Document:

mm06-1010_8ke102.htm

     

    EXHIBIT 10.2

    
 

    
       

      
        
          EXECUTION
VERSION

          

        

      

    

    AMENDMENT NO. 7 TO CREDIT
AGREEMENT

     

    This
AMENDMENT NO. 7 TO CREDIT AGREEMENT (this “Amendment”) dated as
of June 9, 2010 by and among ARCHIPELAGO LEARNING, LLC (formerly known as Study
Island, LLC), a Delaware limited liability company (“Borrower”), the other
persons designated as a “Credit Party” on the signature pages hereof, the
financial institutions designated as “Existing Lenders” on the signature pages
hereof (collectively, the “Consenting Lenders”),
the financial institutions designated as a “Supplemental Term Loan Lender” on
the signature pages hereof, the financial institutions designated as a
“Supplemental Revolving Lender” on the signature pages hereof and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation (“Agent”), for itself
as a Lender (including as Swingline Lender) and L/C Issuer and as Agent for
Lenders.  Unless otherwise specified herein, capitalized terms used in
this Agreement shall have the meanings ascribed to them in the Credit Agreement
(as hereinafter defined).

     

    R E C I T
A L S:

     

    WHEREAS,
Borrower, the other Credit Parties, Agent and Lenders have entered into that
certain Credit Agreement, dated as of November 16, 2007 (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit
Agreement”); and

     

    WHEREAS,
Borrower, Agent and Lenders have agreed to amend certain terms of the Credit
Agreement as described herein.

     

    NOW
THEREFORE, in consideration of the mutual execution hereof and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

     

    Section
1. Amendments to Credit
Agreement.  Immediately upon the satisfaction of each of the
applicable conditions precedent set forth in Section 3 of this Amendment, the
following amendments to the Credit Agreement shall become effective as of the
date hereof:

     

    (a) Section
1.1(a) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

    “(a)(i)
it has heretofore made an initial Loan to Borrower on the Closing Date (the
“Initial Term Loan”), and/or (ii) to make a supplemental Loan to Borrower on the
Seventh Amendment Effective Date (the “Supplemental Term Loan” and, collectively
with the Initial Term Loan, the “Term Loan”) in the principal amounts not to
exceed its Commitment as set forth on Schedule 1.1(a)
attached to this Agreement on the Closing Date and the amended and restated
Schedule 1.1(a)
attached to the Seventh Amendment hereto, as applicable (its “Term Loan
Commitment”).  In addition to reflecting each Lender’s Term Loan
Commitment with respect to the Supplemental Term Loan, the amended and restated
Schedule 1.1(a)
attached to the Seventh Amendment reflects the outstanding principal amount of
the Term Loan other than the Supplemental Term Loan held by each Term Loan
Lender as of the Seventh Amendment Effective Date; and”.

     

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

     

     

    (b) Section
1.1(b) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

    “(b)           to
make Loans to the Borrower (each such Loan, a “Revolving Loan”) from time to
time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender’s name in Schedule 1.1(b) under
the heading “Revolving Loan Commitment” (such amount as the same may have been
reduced or increased during the period from the Closing Date to the Seventh
Amendment Effective Date as a result of one or more assignments pursuant to
Section 9.9 or increased on the Seventh Amendment Effective Date as the same may
be reduced or increased during the period after the Closing Date as a result of
one or more assignments pursuant to Section 9.9, being referred to herein as
such Lender’s “Revolving Loan Commitment”); provided, however, that, after
giving effect to any Borrowing of Revolving Loans, the aggregate principal
amount of all outstanding Revolving Loans shall not exceed the Maximum Revolving
Loan Balance.  The “Maximum Revolving Loan Balance” from time to time
will be the Aggregate Revolving Loan Commitment then in effect less the sum of
(x) the aggregate amount of Letter of Credit Obligations plus (y) outstanding
Swing Loans.  In addition to reflecting the Supplemental Revolving
Loan Commitment (as defined in the Seventh Amendment) of each Supplemental
Revolving Lender (as defined in the Seventh Amendment), the amended and restated
Schedule 1.1(b)
attached to the Seventh Amendment reflects each Revolving Lender’s Revolving
Loan Commitment as of the Seventh Amendment Effective Date after giving effect
to the transactions contemplated thereby.”.

     

    (c) Section
1.6(a) of the Credit Agreement is hereby amended by deleting the reference to
“Alternate Base Rate” appearing therein and substituting “Base Rate” in its
place.

     

    (d) Section
1.6(c)(ii) of the Credit Agreement is hereby amended by deleting the reference
to “ABR Revolving Loans” appearing therein and substituting “Base Rate Revolving
Loans” in its place.

     

    (e) Section
1.7(a) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

    “(a)           Termination of
Commitments.  The Term Loan Commitments shall automatically
terminate on the respective dates on which the applicable Term Loans are
advanced.  The Revolving Loan Commitments, the Swingline Commitment
and the commitment to issue Letters of Credit shall automatically terminate on
the Revolving Termination Date.”.

     

    (f) Section
1.9 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

     

     

    
      
         

      

      
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    “Amortization of Term
Borrowings.  (a) The principal amount of the Initial Term Loan
shall be paid in installments on the dates and in the respective amounts shown
below (as adjusted from time to time pursuant to Section
1.10(g)):

    

    
      	
              Date of
      Payment

            	 	
              Amount of
      Term

              Loan
      Payment

            	 
	 
      	 	 	 
	
              June
      30, 2010

            	 	$	175,000	 
	
              September
      30, 2010

            	 	$	175,000	 
	
              December
      31, 2010

            	 	$	175,000	 
	
              March
      31, 2011

            	 	$	175,000	 
	
              June
      30, 2011

            	 	$	175,000	 
	
              September
      30, 2011

            	 	$	175,000	 
	
              December
      31, 2011

            	 	$	175,000	 
	
              March
      31, 2012

            	 	$	175,000	 
	
              June
      30, 2012

            	 	$	175,000	 
	
              September
      30, 2012

            	 	$	175,000	 
	
              December
      31, 2012

            	 	$	175,000	 
	
              March
      31, 2013

            	 	$	175,000	 
	
              June
      30, 2013

            	 	$	175,000	 
	
              September
      30, 2013

            	 	$	175,000	 
	
              Term
      Loan Maturity Date

            	Entire
      remaining amount

    

    

     

    (b) The
principal amount of the Supplemental Term Loan shall be paid in installments on
the dates and in the respective percentages shown below (as adjusted from time
to time pursuant to Section
1.10(g)):

    

    
      	
              Date of
      Payment

            	 	
              Percentage of Supplemental
      Term Loan Made on the Seventh Amendment Effective
    Date

            	 
	 
      	 	 
      	 
	
              June
      30, 2010

            	 	
              0.25%

            	 
	
              September
      30, 2010

            	 	
              0.25%

            	 
	
              December
      31, 2010

            	 	
              0.25%

            	 
	
              March
      31, 2011

            	 	
              0.25%

            	 
	
              June
      30, 2011

            	 	
              0.25%

            	 
	
              September
      30, 2011

            	 	
              0.25%

            	 
	
              December
      31, 2011

            	 	
              0.25%

            	 
	
              March
      31, 2012

            	 	
              0.25%

            	 
	
              June
      30, 2012

            	 	
              0.25%

            	 
	
              September
      30, 2012

            	 	
              0.25%

            	 
	
              December
      31, 2012

            	 	
              0.25%

            	 
	
              March
      31, 2013

            	 	
              0.25%

            	 
	
              June
      30, 2013

            	 	
              0.25%

            	 
	
              September
      30, 2013

            	 	
              0.25%

            	 

    

    

     

     

    
      
         

      

      
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                Date of
      Payment

              	 	
                Percentage of Supplemental
      Term Loan Made on the Seventh Amendment Effective
    Date

              	 
	 
      	 	 
      	 
	
                Term
      Loan Maturity Date

              	 	
                Entire
      remaining amount”

              	 

      

    

     

    (g) Section
1.10(b)(iv) of the Credit Agreement is hereby amended and restated in entirety
to read as follows:

     

    “(iv)           In
the event that the aggregate face amount of Letters of Credit exceeds the L/C
Sublimit, Borrower shall, without notice or demand, immediately replace
outstanding Letters of Credit or cash collateralize outstanding Letters of
Credit in accordance herewith, in an aggregate amount sufficient to eliminate
such excess.”.

