Document:

Exhibit 10.1

 

NEW HORIZONS WORLDWIDE, INC.

 

SERIES A STOCK PURCHASE AGREEMENT

 

 

DATED AS OF FEBRUARY 7, 2005

 

 

SERIES A STOCK PURCHASE AGREEMENT

 

THIS
SERIES A STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of February 7, 2005 by and
among New Horizons Worldwide, Inc., a Delaware corporation (the “Company”), Camden Partners Strategic Fund III, L.P., a
Delaware limited partnership, Camden Partners Strategic Fund III-A, L.P.,
a Delaware limited partnership (collectively, “Camden”)
and each of the persons listed on Schedule A
hereto, each of which is herein referred to as an “Investor.”

 

WHEREAS, the Company
desires to issue to each Investor, and each Investor desires to subscribe for
and acquire from the Company, an equity interest in the Company, upon the terms
and conditions hereinafter set forth;

 

NOW,
THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements hereinafter set forth, the parties
hereto hereby agree as follows:

 

1.             DEFINITIONS

 

For
all purposes of this Agreement, certain capitalized terms specified in Exhibit A shall have the
meanings set forth in that Exhibit A,
except as otherwise expressly provided.

 

2.             SALE AND PURCHASE OF SHARES

 

2.1          Authorization
of the Company Stock.

 

The
Company has, or before the Closing will have, authorized the sale and issuance
of up to 1,600,000 shares of its Series A Convertible Preferred Stock, no
par value per share (the “Series A Stock”),
having the rights, restrictions, privileges and preferences set forth in the Certificate
of Designations, a copy of which is attached hereto as Exhibit B
(the “Certificate”).  The Company has, or on or before the Closing
will have, designated the terms of the Series A Stock by filing the
Certificate with the Secretary of State of the State of Delaware.

 

2.2          Sale
and Purchase of Shares

 

On
the basis of the representations, warranties and agreements contained herein,
and subject to the terms and conditions hereof, the Company agrees to sell and
issue to each Investor, and each Investor agrees, severally and not jointly, to
purchase from the Company on the Closing Date, that number of shares of the
Company’s Series A Stock set forth opposite the Investor’s name on Schedule A, at a purchase
price of $3.75 per share (the “Purchase Price”).  The Company’s agreement with each Investor is
a separate agreement, and the sale of the Series A Stock to each Investor
is a separate sale.

 

2.3          Closing

 

The
closing of the sale and purchase of the Series A Stock (the “Closing”) shall take place at the offices of
Hogan & Hartson L.L.P., 111 South Calvert Street,
Suite 1600,

 

 

Baltimore,
Maryland 21202, at 10:00 a.m., Baltimore time, on the date hereof or at
such other location, date and time as may be agreed upon between the Company
and Camden in its capacity as agent for the Investors (the “Closing Date”).  At
the Closing, the Company shall issue and deliver to the Investors stock
certificates in definitive form, registered in the name of each Investor,
representing the Series A Stock being purchased by each Investor as set
forth on Schedule A.  As payment in full for the shares of
Series A Stock  being purchased by
it at the Closing, and against delivery of the stock certificate or
certificates, on the Closing, each Investor shall deliver to the Company by
wire transfer of immediately available funds, the amount set forth under the
heading “Purchase Price Payable at Closing” on Schedule A.  In the event that Camden reallocates the “Shares to be Purchased at Closing” after the Closing, upon
written notice of the reallocation, the Company agrees to amend Schedule A to reflect such
reallocation.

 

3.             REPRESENTATIONS AND WARRANTIES OF THE
COMPANY

 

The
Company hereby represents and warrants to each Investor as follows:

 

3.1          Organization
and Standing

 

The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite corporate power
and authority to own, operate and lease its Assets, to carry on its business as
currently conducted, to execute, deliver and perform its obligations under this
Agreement, the Registration Rights Agreement, the Stockholders’ Agreement and
the Restated Certificate of Incorporation (collectively, the “Company Agreements”). 
The Company is duly qualified to conduct its business, and is in good
standing, in each jurisdiction in which the nature of the business conducted by
the Company or the character of the Assets owned, leased or otherwise held by
it makes any such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect.

