mm06-1010_8ke104.htm


     

    Exhibit
10.4

    


    EXECUTION
COPY

     

    


     

    


     

    June
9, 2010


     

    


     

    


     

    SERVICE
AGREEMENT

     

    between

     

    EDUCATIONCITY
LIMITED

     

    -
and -

     

    SIMON
BOOLEY

     

     

     

    


     


    
      
        
          Weil, Gotshal & Manges

           

          One South
Place   London   EC2M 2WG

          Tel: +44
(0) 20 7903 1000   Fax: +44 (0) 20 7903 0990

           

          www.weil.com

           

        

         


      

      
         


        
          

        

      

      
         


      

    


    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)  

            	
              SIMON BOOLEY of 9 The
      Pines, Busby, Leicester LE7 9RX (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 an act of the Company
      (which shall not include 

            


       

       

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

       

       

      	 	 	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;

            


       

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

       

      	 	
              “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.

            


    

     

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    
      	
              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

            


    

     

     

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    
      	
              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”).

            


    

     

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              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 

            


    

     

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                5.2  

              	
                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

            


    

     

     

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                 

              	
                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

            


    

     

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                 

              	
                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.

            


    

     

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              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;

            


    

     

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              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 or 

            


    

     

     

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

     

    
      
        	
                  

              	
                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

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              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

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              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

        
          

        

      

      
        
        

      

    

     

     

     

    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

        
          

        

      

      
         


      

    


    


     

    SIGNED AS A DEED
by

    SIMON
BOOLEY               
                                      .......................................


       

      In the
presence
of                                                          .......................................

      Signature
of Witness

      


       .......................................

      Name of
Witness

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

    

     


    
      
         


      

      
        16

        
          

        

      

      
         


      

    


    


     

    SCHEDULE
1

    POWER
OF ATTORNEY

     

    By this
Power of Attorney made on June 9, 2010, I, Simon Booley of 9 The Pines, Bushby,
Leicester LE7 9RX 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

                  SIMON
      BOOLEY

                  in
      the presence of: 

                

              	
                )

                )

                )

                )

              


      

    

    


     

    Witness
name:

     

    Address:

     

    Occupation:

     

     

     

     


    
      
        
          S-1-1

        

         


      

      
         


        
          

        

      

      
         


      

    


    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

        

         


      

      
         


        
          

        

      

      
         


      

    


    “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

        

         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              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

        

         


      

      
         


        
          

        

      

      
         


      

    


    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

        
          

        

      

      
        
        

      

    

     

     

     

    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

           
 

        

         


      

      
         


        
          

        

      

      
         


      

    


    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

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              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

           
 

        

         


      

      
         


        
          

        

      

      
         


      

    


    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

          

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    (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