     

    (h) Section
1.10(g) of the Credit Agreement is hereby amended and restated in entirety to
read as follows:

     

    “(g)           Application of
Prepayments.  Prior to any optional or mandatory prepayment
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and, if applicable, shall specify such selection in the notice of such
prepayment pursuant to Section 1.10(h), subject to the provisions of this
Section 1.10(g).  Any optional prepayments of Term Loans pursuant to
Section 1.10(a) shall be applied pro rata among the tranches of Term Loans and
then to the scheduled payments of such Term Loans as directed by the
Borrower.  Any mandatory prepayments pursuant to Section 1.10(c), (d),
(e) or (f) shall be applied first, to the prepayment of the Term Loans on a pro
rata basis among the tranches of Term Loans until all Term Loans are paid in
full, and second, to the prepayment of outstanding Revolving Loans until paid in
full (without a permanent reduction in the Revolving Loan
Commitments).  Any prepayments of Term Loans pursuant to Section
1.10(c), (d), (e) or (f) shall be applied to reduce scheduled installments
required under Section 1.9 in direct order of maturity.

     

    Amounts
to be applied pursuant to this Section 1.10 to the prepayment of Term Loans and
Revolving Loans shall be applied, as applicable, first, to reduce outstanding
Base Rate Term Loans and Base Rate Revolving Loans, respectively.  Any
amounts remaining after each such application shall be applied to prepay LIBOR
Term Loans or LIBOR Revolving Loans, as applicable.”.

     

    (i) Section
1.17(c) of the Credit Agreement is hereby amended by deleting the reference to
“this clause (iii)” appearing therein and substituting “this subsection (c)” in
its place.

     

    (j) Section
1.17(d) of the Credit Agreement is hereby amended by deleting the reference to
“clause (iii) above” appearing therein and substituting “subsection (c) above”
in its place.

     

     

     

    
      
         

      

      
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    (k) Section
1.18(a)(A)(ii) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

     

    “(ii) the
Letter of Credit Obligations for all Letters of Credit would exceed the L/C
Sublimit;”.

     

    (l) A new
Section 1.20 shall be added to the Credit Agreement to read in its entirety as
follows:

     

    “1.20           Increase in
Commitments.

     

    (a)  Request.  So
long as no Event of Default is continuing or would result after giving pro forma
effect to the funding thereof, Borrower may by written notice to the Agent prior
to November 1, 2012 request an increase to the Term Loan Commitments (each, an
“Additional Term Loan
Commitment”); provided, that the minimum Additional Term Loan Commitment
shall be $5,000,000, and after giving effect to all such Additional Term Loan
Commitments, the aggregate Additional Term Loan Commitment shall not exceed
$25,000,000; provided, further, that the Borrower shall be in compliance with
the covenants contained in Article VI (after giving pro forma effect to the
Additional Incremental Term Loans (as defined below) to be made under such
Additional Term Loan Commitment and the application of the proceeds thereof) as
of the last day of the most recently completed fiscal quarter for which
financial statements have been delivered in accordance with Section 4.1(b)(i)
hereof prior to the applicable Additional Term Loan Effective
Date.  Such notice shall specify the amount of the proposed Additional
Term Loan Commitment and the date (the “Additional Term Loan
Effective Date”) on which Borrower proposes that such Additional Term
Loan Commitment shall be effective, which shall be a date not less than 10
Business Days after the date on which such notice is delivered to the Agent (or
such shorter period acceptable to the Agent in its discretion).  The
Additional Term Loan Commitment may be offered to existing Lenders and/or new
Lenders, subject to the standards for Sales of Loans set forth in Section
9.9(b); provided, that no Lender shall be obligated to increase its Term Loan
Commitment.

     

    (b)  Conditions.  Each
Additional Term Loan Commitment shall become effective, as of such Additional
Term Loan Effective Date; provided that each of the conditions set forth in
Sections 2.2(b) and (c) shall have been satisfied.

     

    (c)  Terms of Additional Term
Loan Commitments.  Terms and provisions of Loans made pursuant
to each Additional Term Loan Commitment (“Additional Incremental Term
Loans”), including without limitation amortization and maturity date but
excluding the effective interest rate, shall be identical to the Supplemental
Term Loan; provided that the effective interest rate of the Additional
Incremental Term Loans (taking into account all upfront, closing and similar
fees and original issue discount) shall not be greater than the effective
interest rate with respect to the Supplemental Term Loan on the Additional Term
Loan Effective Date (taking into account all arrangement fees, upfront, closing
and similar fees and original issue discount) plus 25 basis points per annum
unless (i) the effective interest rate with respect to the Supplemental Term
Loan is increased so that the effective interest rate applicable to the
Additional Incremental Term 

     

     

     

    
      
         

      

      
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    Loans
does not exceed the effective interest rate then applicable to the Supplemental
Term Loan by more than 25 basis points per annum and (ii) the effective interest
rate with respect to the Revolving Loans and the other Term Loans is increased
by an amount equal to the increase in the effective interest rate applicable to
the Supplemental Term Loan made pursuant to the preceding clause
(i).

     

    The
Additional Term Loan Commitments shall be effected by an Increase Joinder
executed by Borrower, the Agent and each Lender making such increased or new
Commitment, in form and substance satisfactory to each of them.  The
Increase Joinder may, without the consent of any other Lenders, effect such
ministerial amendments to this Agreement and the other Loan Documents as may be
reasonably necessary or appropriate, in the opinion of the Agent, to effect the
provisions of this Section
1.20.  In addition, unless otherwise specifically provided
herein, all references in Loan Documents to Term Loans shall be deemed, unless
the context otherwise requires, to include the Additional Incremental Term
Loans, respectively, made pursuant to this Section
1.20.

     

    (d)  Making of Additional
Incremental Term Loans.  On each Additional Term Loan Effective
Date on which an Additional Term Loan Commitment is effective, subject to the
satisfaction of the foregoing terms and conditions, each Lender of such
Additional Incremental Term Loan shall make an Additional Incremental Term Loan
to Borrower in an amount equal to its Additional Term Loan
Commitment.

     

    (e)  Equal and Ratable
Benefit.  From and after each Additional Term Loan Effective
Date, the Loans and Commitments established pursuant to this paragraph shall
constitute Loans and Commitments under, and shall be entitled to all the
benefits afforded by, this Agreement and the other Loan Documents, and shall,
without limiting the foregoing, benefit equally and ratably from the guarantees
and security interests created by the Guaranty and Security
Agreement.  The Credit Parties shall take any actions reasonably
required by the Agent to ensure and/or demonstrate that the Liens and security
interests granted by the Guaranty and Security Agreement continue to be
perfected under the UCC or otherwise after giving effect to the establishment of
any such new Commitments.”