 

3.2          Subsidiaries

 

Except
as set forth on Schedule 3.2, the Company
has no subsidiaries and no equity investment or other interest in, nor has the
Company made advances or loans to, any corporation, association, partnership,
joint venture or other entity.  Each
subsidiary listed on Schedule 3.2  (the “Subsidiaries”) has been duly organized,
is validly existing and in good standing under the laws of the jurisdiction of
its organization, has all requisite corporate power and authority to own and
operate its properties, to lease the properties it operates as lessee and to
conduct the business in which it is engaged, and is duly qualified to transact
business and is in good standing under the laws of the jurisdiction in which
the conduct of its business or the nature of its properties requires such
qualification except where the failure to be so qualified or in good standing
would not reasonably be expected to have a Material Adverse Effect.  Except as disclosed on Schedule 3.2,
all of the issued and outstanding stock (or equivalent interests) of each
Subsidiary set forth on Schedule 3.2
has been duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company free and clear of any Encumbrances and there are no
rights, options or warrants outstanding or other agreements to acquire shares
of stock (or equivalent interests) of such Subsidiary.

 

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3.3          Capitalization

 

As
of the date hereof, the authorized capital stock of the Company consists of
(x) 22,000,000 shares of Common Stock, of which as of the date hereof,
10,451,658 shares are issued and outstanding, 2,372,500 shares are reserved for
issuance pursuant to the Company’s employee incentive plans and other options
outstanding, and (y) 2,000,000 shares of preferred stock, of which
2,000,000 are designated as Series A Stock of which as of the date hereof,
none are issued and outstanding.  All of
such outstanding shares have been, or upon issuance will be, validly issued and
are fully paid and nonassessable.  Except
as set forth on Schedule 3.3: (i) no
shares of the Company’s capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company or any of its
Subsidiaries; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Company or any of its Subsidiaries or
by which the Company or any of its Subsidiaries is or may become bound;
(iv) there are no financing statements securing obligations in any
material amounts, either singly or in the aggregate, filed in connection with
the Company; (v) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the Securities Act (except the Registration Rights
Agreement); (vi) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries;
(vii) there are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by the issuance of the Series A
Stock;  and (viii) the Company does
not have any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement.  The
Company has Furnished to each Investor true, correct and complete copies of the
Company’s Restated Certificate of Incorporation, as amended and as in effect on
the date hereof (the “Certificate of
Incorporation”), and the Company’s Amended and Restated Bylaws, as
amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or
exercisable or exchangeable for, Common Stock and the material rights of the
holders thereof in respect thereto.

 

3.4          SEC
Reports; Financial Statements

 

(a)           The
Company has timely filed all SEC Reports. 
Each SEC Report complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as applicable, and did
not contain any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
in the SEC Reports, in light of the circumstances under which they were made,
not misleading.

 

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Each of the
Company’s financial statements (including, in each case with respect to audited
financial statements, any related notes) contained in the SEC Reports complied
as to form in all material respects with applicable  accounting requirements and the published
rules and regulations of the Commission with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods involved
(except, with respect to audited financial statements, as may be indicated in
the notes to such financial statements) and fairly presented the consolidated
financial position of the Company and its Subsidiaries as of and at the
respective date and the results of operations and cash flows for the periods
indicated, except that unaudited financial statements were subject to normal
and recurring year-end adjustments which were not or are not expected to be
material in amount or effect and the absence of footnote disclosure.  The Company has Furnished to each Investor or
its respective representatives true, correct and complete copies of the SEC
Reports not available on the EDGAR system.

 

(b)           Since
September 30, 2004, except as set forth on Schedule 3.4(b) or as described in
the SEC Reports filed with the Commission prior to the date hereof or as
otherwise publicly disclosed by press release prior to the date hereof,
(i) each of the Company and its Subsidiaries has operated in the ordinary
course and (ii) there has occurred no fact, event, circumstance or
development that, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect. 
Since September 30, 2004 and except as set forth in the SEC Reports or
on Schedule 3.4(b), the Company has
not (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, in excess of $25,000 outside of the Ordinary
Course of Business, or (iii) had capital expenditures, individually or in
the aggregate, in excess of $100,000. 
The Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact which would reasonably lead a creditor to do
so.  The Company is not as of the date
hereof, and after giving effect to the transactions contemplated hereby to
occur at the Closing, will not be Insolvent (as defined below).  For purposes of this Section 3.4,
“Insolvent” means (i) the present
fair saleable value of the Company’s assets is less than the amount required to
pay the Company’s total current Indebtedness, (ii) the Company is unable
to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured, (iii) the Company
intends to incur or believes that it will incur debts that would be beyond its
ability to pay as such debts mature or (iv) the Company has unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.

