and e-mailed copies of signatures shall be deemed to
be originals for purposes of the effectiveness of this Agreement.


 


4.4                               Notices.
Any notice required or permitted pursuant to this Agreement shall be given in
writing and shall be given either personally or by sending it by next-day or
second-day courier service, fax, electronic mail or similar means to such
Party. Where a notice is sent by next-day or second-day courier service,
service of the notice shall be deemed to be effected by properly addressing,
pre-paying and sending by next-day or second-day service through an
internationally-recognized courier a letter containing the notice, with a
confirmation of delivery, and to have been effected at the expiration of two
days after the letter containing the same is sent as aforesaid. Where a notice
is sent by fax or electronic mail, service of the notice shall be deemed to be
effected by properly addressing, and sending such notice through a transmitting
organization, with a written confirmation of delivery, and to have been
effected on the day the same is sent as aforesaid.


 


4.5                               Headings and Titles.
Headings and titles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.


 


4.6                               Entire Agreement; Amendments and Waivers. This Agreement (including any Schedules or Exhibits hereto) constitutes
the full and entire understanding and agreement among the Parties with regard
to the subjects hereof and thereof, and supersedes all other agreements between
or among any of the Parties with respect to the subject matter hereof. Any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of both
Parties.


 


4.7                               Severability.
If a provision of this Agreement is held to be unenforceable under applicable
Laws, such provision shall be excluded from this Agreement and the remainder of
the Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.


 


16

















 


4.8                               Further Assurances.
The Parties agree to execute such further instruments and to take such further
action as may be reasonably necessary to carry out the intent of this
Agreement.


 


4.9                               Rights Cumulative.
Each and all of the various rights, powers and remedies of a Party hereto will
be considered to be cumulative with and in addition to any other rights, powers
and remedies which such Party may have at law or in equity in the event of the
breach of any of the terms of this Agreement. The exercise or partial exercise
of any right, power or remedy will neither constitute the exclusive election
thereof nor the waiver of any other right, power or remedy available to such
Party.


 


4.10                        No Waiver.
Failure to insist upon strict compliance with any of the terms, covenants, or
conditions hereof will not be deemed a waiver of such term, covenant, or
condition, nor will any waiver or relinquishment of, or failure to insist upon
strict compliance with, any right, power or remedy power hereunder at any one
or more times be deemed a waiver or relinquishment of such right, power or
remedy at any other time or times.


 


4.11                        No Presumption.
The Parties acknowledge that any applicable Law that would require
interpretation of any claimed ambiguities in this Agreement against the Party
that drafted it has no application and is expressly waived. If any claim is
made by a Party relating to any conflict, omission or ambiguity in the
provisions of this Agreement, no presumption or burden of proof or persuasion
will be implied because this Agreement was prepared by or at the request of any
Party or its counsel.


 


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remainder of this page has been intentionally left blank.]


 


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IN WITNESS WHEREOF, the
Parties hereto have executed this Agreement as of the date first written above.


 


 


	
   

  	
  COMPANY:

  
	
   

  	
  XUEDA EDUCATION GROUP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jun Wang

  
	
   

  	
   

  	
  Name:

  	
  Jun Wang

  
	
   

  	
   

  	
  Title:

  	
  Director and President

  



 


[Signature page to the Investor and Registration Rights Agreement]


 

















 


IN WITNESS WHEREOF, the
Parties hereto have executed this Agreement as of the date first written above.


 


	
   

  	
  INVESTOR:

  
	
   

  	
  WP X INVESTMENTS IV LTD.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sharmila Baichoo

  
	
   

  	
   

  	
  Name:

  	
  Sharmila Baichoo

  
	
   

  	
   

  	
  Title:

  	
  Authorized Representative

  



 


[Signature page to the Investor and Registration Rights Agreement]