     

                          (m)           Section
3.11 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “3.11           Use of
Proceeds.  Borrower (a) has used the proceeds of the Initial
Term Loan to (i) make a distribution to Holdings on the Closing Date to pay a
portion of the Closing Dividend and (ii) pay related fees and expenses and the
costs and expenses required to be paid pursuant to Section 2.1, (b) will
use the Supplement Term Loan to partially finance the Education City
Acquisition, (c) will use the Revolving Loans and Swing Loans after the Closing
Date for working capital needs and general corporate purposes of Borrower and
its Subsisidiaries and (d) will use the Additional Incremental Term Loans to
finance Permitted Acquisitions.”

     

    (n)           Section
4.1(a) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

     

     

    
      
         

      

      
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    “(a)           Annual
Reports.  As soon as available and in any event within 120 days
after the end of each fiscal year, (i) the consolidated and consolidating
balance sheet of Holdings as of the end of such fiscal year (or, in the case of
the fiscal year ending December 31, 2007, for the period from January 10, 2007
to December 31, 2007) and related consolidated statements of income, cash flows
and stockholders’ equity for such fiscal year and related consolidating
statements of income and cash flows, and for each such fiscal year ending on or
after December 31, 2009 in comparative form with such financial statements as of
the end of, and for, the preceding fiscal year, and notes thereto, accompanied,
in the case of the consolidated financial statements only, by an opinion of
Deloitte & Touche, LLP or other independent public accountants of recognized
standing (which opinion shall not be qualified as to scope or contain any going
concern or other similar qualification), stating that such consolidated
financial statements fairly present, in all material respects, the consolidated
financial condition, results of operations and cash flows of Holdings and its
Subsidiaries as of the dates and for the periods specified in accordance with
GAAP, and (ii) for each fiscal year ending on or after December 31, 2008, a
narrative report and management’s discussion and analysis of the financial
condition and results of operations for such fiscal year, as compared to
budgeted amounts and, for each such fiscal year ending on or after December 31,
2009, the previous fiscal year (it being understood that the furnishing of an
annual report of a parent holding company of Holdings on Form 10-K for such year
(if any) so long as such parent holding company has no significant assets or
operations other than its ownership of Net Proceeds from its IPO and any
follow-on offering and Holdings and its Subsidiaries as filed with the SEC will
satisfy the  Credit Parties’ obligation to deliver consolidated
financial statements under Section 4.1(a)(i)
with respect to such fiscal year and delivery obligations under Section 4.1(a)(ii)
with respect to such fiscal year).”.

     

    (o)           Section
4.1(b) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:

     

    “(b)           Quarterly
Reports.  As soon as available and in any event within 45 days
after the end of each fiscal quarter, (i) the consolidated and consolidating
balance sheet of Holdings as of the end of such fiscal quarter and related
consolidated and consolidating statements of income and cash flows for such
fiscal quarter and for the then elapsed portion of the fiscal year (or, in the
case of the fiscal quarter ending December 31, 2007, the  period from
January 10, 2007 through December 31, 2007) and for each such fiscal quarter
ending after the first anniversary of the Closing Date, in comparative form with
the consolidated and consolidating statements of income and cash flows for the
comparable periods in the previous fiscal year, accompanied by a certificate of
a Financial Officer stating that such financial statements fairly present, in
all material respects, the financial condition, results of operations and cash
flows of Holdings and its Subsidiaries as of the date and for the periods
specified in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments and the absence of footnotes, and (ii) with respect
to each of the first three fiscal quarters in each fiscal year, a narrative
report and management’s discussion and analysis of the financial condition and
results of operations for such fiscal quarter and the then elapsed portion of
the fiscal year, as compared to budgeted amounts and, for each such fiscal
quarter ending after the first anniversary of the Closing Date, to the
comparable periods in the previous fiscal 

     

     

     

    
      
         

      

      
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    year (it
being understood that the furnishing of a quarterly report of a parent holding
company of Holdings on Form 10-Q for such quarter (if any) so long as such
parent holding company has no significant assets or operations other than its
ownership of Net Proceeds from its IPO and any follow-on offering and Holdings
and its Subsidiaries as filed with the SEC will satisfy the  Credit
Parties’ obligation to deliver consolidated financial statements under Section 4.1(b)(i)
with respect to such fiscal quarter and delivery obligations under Section 4.1(b)(ii)
with respect to such fiscal quarter).”.

     

    (p)           Section
4.1(c) of the Credit Agreement is hereby amended by deleting each reference to
“consolidated” appearing therein and substituting “consolidated and
consolidating” in each such place.

     

    (q)           Section
5.4(a) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(a)           Loans
by Borrower or any Credit Party directly to Archipelago Learning Holdings UK,
Ltd. made on the Seventh Amendment Effective Date to consummate the Education
City Acquisition, and any Permitted Refinancing thereof;”.

     

    (r)           Section
5.4(k) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(k)           so
long as no Event of Default has occurred and is continuing, other Investments
and Acquisitions in an aggregate amount not to exceed $10,000,000 plus the
Available Amount plus the Available Cash; provided, that Acquisitions and
Investments, in each case, which utilize any portion of the Available Amount and
constitute a Potential Permitted Acquisitions must satisfy all of the conditions
set forth in the definition of “Permitted Acquisition” other than condition (f)
thereof”.

    

    (s)           Section
5.7(a) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(a)           Investments
and Acquisitions in compliance with Section 5.4;”.

     

    (t)           Section
5.7(b) of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(b)           the
TeacherWeb Acquisition and the Education City Acquisition;”.

     

    (u)           Section
5.11 of the Credit Agreement is hereby amended by (i) deleting “or” appearing at
the end of subsection (a) thereof, (ii) deleting “.” appearing at the end of
subsection (b) thereof and substituting “; or” in its place, and (iii) adding a
new subsection (c) thereto to read in its entirety as follows:

     

    “(c)           make
any earn-out payment (i) to the sellers in the Education City Acquisition if an
Event of Default under Sections 7.1(a) or 7.1(b) has occurred and is continuing
and (ii) to the sellers in any other Acquisition if an Event of Default has
occurred and is continuing or would result from making such earn-out
payment.”.

     

     

     

    
      
         

      

      
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    (v)           Section
11.1 of the Credit Agreement is hereby amended by adding the following
references to the chart therein in their appropriate alphabetical
order:

     

    
    

     

    
      	 	“Additional Incremental Term Loans” 	1.20(c) 
	 	“Additional Term Loan Commitment” 	1.20(a) 
	 	“Additional Term Loan Effective Date” 	1.20(a) 
	 	“Initial Term Loan” 	1.1(a) 
	 	“Potential Permitted Acquisition” 	“Permitted Acquisition” 
	 	“Supplemental Term Loan” 	1.1(a) 

    

     

    (w)           Section
11.1 of the Credit Agreement is hereby amended by deleting the following
reference to the chart therein:

     

    “L/C
Sublimit”                                                                                     1.18

    

    (x)           The
definition “Consolidated EBITDA” set forth in Section 11.1 of the Credit
Agreement is hereby amended by adding a new sentence to the end thereof to read
as follows:

     

    “Notwithstanding
the foregoing, for the 3 month fiscal periods ending on a date identified in the
table below, Consolidated EBITDA for such fiscal period with respect to
EducationCity Inc. and Archipelago International Holdings, Inc. shall be deemed
to have been the amount set forth opposite such date:

     

               Fiscal
Period
Ending                                            Consolidated
EBITDA

     

               June
30,
2009                                                    
$1,946,492

     

               September
30,
2009                                           $1,298,767

     

               December
31,
2009                                           
$1,318,201

     

               March
31,
2010                                                 
$2,716,794.”

     

    (y)           Section
11.1 of the Credit Agreement is hereby amended by the addition of the following
definitions, which shall be inserted in their proper alphabetical
order:

     

    “Education
City Acquisition” means the acquisition of all of the Equity Interests of
Educationcity Ltd. pursuant to the terms of the Share Purchase Agreement, dated
as of the Seventh Amendment Effective Date, by and among Archipelago Learning,
Inc., Archipelago Learning Holdings UK, Ltd., and the Persons party thereto as
Sellers.