 

3.5          No
Undisclosed Liabilities

 

Neither
the Company nor any of its Subsidiaries has any material liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
except (a) liabilities or obligations disclosed or reserved against in the
SEC Reports filed prior to the date of this Agreement or (b) liabilities
or obligations which arose after the last date of any such SEC Report, in the
Ordinary Course of Business consistent with past practice that, individually or
in the aggregate, have not had, and could not reasonably be expected to have, a
Material Adverse Effect or (c) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principals to be reflected in the financial statements
contained in the SEC Reports, which in both cases individually and in the

 

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aggregate would
not have a Material Adverse Effect or (d) liabilities incurred in
connection with or as a result of the transactions contemplated by this
Agreement, or (e) as otherwise set forth on Schedule 3.5
or resulting from matters expressly addressed elsewhere in this Section 3.

 

3.6          Accounting;
Disclosure Controls; Accounts Receivable

 

(a)           Except as
set forth in Schedule 3.6(a) or the SEC
Reports, the Company and each Significant Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is
permitted only in accordance with management’s general or specific authorization
and (iv) the recorded accountability for assets and liabilities is
compared with the existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any difference.

 

(b)           Except as
set forth in Schedule 3.6(b) or the SEC
Reports, the Company maintains disclosure controls and procedures (as such term
is defined in Rule 13a-14 under the Exchange Act) that are effective in
ensuring that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the Commission, including, without limitation, controls and procedures
designed in to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the Exchange Act is accumulated
and communicated to the Company’s management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate, to allow timely decisions regarding required disclosure.

 

(c)           The
accounts receivable of the Company shown on the financial statements included
in or incorporated by reference into the SEC Reports, or thereafter acquired by
the Company until the date hereof, have been collected or are collectible in
amounts not less than the amounts thereof carried on the books of the Company,
except to the extent of the allowance for doubtful accounts shown on such
financial statements or as otherwise disclosed in Schedule
3.6(c).

 

3.7          Taxes

 

(a)           Except
as set forth in the SEC Reports, (1) the Company and each Subsidiary has duly
filed (or obtained extensions with respect to) all Tax Returns required to be
filed on or before the Closing with respect to all applicable Taxes, and (2) no
penalties or other charges are or will become due with respect to any such Tax
Returns as the result of the late filing thereof.  All of the Tax Returns are true and complete
in all material respects.  The Company
and each of its Subsidiaries: (i) has paid all Taxes due or claimed to be
due by any taxing authority in connection with any such Tax Returns (without
regard to whether or not such Taxes are shown as due on such Tax Returns); or
(ii) has established in its financial statements adequate reserves (in
conformity with GAAP consistently applied) for the payment of such Taxes.  The amounts set up as reserves for Taxes on
the financial statements are sufficient for the payment of all unpaid Taxes as
of the dates thereof, whether or not such Taxes are disputed or

 

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are yet due and
payable, for or with respect to the period, and for which the Company or its
Subsidiaries may be liable in its own right or as a transferee of the Assets
of, or successor to, any corporation, person, association, partnership, joint
venture or other entity.

 

(b)           The
Company and each of its Subsidiaries, either in its own right or as a
transferee, does not have any liability for Taxes payable for or with respect
to any periods prior to and including the Closing in excess of the amounts
actually paid prior to the Closing or reserved for in the financial statements.