    

    “L/C
Sublimit” means $2,000,000.

    

    “SEC”
means the U.S. Securities and Exchange Commission or any successor
agency.

     

     

     

    
      
         

      

      
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    “Seventh
Amendment” means Amendment No. 7 to Credit Agreement dated as of June 9, 2010
among the Borrower, the Agent and the Lenders signatory thereto.

    

    “Seventh
Amendment Effective Date” means the date on which the conditions set forth in
Section Three of the Seventh Amendment are waived or satisfied.

    

    “Term
Loan Lender” means each Lender with a Term Loan Commitment (or, if the Term Loan
Commitments have terminated, who holds Term Loans).

    

    (z)           The
following definitions in Section 11.1 of the Credit Agreement are hereby amended
and restated in their entirety to read as follows:

     

    “Aggregate
Revolving Loan Commitment” means the combined Revolving Loan Commitments of the
Lenders, which shall be in the amount of $10,000,000 on the Closing Date and
$20,000,000 on the Seventh Amendment Effective Date, as such amount may be
reduced from time to time pursuant to this Agreement.”

    

    “Applicable
Fee” means:

     

    (a)           for
the period commencing on the Closing Date through the fifth (5th)
Business Day after the date on which financial statements for March 31, 2008 are
delivered, 0.50%;

     

    (b)           thereafter
through the Seventh Amendment Effective Date, the Applicable Fee shall equal the
applicable fee in effect from time to time determined as set forth below based
upon the applicable Leverage Ratio then in effect pursuant to the appropriate
column under the table below:

     

    

    
      	 	
              Leverage
      Ratio

            	
              Applicable
      Fee

            	 
	 	
              Greater
      than or equal to 4.25 to 1

            	
              0.50%

            	 
	 	 	 	 
	 	
              Less
      than 4.25 to 1 and greater than or equal to 3.75 to 1

            	
              0.50%

            	 
	 	 	 	 
	 	
              Less
      than 3.75 to 1 and greater than or equal to 3.00 to 1

            	
              0.375%

            	 
	 	 	 	 
	 	
              Less
      than 3.00 to 1

            	
              0.25%

            	 

    

     

     

    
 

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

     

     

    The
Applicable Fee shall be adjusted from time to time upon delivery to the Agent of
the quarterly financial statements for each fiscal quarter required to be
delivered pursuant to Section 4.1 hereof accompanied by a written calculation of
the Leverage Ratio certified on behalf of the Borrower by a Responsible Officer
as of the end of the fiscal quarter for which such financial statements are
delivered.  If such calculation indicates that the Applicable Fee
shall increase or decrease, then on the fifth (5th)
Business Day following the date of delivery of such financial statements and
written calculation the Applicable Fee shall be adjusted in accordance
therewith; provided, however,
that if the Borrower shall fail to deliver any such financial statements for any
such fiscal quarter by the date required pursuant to Section 4.1, then, at the
Agent’s election, effective as of the fifth (5th)
Business Day following the date on which such financial statements were to have
been delivered, and continuing through the fifth (5th)
Business Day following the date (if ever) when such financial statements and
such written calculation are finally delivered, the Applicable Fee shall be
conclusively presumed to equal the highest Applicable Margin specified in the
pricing table set forth above; and

     

    (c)           thereafter,
0.50%.

     

               “Applicable
Margin” means:

     

    (a)           for
the period commencing on the Closing Date through the fifth (5th)
Business Day after the date on which financial statements for March 31, 2008 are
delivered: (x) if a Base Rate Loan, three percent (3.00%) per annum and (y) if a
LIBOR Rate Loan, four percent (4.00%) per annum; and

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

     

     

    (b)           thereafter
through the Seventh Amendment Effective Date, the Applicable Margin shall equal
the applicable LIBOR margin or Base Rate margin in effect from time to time
determined as set forth below based upon the applicable Leverage Ratio then in
effect pursuant to the appropriate column under the table below:

     

    

    
      	 	
              Revolving Loans, Swing Loans
      and Term Loan

            	 
	 	
              Leverage
      Ratio

            	
              LIBOR
      Margin

            	
              Base Rate
      Margin

            	 
	 	 	 	 	 
	 	
              Greater
      than or equal to 4.25 to 1

            	
              4.00%

            	
              3.00%

            	 
	 	 	 	 	 
	 	
              Less
      than 4.25 to 1 and greater than or equal to 3.75 to 1

            	
              3.75%

            	
              2.75%

            	 
	 	 	 	 	 
	 	
              Less
      than 3.75 to 1 and greater than or equal to 3.00 to 1

            	
              3.50%

            	
              2.50%

            	 
	 	 	 	 	 
	 	
              Less
      than 3.00 to 1

            	
              3.25%

            	
              2.25%

            	 

    

     

    The
Applicable Margin shall be adjusted from time to time upon delivery to the Agent
of the quarterly financial statements for each fiscal quarter required to be
delivered pursuant to Section 4.1 hereof accompanied by a written calculation of
the Leverage Ratio certified on behalf of the Borrower by a Responsible Officer
as of the end of the fiscal quarter for which such financial statements are
delivered.  If such calculation indicates that the Applicable Margin
shall increase or decrease, then on the fifth (5th)
Business Day following the date of delivery of such financial statements and
written calculation the Applicable Margin shall be adjusted in accordance
therewith; provided, however,
that if the Borrower shall fail to deliver any such financial statements for any
such fiscal quarter by the date required pursuant to Section 4.1, then, at the
Agent’s election, effective as of the fifth (5th)
Business Day following the date on which such financial statements were to have
been delivered, and continuing through the fifth (5th)
Business Day following the date (if ever) when such financial statements and
such written calculation are finally delivered, the Applicable Margin shall be
conclusively presumed to equal the highest Applicable Margin specified in the
pricing table set forth above.  Notwithstanding anything herein to the
contrary, Swing Loans may not be LIBOR Rate Loans.

     

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

     

     

    (c)           thereafter,
the Applicable Margin shall equal the applicable LIBOR margin or Base Rate
margin in effect from time to time determined as set forth below based upon the
applicable Leverage Ratio then in effect pursuant to the appropriate column
under the table below:

     

    

    
      	 	
              All Loans (other than the
      Additional Incremental Term Loans)

            	 
	 	
              Leverage
      Ratio

            	
              LIBOR
      Margin

            	
              Base Rate
      Margin

            	 
	 	 	 	 	 
	 	
              Greater
      than or equal to 4.25 to 1

            	
              4.50%

            	
              3.50%

            	 
	 	 	 	 	 
	 	
              Less
      than 4.25 to 1 and greater than or equal to 3.75 to 1

            	
              4.25%

            	
              3.25%

            	 
	 	 	 	 	 
	 	
              Less
      than 3.75 to 1 and greater than or equal to 3.00 to 1

            	
              4.00%

            	
              3.00%

            	 
	 	 	 	 	 
	 	
              Less
      than 3.00 to 1

            	
              3.75%

            	
              2.75%

            	 

    

     

    The
Applicable Margin shall be adjusted from time to time upon delivery to the Agent
of the quarterly financial statements for each fiscal quarter required to be
delivered pursuant to Section 4.1 hereof accompanied by a written calculation of
the Leverage Ratio certified on behalf of the Borrower by a Responsible Officer
as of the end of the fiscal quarter for which such financial statements are
delivered.  If such calculation indicates that the Applicable Margin
shall increase or decrease, then on the fifth (5th)
Business Day following the date of delivery of such financial statements and
written calculation the Applicable Margin shall be adjusted in accordance
therewith; provided, however,
that if the Borrower shall fail to deliver any such financial statements for any
such fiscal quarter by the date required pursuant to Section 4.1, then, at the
Agent’s election, effective as of the fifth (5th)
Business Day following the date on which such financial statements were to have
been delivered, and continuing through the fifth (5th)
Business Day following the date (if ever) when such financial statements and
such written calculation are finally delivered, the Applicable Margin shall be
conclusively presumed to equal the highest Applicable Margin specified in the
pricing table set forth above.  Notwithstanding anything herein to the
contrary, Swing Loans may not be LIBOR Rate Loans.