 

(c)           Except
as set forth on Schedule 3.7(c) or in the SEC Reports, (i) there is no action,
suit, proceeding, audit, investigation or claim pending or, to the Knowledge of
the Company, threatened in respect of any Taxes for which the Company or any of
its Subsidiaries is or may become liable, nor is any deficiency or claim for
any such Taxes proceeding or, to the Knowledge of the Company, threatened and
(ii) the Company and its Subsidiaries have not consented to any waivers or
extensions of any statute of limitations with respect to the collection or
assessment of any Taxes against the Company or any of its Subsidiaries.  There is no agreement, waiver or consent
providing for an extension of time with respect to the assessment or collection
of any Taxes against the Company or any of its Subsidiaries and no power of
attorney granted by the Company or any of its Subsidiaries with respect to any
tax matters is currently in force.

 

(d)           Except
as set forth on Schedule 3.7(d), the Company
has not: (i) been a partner in a partnership or an owner of an interest in
an entity treated as a partnership for federal income tax purposes;
(ii) executed or filed with the Internal Revenue Service any consent to
have the provisions of Section 341(f) of the Code apply to it;
(iii) been subject to Section 999 of the Code; or (iv) been a
party to any agreement relating to the sharing, allocation or payment of, or
indemnity for, Taxes.

 

(e)           The
Company has Furnished to each Investor true and complete copies of all Company
Tax Returns and all written communications relating to any such Company Tax
Returns or to any deficiency or claim proposed and/or asserted, irrespective of
the outcome of such matter, but only to the extent such items relate to tax
years (i) which are subject to an audit, investigation, examination or
other proceeding, or (ii) with respect to which the statute of limitations
has not expired.

 

3.8          No
Consents

 

Except
as set forth on Schedule 3.8 and except for
the filing of a Form D with the Commission and any state securities
regulators, no consent, approval, exemption or authorization of or designation,
declaration or filing with any Governmental Entity on the part of the Company
or any Significant Subsidiary is necessary or required in connection with the
execution, delivery and performance of this Agreement, the offer, sale or
issuance of the Series A Stock, or the consummation of any other
transaction contemplated hereby.  All
consents and waivers required from any Person in order to carry out the
transactions contemplated hereby under any contract, lease or agreement to
which the Company or any Significant Subsidiary is a party are set forth on Schedule 3.8, except those that the failure to make or
obtain would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect or prevent, materially delay or

 

6

 

materially
impair the ability of the Company to consummate the transactions contemplated
by this Agreement.  Except as set forth
on Schedule 3.8 or in the SEC
Reports, the Company is not in violation of the listing requirements of the
Nasdaq and to the Knowledge of the Company, there are no facts currently in
existence that would reasonably lead to delisting or suspension of the Common
Stock.

 

3.9          Title
to Property and Assets; Leases

 

Except
for Permitted Encumbrances or as set forth in Schedule 3.9,
each of the Company and its Subsidiaries has good and marketable title, free
and clear of all Encumbrances to all of its Assets, including all real property
leased, subleased or otherwise occupied by the Company and its
Subsidiaries.  All leases to which the
Company or any of its Subsidiaries is a party (collectively, the “Leases”) are valid and binding and in full force and effect,
and no material default (or event which, with the giving of notice or passage
of time, or both, would constitute a material default) by the Company or any of
its Subsidiaries, or to the Knowledge of the Company by any other party
thereto, has occurred or is continuing thereunder which would result in a
Material Adverse Effect.  The Company and
its Subsidiaries enjoy a peaceful and undisturbed possession under all such
Leases to which any of them is party as lessee with such exceptions as do not
materially interfere with the use made by the Company or such Subsidiary.  As used herein, the term “Lease” shall also include subleases or other occupancy
agreements.  The term “lessee” shall also include any sublessee or other occupant.

 

3.10        Insurance

 

The
Company and its Subsidiaries maintain, with reputable insurers, insurance in
such amounts, including deductible arrangements, and of such a character as is
usually maintained by reasonably prudent managers of companies engaged in the
same or similar business.  All policies
of title, fire, liability, casualty, business interruption, workers’ compensation
and other forms of insurance including, but not limited to, directors and
officers insurance and key man insurance, held by the Company and its
Subsidiaries, are in full force and effect in accordance with their terms.  Neither the Company or any of its
Subsidiaries is in default in any material respect under any provisions of any
such policy of insurance and no such Person has received notice of cancellation
of any such insurance.

 

3.11        Intellectual
Property

 

(a)           The Company and its Subsidiaries own, or are
licensed or otherwise possess all necessary rights to use, all patents, patent
applications, patent disclosures, trademarks, trade names, service marks, trade
dress, copyrights and any applications therefore, maskworks, schematics,
technology, know-how, trade secrets, inventions, improvements thereto, ideas,
algorithms, processes, computer software programs and applications (source code
or object code form) and tangible or intangible proprietary information or
material (“Intellectual Property”) that are
used in the business or products of the Company and its Subsidiaries.

 

(b)           Set forth on Schedule 3.11
are all (i) patents, patent applications, registered trademarks,
registered copyrights, and maskworks included in the Intellectual Property that
are owned by the Company and its Subsidiaries, including the jurisdictions,
both domestic

 

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and
foreign, in which each such item of Intellectual Property has been issued or
registered or in which any application for such issuance and registration has
been filed, and (ii) material licenses, sublicenses and other material
agreements to which the Company or any Subsidiary are a party and pursuant to
which the Company or such Subsidiary is authorized to use any third party
patents, trademarks or copyrights, including software (“Third Party
Intellectual Property Rights”). Other than the Franchise Agreements
identified on Schedule 3.18(b) hereto, the
Company and its Subsidiaries have not authorized any third party to use any
material Intellectual Property owned by the Company or any Subsidiary.

 

(c)           The Company and its Subsidiaries have taken
all commercially reasonable actions in all jurisdictions where the Company
reasonably believes such action is appropriate, both domestic and foreign, to
register and maintain the registration of all material Intellectual Property.

 

(d)           To the Knowledge of the Company,
(i) there is no unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights of the Company or any
Subsidiary, or any Third Party Intellectual Property Rights to the extent
licensed by or through the Company or any Subsidiary, by any third party, or
(ii) the conduct of the business of the Company and any Subsidiary does
not infringe any patent, trademark, service mark, copyright, trade secret or
other proprietary right of any third party. 
There are no royalties, fees or other payments or compensation payable
by the Company or its Subsidiaries to any Person in excess of $25,000 in any twelve
(12) month period by reason of the Company’s or its Subsidiaries ownership,
use, sale or disposition of Intellectual Property.

 

(e)           The Company is not, nor will it be as a
result of the execution and delivery of this Agreement or the agreements contemplated
hereby, or the performance of its obligations hereunder and thereunder, in
breach of any license, sublicense or other agreement relating to the
Intellectual Property, including Third Party Intellectual Property Rights.

 

(f)            All current officers, employees and material
consultants of the Company and its Subsidiaries have executed and delivered to
the Company or the applicable Subsidiary an agreement regarding assignment to
the Company or the Subsidiary, as appropriate, of any Intellectual Property arising
from services performed for the Company or the Subsidiary  by such Persons.  There is no Intellectual Property developed
by a Stockholder, director, officer, consultant or employee of the Company that
is used in the business of the Company that has not been transferred to, or is
not owned free and clear of any liens or Encumbrances by, the Company.

 

(g)           The Company has entered into written
confidentiality agreements with all third parties having access to
Company-owned confidential Intellectual Property in connection with the
disclosure to, or use or appropriation by, those third parties, of Intellectual
Property owned by the Company.

 

3.12        Compliance
with Laws; Regulatory Approvals

 

Except
as disclosed in the SEC Reports and except for matters which in the aggregate
would not have a Material Adverse Effect, the operations of the Company and its

 

8

 

Subsidiaries
have been conducted in compliance with all applicable Laws.  Neither the Company nor any Subsidiary has
received written notice of any material violation (or of any investigation,
inspection, audit, or other proceeding by any Governmental Entity involving
allegations of any violation) of any Law. 
Except for matters which in the aggregate, as would not have a Material
Adverse Effect, (a) all Regulatory Approvals required by the Company and
its Subsidiaries to conduct their respective business as now conducted by them
have been obtained and are in full force and effect, (b) the Company and
its Subsidiaries are in compliance with the terms and requirements of such
Regulatory Approvals, and (c) to the Knowledge of the Company, no event
has occurred which constitutes, or with due notice or lapse of time or both may
constitute, a material default by the Company or any Subsidiary under any
Regulatory Approval.  No Regulatory
Approvals obtained by the Company will in any way be affected by, or terminate
or lapse by reason of, the transactions contemplated by this Agreement or any
of the other Company Agreements, except for such Regulatory Approvals as would
not, individually or in the aggregate, have a Material Adverse Effect.  Since January 1, 2001, (i) the Common
Stock has been designated for quotation or listed on the Nasdaq National
Market, (ii) trading in the Common Stock has not been suspended by the
Commission or the Nasdaq National Market and (iii) the Company has
received no communication, written or oral, from the SEC or the Nasdaq National
Market regarding the suspension or delisting of the Common Stock from the
Nasdaq National Market.