     

    “Available
Amount” means, on any date of determination, an amount, not less than zero,
equal to (a) the sum of (i) an amount, not less than zero, determined on a
cumulative basis equal to the amount of Excess Cash Flow for all Excess Cash
Flow Periods that is not (and, in the case of any fiscal year where the
respective required date of prepayment has not yet occurred pursuant to Section 1.10(f), will
not on such date of required prepayment be) required to be applied in accordance
with Section
1.10(f), plus (ii) the net proceeds
from Excluded Equity Issuances after the Seventh Amendment 

     

     

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

     

    Effective
Date, plus (iii) 100%
of the aggregate amount of cash and the fair market value, as determined in good
faith by the Borrower, of marketable securities contributed to the capital of
the Borrower following the Seventh Amendment Effective Date (other than by a
Restricted Subsidiary), plus (iv) 100% of the
aggregate amount of Net Proceeds not required to be applied to the Loans
pursuant to Section
1.10 and the fair market value, as determined in good faith by the
Borrower, of marketable securities received by the Borrower or a Restricted
Subsidiary from the sale or other disposition (other than to the Borrower or a
Restricted Subsidiary) of acquisitions and investments made by the Borrower or
its Restricted Subsidiaries pursuant to Section 5.4(k) or
Section 5.7(c)
(up to an amount equal to the amount deducted from the Available Amount when
these investments were initially made), and any dividends, distributions, return
of capital, interest, fees, premium, income, profits and other amounts realized
from such acquisitions or investments by the Borrower or its Restricted
Subsidiaries, in each case after the Seventh Amendment Effective Date (excluding
such amounts as are included in Consolidated EBITDA while such investments are
owned), plus (v) an
amount equal to the Net Proceeds of all other Asset Sales and Events of Loss
after the Seventh Amendment Effective Date that are not required to be applied
(whether as a prepayment or reinvestment) in accordance with Sections 1.10(c) or
(e), plus (vi) in the case of the
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary after the
Seventh Amendment Effective Date (which, for purposes hereof, shall be deemed to
include the merger, consolidation or similar transaction of an Unrestricted
Subsidiary into the Borrower or a Restricted Subsidiary, so long as the Borrower
or a Restricted Subsidiary is the surviving entity, and the transfer of all or
substantially all of the assets of an Unrestricted Subsidiary to the Borrower or
a Restricted Subsidiary), the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Borrower in good faith at the time
of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary,
minus (b) the portion
of the Available Amount previously utilized pursuant to Sections 5.4(k),
5.7(c), 5.8(g) and 5.11(a), minus (c) the portion of the
$50,000,000 basket previously utilized pursuant to clause (f)(i) of the
definition of Permitted Acquisition.

     

    “Consolidated
Fixed Charges” shall mean, for any Test Period, Consolidated Interest Expense
for such Test Period, adjusted by adding (without duplication):

     

    (a)   
        the aggregate amount of Capital
Expenditures for such Test Period;

     

    (b)    
       Consolidated Tax Expense paid or
payable in cash with respect to such Test Period (net of any cash refund in
respect of income taxes actually received with respect to such period) and,
without duplication, all Permitted Tax Distributions made during such
period;

     

    (c)  
         the principal amount of
all scheduled amortization payments on all Indebtedness (including the principal
component of all Capital Lease Obligations, but excluding such amortization
payments on Indebtedness incurred to finance Capital Expenditures included in
clause (b) above in such period or any prior period) of Borrower and its
Restricted Subsidiaries for such period (as determined on the first day of the
respective period);

     

     

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

     

     

    (d)        
   management fees and charges permitted under Section 5.8(h) and
added back in the calculation of Consolidated EBITDA for such Test
Period;

     

    (e)  
         the product of (i) all
dividend payments on any series of Disqualified Capital Stock of Holdings or any
of its Restricted Subsidiaries (other than dividend payments to Holdings or any
of its Restricted Subsidiaries) made during such period multiplied by (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
Holdings and its Restricted Subsidiaries, expressed as a decimal;

     

    (f)     
      the product of (i) all cash dividend
payments (other than dividends permitted by Sections 5.8(d), (e) or (k)) on any
common or Preferred Stock (other than Disqualified Capital Stock) of Holdings or
any of its Restricted Subsidiaries (other than dividend payments to Holdings or
any of its Restricted Subsidiaries) made during such period multiplied by (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
Holdings and its Restricted Subsidiaries, expressed as a decimal;
and

     

    (g)   
        the principal amount of all earn-out
and similar payments with respect to the Education City Acquisition made during
such period unless the aggregate amount of the baskets permitted to be utilized
pursuant to clause (f) of the definition of Permitted Acquisition have been
permanently reduced by such principal amount.

     

    For
purposes of determining compliance with the Fixed Charge Coverage Ratio in
Section 6.3 for the fiscal quarters ending March 31, 2008, June  30,
2008 and September 30, 2008, Consolidated Fixed Charges shall be measured from
January 1, 2008, and shall multiplied by 4.0, 2.0 and 1.333,
respectively.

     

                  
“Excess Cash Flow Period” shall mean each fiscal year of Borrower commencing
with the fiscal year ended December 31, 2010.

     

    “Permitted
Acquisition” means any Acquisition by (i) the Borrower (or any Wholly-Owned
Subsidiary of the Borrower) of all or substantially all of the assets, or any
business or division, of a target company, which assets are located in the
United States (including commonwealths and territories thereof), Canada, the
United Kingdom, Australia, New Zealand or a country in the European Union or
(ii) the Borrower (or any Wholly-Owned Subsidiary of the Borrower) of 100% of
the Equity Interests of a target company organized under the laws of any State
in, or commonwealth or territory of, the United States, the District of
Columbia, Canada, the United Kingdom, Australia, New Zealand or a country in the
European Union (in each case, a “Potential Permitted Acquisition”) to the extent
that each of the following conditions shall have been satisfied:

     

    (a)    
  to the
extent the Acquisition will be financed in whole or in part with the proceeds of
any Loan, the conditions set forth in Section 2.2 shall have been
satisfied;

     

    (b)   the
Borrower shall have furnished to the Agent and Lenders at least five (5)
Business Days (or such shorter period acceptable to Agent) prior to the
consummation of such Acquisition (1) if available, an executed term sheet and/or
commitment letter

     

     

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

     

    (setting
forth in reasonable detail the terms and conditions of such Acquisition) and, at
the request of the Agent, such other information and documents that the Agent
may request, including, without limitation, executed counterparts of the
respective agreements, documents or instruments pursuant to which such
Acquisition is to be consummated (including, without limitation, any related
management, non-compete, employment, option or other material agreements), any
schedules to such agreements, documents or instruments and all other material
ancillary agreements, instruments and documents to be executed or delivered in
connection therewith, (2) pro forma financial statements of Holdings and its
Subsidiaries after giving effect to the consummation of such Acquisition, (3) a
certificate of a Responsible Officer of the Borrower demonstrating on a pro
forma basis (as set forth in the definition of Consolidated EBITDA) compliance
with the covenants set forth in Article VI hereof after giving effect to the
consummation of such Acquisition and (4) copies of such other agreements,
instruments and other documents (including, without limitation, the Loan
Documents required by Section 4.11) as the Agent reasonably shall
request;