 

3.13        Litigation;
Disputes

 

(a)           Except
as set forth in the SEC Reports or on Schedule 3.13(a),
there is no legal action, suit, arbitration or other legal, administrative or
other governmental investigation, inquiry or proceeding pending or, to the
Knowledge of the Company, threatened against the Company or any Subsidiary or
relating to any of the Company Agreements or the contemplated transactions
hereof which, if determined adversely to the Company or any such Subsidiary,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect or would reasonably be expected to prohibit or
materially delay the Closing.  Except as
set forth in the SEC Reports or on Schedule 3.13(a),
the Company is not subject to any legal action, suit, arbitration or other
legal, administrative or other governmental investigation, inquiry or
proceeding that, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect if determined adversely to the Company.

 

(b)           The
Company is not currently involved in nor reasonably anticipates any dispute
with any of its current or former employees, agents, brokers, distributors,
vendors, customers, business consultants, franchisees, franchisers,
representatives or independent contractors (or any current or former employees
of any of the foregoing persons or entities), which would reasonably be
expected to have a Material Adverse Effect if determined adversely to the
Company.

 

3.14        Labor
Relations

 

(a)           The
Company and its Subsidiaries have complied and are in compliance with all Laws
relating to employment or the workplace, including, without limitation,
provisions relating to wages, hours, collective bargaining, safety and health,
work authorization, equal employment opportunity, immigration, withholding,
unemployment compensation, worker’s

 

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compensation,
employee privacy and right to know except where the failure to be in such
compliance would not have a Material Adverse Effect.  Except as set forth in the SEC Reports or on Schedule 3.14(a), there are no collective bargaining
agreements, employment agreements between the Company or its Subsidiaries and
any of their employees, or professional service agreements not terminable at
will relating to the business and Assets of the Company or its
Subsidiaries.  The consummation of the
transactions contemplated hereby will not cause the Company or the Investors to
incur or suffer any liability relating to, or obligation to pay, severance,
termination or other employment related payments, including but not limited to
benefits or penalties, to any person or entity.

 

(b)           No
executive officer of the Company (as defined in Rule 501(f) of the Securities
Act) has notified the Company that such officer intends to leave the Company or
otherwise terminate such officer’s employment with the Company.  To the Knowledge of the Company, no executive
officer of the Company, is, or is expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each
such executive officer does not subject the Company or any of its Subsidiaries
to any liability with respect to any of the foregoing matters.

 

3.15        Pension
and Benefit Plans

 

(a)           Set
forth on Schedule 3.15(a), is a list of all
Plans or Other Arrangements.

 

(b)           The
Company has Furnished  to each Investor
true and complete copies of each of the following Documents: (i) the
Documents setting forth the terms of each Plan; (ii) all related trust
agreements or annuity agreements (and any other funding Document) for each
Plan; (iii) for the three most recent plan years, all annual reports (Form
5500 series) on each Plan that have been filed with any governmental agency;
(iv) the current summary plan description and subsequent summaries of
material modifications for each Title I Plan; (v) all DOL opinions on any
Plan and all correspondence relating to the request for and receipt of each
opinion; (vi) all correspondence with the PBGC on any Plan; and
(vii) all IRS rulings, opinions or technical advice relating to any Plan
and all correspondence relating to the request for and receipt of each ruling,
opinion or technical advice.  For each
Other Arrangement, the Company has Furnished to each Investor true and complete
copies of each policy, Agreement or other Document setting forth or explaining
the terms of the Other Arrangement, all related trust agreements or other
funding Documents (including, without limitation, insurance contracts,
certificates of deposit, money market accounts, etc.) and all correspondence or
other submissions with any governmental agency.

 

(c)           No
Plan is a Multiemployer Plan.

 

(d)           No
Plan is an ESOP.

 

(e)           No
Plan is a Defined Benefit Plan.

 

(f)            The
Company and its Subsidiaries has made all contributions and other payments
required by and due under the terms of each Plan and Other Arrangement.

 

10

 

(g)           Schedule 3.15(g)
sets forth a list of all Qualified Plans. 
All Qualified Plans and any related trust agreements or annuity
agreements (or any other funding Document) comply and have complied with ERISA,
the Code (including, without limitation, the requirements for Tax qualification
described in Section 401 thereof), and all other Laws.  The trusts established under such Plans are
exempt from federal income taxes under Section 501(a) of the Code.  The Company or its Subsidiaries, as
applicable, has received determination letters issued by the IRS with respect
to each Qualified Plan, and the Company has Furnished to each Investor true and
complete copies of all such determination letters and all correspondence
relating to the applications therefore. 
All statements made by or on behalf of the Company or its Subsidiaries
to the IRS in connection with applications for determinations with respect to
each Qualified Plan were true and complete when made and continue to be true
and complete.  Nothing has occurred since
the date of the most recent applicable determination letter that would
adversely affect the tax-qualified status of any Qualified Plan.

 

(h)           The
Company and its Subsidiaries have complied in all material respects with all
applicable provisions of the Code, ERISA, the National Labor Relations Act,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act, the Fair Labor Standards Act, the Securities Act, the Securities Exchange
Act of 1934, and all other Laws pertaining to the Plans, Other Arrangements and
other employee or employment related benefits, and all premiums and assessments
relating to all Plans or Other Arrangements. 
The Company and its Subsidiaries have no liability for any delinquent
contributions within the meaning of Section 515 of ERISA (including,
without limitation, related attorneys’ fees, costs, liquidated damages and
interest) or for any arrearages of wages. 
The Company and its Subsidiaries have no pending unfair labor practice
charges, contract grievances under any collective bargaining agreement, other
administrative charges, claims, grievances or lawsuits before any court,
governmental agency, regulatory body, or arbiter arising under any Law
governing any Plan, and there exist no facts that could give rise to such a
claim.

 

(i)            Schedule 3.15(i)
identifies any Plan that covered any current or former Company or Subsidiary
employees that has been terminated within the five calendar years preceding the
date hereof.

 

(j)            No
Plan or Other Arrangement, individually or collectively, provides for any
payment by Company or any Subsidiary to any employee or independent contractor
that is not deductible under Section 162(a)(1) or 404 of the Code or that
is an “excess parachute payment”
pursuant to Section 280G of the Code.

 

(k)           No
Plan has experienced a “reportable
event” (as such term is defined in Section 4043(b) of ERISA) that
is not subject to an administrative or statutory waiver from the reporting
requirement.

 

(l)            No
Plan is a “qualified foreign plan”
(as such term is defined in Section 404A(e) of the Code), and no Plan is
subject to the Laws of any jurisdiction other than the United States of America
or one of its political subdivisions.

 

(m)          The
Company and its Subsidiaries have timely filed and Company has Furnished to
each Investor true and complete copies of each Form 5330 (Return of Excise
Taxes

 

11

 

Related to
Employee Benefit Plans) that the Company filed on any Plan.  The Company and its Subsidiaries have no
liability for Taxes required to be reported on Form 5330.

 

(o)           All
Welfare Plans and the related trusts that are subject to Section 4980B(f)
of the Code and Sections 601 through 609 of ERISA comply with and have been
administered in compliance with the health care continuation-coverage
requirements for tax-favored status under Section 4980B(f) of the Code and
Sections 601 through 609 of ERISA in all material respects.

 

(p)           No
Plan promises or provides post-retirement medical, life insurance or other
benefits due now or in the future to current, former or retired employees of
the Company or its Subsidiaries.