     

    (c)         
 the
Borrower and its Subsidiaries (including any new Subsidiary) shall execute and
deliver the agreements, instruments and other documents required by Section
4.11;

     

    (d)    
  such
Acquisition shall not be hostile and shall have been approved by the board of
directors (or other similar body) and/or the stockholders or other equityholders
of the target company;

     

    (e)
           no
Default or Event of Default shall then exist or would exist after giving effect
thereto;

     

    (f)  
  the total
consideration paid or payable (including without limitation, any deferred
payment and the principal amount of all Indebtedness assumed in connection
therewith) for all Acquisitions consummated during the term of this Agreement
after the Seventh Amendment Effective Date shall not exceed (i) the greater of
(x) $50,000,000 minus the portion of
the Available Amount utilized after the Seventh Amendment Effective Date
pursuant to Sections
5.4(k), 5.7(c), 5.8(g) and 5.11(a) and this
clause (i) or (y) the Available Amount; provided, that not more than $25,000,000
shall be attributable to the acquisition of assets of a target company not
located in any State in the United States, the District of Columbia or any
commonwealth or territory of the United States that has adopted Revised Article
9 of the UCC and the Equity Interests of a target company not organized under
the laws of any State in the United States, the District of Columbia or any
commonwealth or territory of the United States that has adopted Revised Article
9 of the UCC, plus (ii)
$20,000,000 (such amount, the “Annual Limitation”)
during the twelve-month period ending on the first anniversary of the Seventh
Amendment Effective Date and each twelve-month period thereafter (with unused
amounts in each twelve-month period (the “Carry-Forward
Amount”) carried over to the immediately following twelve-month period
(the “Carry-Forward
Period”) and all consideration paid or payable with respect to
Acquisitions consummated in any twelve-month period permitted under this clause
(ii) shall be first applied to reduce the applicable Annual Limitation and then
to reduce the Carry-Forward Amount, if any; it 

     

     

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

     

    being
understood and agreed that any unused Carry-Forward Amount expires at the end of
the applicable Carry-Forward Period); provided, that not more than $5,000,000
(such amount, the “Foreign Annual
Limitation”) during any twelve-month period shall be attributable to the
acquisition of assets of a target company not located in any State in the United
States, the District of Columbia or any commonwealth or territory of the United
States that has adopted Revised Article 9 of the UCC and the Equity Interests of
a target company not organized under the laws of any State in the United States,
the District of Columbia or any commonwealth or territory of the United States
that has adopted Revised Article 9 of the UCC (with unused amounts in each
twelve-month period (the “Foreign Carry-Forward
Amount”) carried over to the immediately following twelve-month period
(the “Foreign
Carry-Forward Period”) and all consideration paid or payable with respect
to Acquisitions consummated in any twelve-month period permitted under this
proviso to this clause (ii) shall be first applied to reduce the applicable
Foreign Annual Limitation and then to reduce the Foreign Carry-Forward Amount,
if any; it being understood and agreed that any unused Foreign Carry-Forward
Amount expires at the end of the applicable Foreign Carry-Forward
Period);

     

    (g)   
  the
Acquisition will be consummated in all material respects in accordance with
Requirements of Law;

     

    (h)  
  the
target company shall be, or shall be engaged in, a business of the type that the
Borrower and the Restricted Subsidiaries are permitted to be engaged in under
Section 5.13(b) hereof; and

     

    (i)    
  the
target company has EBITDA, subject to proforma adjustments acceptable to the
Agent, for the most recent four quarters prior to the acquisition date for which
financial statements are available, greater than zero.

     

    (aa)           Schedule
1.1(a) (“Term Loan Commitment”) to the Credit Agreement is hereby amended by
supplementing the provisions thereof with the information as to the Supplemental
Term Loan set forth in Annex A attached to this Amendment.

     

    (bb)          Schedule
1.1(b) (“Revolving Loan Commitment”) to the Credit Agreement is hereby amended
by supplementing the provisions thereof with the information as to the
Supplemental Revolving Lenders and Supplemental Revolving Loan Commitments set
forth in Annex B attached to this Amendment.

     

    Section
2. 
Representations and
Warranties.  In order to induce Agent and Lenders to enter into
this Amendment, each Credit Party represents and warrants, which representations
and warranties and covenants shall survive the execution and delivery of this
Amendment, that:

     

    (a)    
  No Default;
etc.  No Default or Event of Default has occurred and is
continuing after giving effect to this Amendment or would result from the
execution or delivery of this Amendment or the consummation of the transactions
contemplated hereby.

     

    (b)
      Power and Authority;
Authorization.  Such Credit Party has the corporate (or
equivalent) power and authority to execute and deliver this Amendment and to

     

     

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

     

    perform
the terms and provisions of the Credit Agreement, as amended by this Amendment,
and the execution and delivery by such Credit Party of this Amendment, and the
performance by such Credit Party of its obligations hereunder and under the
other Loan Documents has been duly authorized by all requisite corporate (or
equivalent) action by such Credit Party.

     

    (c)  
   Execution and
Delivery.  Such Credit Party has duly executed and delivered
this Amendment.

     

    (d)    
 
Enforceability.  This
Amendment and the Credit Agreement, as amended by this Amendment, constitute the
legal, valid and binding obligations of such Credit Party enforceable against
such Credit Party in accordance with their respective terms, except as
enforcement thereof may be subject to (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ right generally and (ii) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law).

     

    (e)           
Distributable
Reserves.  As of March 31, 2010, (i) the amount of Distributable Reserves (as defined below) within
Educationcity Ltd. is (£588,303) and the minimum amount of Distributable
Reserves within Educationcity Ltd. needed to permit the distribution in kind at
Book Value (as defined below) of 100% of the Equity Interests
of EducationCity Inc. by Educationcity Ltd. (the “Initial Target
Distribution”) is £1 (the "Minimum Distributable
Reserve").  "Distributable Reserves" means a company's accumulated,
realized profits, so far as not previously utilized by distribution or
capitalization, less its accumulated, realized losses, so far as not previously
written off in a reduction or organization of capital duly made, calculated in
accordance with the relevant provisions of Part II of the Companies Act 2006 (as
amended from time to time).  "Book Value" means, in relation to an
asset, the amount at which that asset is stated in the relevant accounts under
the Companies Act 2006 (as amended from time to time).

     

    Section
3. 
Conditions Precedent to
Effectiveness of Amendment.  The effectiveness of this
Amendment, the obligation of each Term Loan Lender with a Term Loan Commitment
with respect to the Supplemental Term Loan (each, a “Supplemental Term Loan
Lender”), and the obligation of each Revolving Lender (each, a “Supplemental Revolving
Lender”, and together with each Supplemental Term Loan Lender, the “Supplemental
Lenders”) with an increase in its existing Revolving Loan Commitment
(such increased amount, the “Supplemental Revolving Loan
Commitment”) are subject to the satisfaction of the following conditions
prior to or concurrently with the effectiveness of the Amendment:

     

    (a)    
 
execution
and delivery of this Amendment by each Credit Party, Agent and the Required
Lenders;

     

    (b)    
 
each
representation and warranty contained herein shall be true and correct in all
material respects;

     

    (c)    
 
the Agent
shall have received a Secretary’s Certificate of each Credit Party certifying
the passage and continued effectiveness of resolutions from such Credit Party
approving the transactions contemplated by this Amendment, and the incumbency of
the officers 

     

     

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

     

    executing
this Amendment and the documents delivered in connection therewith, in each case
in form and substance satisfactory to Agent;

     

    (d)    
 
the Agent
shall have received and be reasonably satisfied with the audited financial
statements of Educationcity Ltd. for the fiscal year ending December 31,
2009;

     

    (e)    
 
the Agent
shall have received, for the ratable benefit of the Consenting Lenders, an
amendment fee equal to one-quarter of one percent (0.25%) of the sum of the
Revolving Loan Commitments (other than Supplemental Revolving Loan Commitments)
of such Consenting Lenders and the aggregate principal amount of outstanding
Term Loans (other than the Supplemental Term Loans) of such Consenting
Lenders;

     

    (f)   the
Borrower shall have paid all other fees and other amounts due and payable by it
under the Credit Agreement, including without limitation reimbursement or other
payment of reasonable fees, costs and expenses owing to Latham & Watkins LLP
and all other amounts required to be reimbursed or paid by the Borrower
hereunder, under any other Loan Document and as separately agreed between the
Agent and Borrower;

     

    (g)    
  the
consummation of the Education City Acquisition;

     

    (h)            receipt
by Agent of the required Notice of Borrowing; and

     

    (i)   contemporaneously
with the consummation of the Education City Acquisition, (i) the execution and
delivery by the Borrower of a securities pledge amendment with respect to the
Equity Interests of Archipelago International Holdings, Inc. (“Archipelago Int’l
Holdings”) in the form of Exhibit 1 to the Guaranty and Security
Agreement, (ii) the execution and delivery by EducationCity Inc. of a joinder
agreement in the form of Exhibit 2 to the Guaranty and Security Agreement, and
(iii) the execution and delivery by Archipelago Int’l Holdings of a joinder
agreement in the form of Exhibit 2 to the Guaranty and Security
Agreement.

     

    Section
4. 
Additional
Covenants.

     

    (a)    
 
Landlord
Waiver.  The Borrower shall use commercially reasonable efforts
to deliver to Agent an executed landlord waiver within sixty (60) days after the
Seventh Amendment Effective Date in form and substance reasonably satisfactory
to Agent with respect to the Borrower’s leased premises at One McKinney Plaza,
Dallas, Texas.

     

    (b)           
Reporting of
Distributable Reserves.  Until Borrower or a Subsidiary of
Borrower has pledged 100% of the Equity Interests of EductionCity Inc. to Agent
pursuant to Section 4(c) below, as soon as available and in any event within 45
days after the end of each fiscal quarter, Borrower will furnish to Agent the
amount of Distributable Reserves within Educationcity Ltd. as of the end of such
fiscal quarter.

     

    (c)    
       Pledge of 100% of Equity
Interests of EducationCity Inc.  As soon as practical
after Educationcity Ltd. has obtained the Minimum Distributable
Reserve, Borrower will (i) cause Educationcity Ltd. to make the Initial Target
Distribution, (ii) cause its other Subsidiaries to make such
distributions and take such other actions necessary to permit
Borrower 

     

     

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

     

    or
another Credit Party to pledge to Agent 100% of the Equity Interests of
EducationCity Inc. and (iii) execute and deliver, or cause another Credit Party
to execute and deliver, to Agent a securities pledge amendment with respect to
100% of the Equity Interests of EducationCity Inc. in the form of Exhibit 1 to
the Guaranty and Security Agreement.  Borrower or a Subsidiary of
Borrower will execute and deliver to Agent a securities pledge amendment with
respect to 100% of the Equity Interests of EducationCity Inc. in the form of
Exhibit 1 to the Guaranty and Security Agreement no later than April 15,
2011.  To the extent that the securities pledge amendment described in
this Section 4(c) is executed by a Person that is not the Borrower or a Domestic
Subsidiary of Borrower (such Person, the “UK Grantor”),  Borrower
will, and will cause the UK Grantor to, take such actions that the Agent shall
deem advisable to perfect its security interest in such pledge of the Equity
Interests of EducationCity Inc. (including, without limitation, registration at
Companies House in the United Kingdom).

     

    Section
5. Reference To And Effect Upon
The Loan Documents.

     

    (a)    
 
Except as
specifically modified above, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified and
confirmed.

     

    (b)    
 
The
execution, delivery and effectiveness of this Agreement shall not operate as a
waiver of any right, power or remedy of Agent or any Lender under the Credit
Agreement or any Loan Documents, nor constitute a waiver of any provision of the
Credit Agreement or any Loan Documents, except as specifically set forth
herein.

     

    (c)    
 
Upon and
after the execution of this Amendment by each of the parties hereto, each
reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as modified hereby.

     

    (d)    
 
This
Amendment is a Loan Document executed pursuant to the Credit Agreement and shall
(unless otherwise expressly indicated herein) be construed, administered and
applied in accordance with the terms and provisions thereof.

     

    Section
6.       Costs And
Expenses.  Borrower agrees to reimburse Agent for all
reasonable and documented out-of-pocket costs and expenses incurred by Agent,
including the reasonable and documented costs and expenses of one counsel to
Agent for advice, assistance, or other representation in connection with this
Agreement.

     

    Section
7. 
Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.

     

    Section
8. 
Headings.  Section
headings in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purposes.

     

     

     

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

     

     

    Section
9. 
Counterparts.  This
Agreement may be executed in any number of counterparts (including by means of
facsimile transmission), each of which when so executed shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument.

     

    Section
10.     Certification and
Acknowledgement.  Borrower certifies and acknowledges that as
of the date hereof and after giving effect to the consummation of the Education
City Acquisition, Available Cash is $0.00.

     

    

    [Signature
Page Follows]

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.

    

    
      	 
      	
              BORROWER:

            
	 
      	 
      
	 
      	
              ARCHIPELAGO
      LEARNING, LLC

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      

    

    

    

    
      	 
      	
              OTHER
      CREDIT PARTIES

            
	 
      	 
      
	 
      	
              AL
      MIDCO, LLC

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      

    

    

    

     

    

    

     

    
      
        
          [Signature
Page to Amendment No. 7 to Credit Agreement]

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 
      	
              GENERAL ELECTRIC CAPITAL
      CORPORATION,

              as
      Agent, an Existing Lender, a Supplemental Term Loan Lender and a
      Supplemental Revolving Lender

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      

    

    

    

     

    

    
      
        
          [Signature
Page to Amendment No. 7 to Credit Agreement]

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 
      	
              NEWSTAR
      COMMERCIAL LOAN TRUST 2005-1,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Servicer

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            

    

    

    

    
      	 
      	
              NEWSTAR
      COMMERCIAL LOAN TRUST 2006-1,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Servicer

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            

    

    

    

    
      	 
      	
              NEWSTAR
      COMMERCIAL LOAN TRUST 2009-1,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Servicer

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            

    

    

    

    
      	 
      	
              NEWSTAR
      LOAN FUNDING, LLC,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Manager

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            

    

    

    

    
      	 
      	
              NEWSTAR
      CREDIT OPPORTUNITIES FUNDING II LTD,

              as
      an Existing Lender

            
	 
      	 
      	
              By:

            	 
      	
              NewStar
      Financial, Inc., as Manager

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Name:

            	
              R.
      Scott Poirier

            
	 
      	 
      	
              Title:

            	
              Managing
      Director

            

    

    

    
      
        
          [Signature
Page to Amendment No. 7 to Credit Agreement]

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    
      	 
      	
              BMO CAPITAL MARKETS FINANCING
      INC,

              as
      an Existing Lender

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      

    

    

    

    

    

    
      
        
          [Signature
Page to Amendment No. 7 to Credit Agreement]

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX A

    

    Schedule
1.1(a)

    

    Term Loan Commitments
(Supplemental Term Loan)

     

    

     

    
      	
              General
      Electric Capital Corporation

            	 	$	15,000,000.00	 
	 	 	 	 	 
	
              Total:

            	 	$	15,000,000.00	 

    

    

     

    Outstanding Principal Amount
of Term Loan (other than Supplemental Term Loan)

     

    
      	
              General
      Electric Capital Corporation

            	 	$	24,121,703.19	 
	 	 	 	 	 
	
              BMO
      Capital Markets Financing, Inc.

            	 	$	13,157,292.65	 
	 	 	 	 	 
	
              Newstar
      Credit Opportunities

            	 	$	10,690,300.27	 
	 	 	 	 	 
	
              Newstar
      Commercial Loan Trust 2006

            	 	$	5,384,888.03	 
	 	 	 	 	 
	
              Newstar
      Trust 2005-1

            	 	$	1,370,551.31	 
	 	 	 	 	 
	
              Newstar
      Commercial Loan Trust

            	 	$	6,675,963.55	 
	 	 	 	 	 
	
              Total:

            	 	$	61,400,699.00	 

    

    

    
      
        
          

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX B

    

    Schedule
1.1(b)

    

    Supplemental Revolving Loan
Commitments

     

    

     

    
      	
              General
      Electric Capital Corporation

            	 	$	10,000,000.00	 
	 	 	 	 	 
	
              Total:

            	 	 	 	 

    

    

     

    Revolving Loan Commitments
After Giving Effect to the Seventh Amendment

     

    
      	
              General
      Electric Capital Corporation

            	 	$	13,928,571.43	 
	 	 	 	 	 
	
              BMO
      Capital Markets Financing, Inc.

            	 	$	2,142,857.14	 
	 	 	 	 	 
	
              Newstar
      Credit Opportunities

            	 	$	1,741,071.43	 
	 	 	 	 	 
	
              Newstar
      Loan Funding LLC

            	 	$	2,187,500.00	 
	 	 	 	 	 
	
              Total:

            	 	$	20,000,000.00mm06-1010_8ke103.htm

     

    Exhibit
10.3

    EXECUTION
COPY

     

     

     

    June
9, 2010

     

    

     

    

     

    SERVICE
AGREEMENT

     

    between

     

    EDUCATIONCITY
LIMITED

     

    -
and -

     

    MATTHEW
DRAKARD

     

     

     

     

     

     

     

     

     

     

    

     

    
      
        
          Weil, Gotshal & Manges

           

          One South
Place   London   EC2M 2WG

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

           

          www.weil.com

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    THIS AGREEMENT is made on June
9, 2010 between the following parties

     

    
      	
              (1)  

            	
              EDUCATIONCITY LIMITED, a
      United Kingdom private limited company (the “Company”);
      and

            

    

     

    
      	
              (2)  

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

            

    

     

    IT IS AGREED as
follows:

     

    
      	
              1  

            	
              DEFINITIONS

            

    

     

    
      	
              1.1  

            	
              Definitions

            

    

     

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

     

    
      	 	
              “Act”

            	
              means
      the Employment Rights Act 1996;

            
	 	 	 
	 	
              “Board”

            	
              means
      the board of directors of Archipelago Learning, Inc. from time to
      time;

            
	 	 	 
	 	
              “CEO”

            	
              means
      the Chief Executive Officer of Archipelago Learning, Inc. from time to
      time;

            
	 	 	 
	 	
              “Confidential
      Information”

            	
              means
      all information that relates to the business, technology, manner of
      operation, suppliers, panelists, customers, finances, employees, plans,
      proposals or practices of the Company or of any third parties doing
      business with the Company, and includes, without limitation, the
      identities of and other information regarding the Company’s suppliers,
      panelists, customers and prospects, supplier lists, panelist list employee
      information, business plans and proposals, software programs, marketing
      plans and proposals, technical plans and proposals, research and
      development, budgets and projections, nonpublic financial information, and
      all other information the Company designates as “confidential” or intends
      to keep as confidential or proprietary;

            
	 	 	 
	 	
              “Effective
      Date”

            	
              means
      the date hereof;

            
	 	 	 
	 	
              “Good
    Reason”

            	
              means
      the occurrence of any of the following events without the Executive’s
      express written consent: (i) any breach by the Company of any material
      provision of this Agreement or any other written agreement with the
      Executive, (ii) a reduction in pay the Executive’s base salary, or (iii) a
      material reduction or diminution of the Executive’s duties,
      responsibilities or authorities, which are caused by
  

            

       

       

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

       

      	 	 	an
      act of the Company (which shall not include the appointment of any
      individual pursuant to clause 3.3. or clause 11.3).  The Company
      shall have 30 days after receipt of notice from the Executive setting
      forth the specific conduct that constitutes Good Reason, to cure such
      conduct that would result in Good Reason.  The Executive may not
      resign his employment for Good Reason unless the Executive has provided
      the Company with at least 30 days’ prior written notice of the Executive’s
      intent to resign for Good Reason (which notice must be provided within 60
      days following (x) the occurrence of the event(s) purported to constitute
      Good Reason, or (y) if the Executive did not know of the occurrence of any
      of such events, the date on which the Executive had actual knowledge of
      the occurrence of any of such events) and has set forth in reasonable
      detail the specific conduct that constitutes Good Reason and the specific
      provisions of this Agreement on which the Executive
  relies. 
	 	 	 
	 	
              “Group
      Company”

            	
              means
      any company which from time to time is:

              (a)  a direct or
      indirect subsidiary undertaking of the Company;

               

              (b)  a direct or
      indirect holding company of the Company;

               

              (c)  a direct or
      indirect subsidiary undertaking of any such holding company;
      or

               

              (d)  an associated
      company being any company in which the Company or any Group Company
      

                   
       has a shareholding of 50% or more or any company which has a
      shareholding of 50%

                  
        or more in the Company or any Group Company and
      “Group” shall mean
      all such

                   
       Group Companies at such time;

            
	 	 	 
	 	
              “Incapacity”

            	
              any
      sickness or injury which prevents the Executive from carrying out his
      duties;

            
	 	 	 
	 	
              “subsidiary” and “holding
      company”

            	
              have
      the meanings attributed to them by section 1159 of the Companies
      Act 2006;

            
	 	 	 
	 	
              “Term”

            	
              means
      the period of the Executive’s employment
  hereunder;

            

       

       

       

       

      
        
          
          

        

        
          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

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                 

              	
                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

            

    

     

     

     

     

    
      
        
        

      

      
        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

    MATTHEW
DRAKARD                                          .......................................

     

    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, Matthew Drakard of Top Cottage,
Stamford Road, Barnsdale, Rutland LE15 8AB in accordance with the terms of the
service agreement (the “Service
Agreement”) of even date between myself and EducationCity Limited (the
“Company”) HEREBY APPOINT the Company to
act as my attorney with authority in my name and on my behalf (so that words and
expressions defined in the Service Agreement shall have the same meanings
herein):

     

    
      	
              1  

            	
              to
      sign or execute any and all agreements, instruments, deeds or other papers
      and to do all such things in my name as may be necessary or desirable to
      implement my obligations in connection with clause 15 and SCHEDULE 3
      of the Agreement; and

            

    

     

    
      	
              2  

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

            

    

     

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

     

    

     

    IN WITNESS whereof this Power
of Attorney has been duly executed.

     

     

    
      	
              EXECUTED as a DEED
      and 

              
                Delivered
      by

                MATTHEW
      DRAKARD

                in
      the presence of: 

              

            	
              )

              )

              )

              )

            

    

     

    
 

     

    Witness
name:

     

    Address:

     

    Occupation:

     

     

     

     

     

     

     

    
      
        
          S-1-1

        

         

      

      
         

        
          

        

      

      
         

      

    

    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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}]]