 

(q)           The
Company and its Subsidiaries have (i) filed or caused to be filed all
returns and reports on the Plans that it is required to file and (ii) paid
or made adequate provision for all fees, interest, penalties, assessments or
deficiencies that have become due pursuant to those returns or reports or
pursuant to any assessment or adjustment that has been made relating to those
returns or reports.  All other fees,
interest, penalties and assessments that are payable by or for the Company or
its Subsidiaries have been timely reported, fully paid and discharged.  There are no unpaid fees, penalties, interest
or assessments due from the Company, its Subsidiaries or from any other person
that are or could become a lien on any Asset of the Company or its Subsidiaries
or could otherwise adversely affect the businesses or Assets of the Company or
its Subsidiaries.  The Company and its
Subsidiaries have collected or withheld all amounts that are required to be
collected or withheld by them to discharge their obligations, and all of those
amounts have been paid to the appropriate governmental agencies or set aside in
appropriate accounts for future payment when due.

 

3.16        Environmental

 

(a)           The Company
and each Subsidiary have complied and are in compliance with, all Environmental
Laws except where the failure to be in such compliance would not have a
Material Adverse Effect.

 

(b)           Neither the
Company nor any Subsidiary has any liability, known or unknown, contingent or
absolute, under any Environmental Law, nor is Company or any Subsidiary
responsible for any such liability of any other person under any Environmental
Law, whether by contract, by operation of law or otherwise, which would have a
Material Adverse Effect.  There are no
facts, circumstances, or conditions existing, initiated or occurring prior to
the Closing Date, which have or will result in liability to the Company or any
Subsidiary under Environmental Law, which would
result in a Material Adverse Effect. 
There are no pending or to the Knowledge of the Company, threatened
Environmental Claims.

 

(c)           To the
extent required by applicable law, the Company and the Subsidiaries have been
duly issued, and maintain all Environmental Permits necessary to operate the
business or Assets of Company as currently operated.  A true and complete list of all such
Environmental Permits, all of which are valid and in full force and effect, is
set out in the Disclosure Schedule.  The
Company and the Subsidiaries have timely filed applications for all

 

12

 

Environmental Permits.  All of the Environmental Permits listed on
the Disclosure Schedule are transferable and none of the Environmental Permits
require consent, notification, or other action to remain in full force and
effect following consummation of the transactions contemplated hereby.

 

(d)           (i) The
Company and its Subsidiaries do not use, have not used in the past, and have
not installed, and to the Company’s Knowledge, no Person uses currently, has
used in the past, or has installed, underground storage tanks for the
management of Hazardous Substances at any Real Property, (ii) the Company
and its Subsidiaries have not installed equipment containing polychlorinated
biphenyls or improvements containing asbestos, and to the Company’s Knowledge,
there is not equipment containing PCBs and no asbestos or toxic mold at any
Real Property; (iii) the Company and its Subsidiaries have not used or
constructed and to the Company’s Knowledge, there is not a dump or landfill at
any Real Property; and (iv) the Company and its Subsidiaries have not
Released, and to the Company’s Knowledge there has been no Release of Hazardous
Materials at, on, under, or from the Real Property.

 

(e)           The Company
has Furnished to each Investor copies of all environmental assessments, reports, audits and other documents in its
possession or under its control that relate to the Real Property, compliance
with Environmental Laws, or  any other
real property that the Company or the Subsidiaries formerly owned, operated, or
leased.  To the Company’s
Knowledge, any information the Company or the Subsidiaries has furnished to
each Investor concerning the environmental conditions of the Real Property,
prior uses of the Real Property, and the operations of the Company or the
Subsidiaries related to compliance with Environmental Laws is accurate and
complete.

 

(f)            No Real
Property, and no property to which Hazardous Materials originating on or from
such properties or the businesses or Assets of the Company or any Subsidiary
has been sent for treatment or disposal, is listed or proposed to be listed on
the National Priorities List or CERCLIS or on any other governmental database
or list of properties that may or do require Remediation under Environmental
Laws.  Neither the Company nor any of its Subsidiaries has arranged, by
contract, agreement, or otherwise, for the transportation, disposal or
treatment of Hazardous Materials at any location such that it is or could be
liable for Remediation of such location pursuant to Environmental Laws.

 

(g)           To the
Knowledge of the Company, no Encumbrance in favor of any person relating to or
in connection with any Environmental Claim has been filed or has attached to
the Real Property.

 

(h)           No
authorization, notification, recording, filing, consent, waiting period,
Remediation, or approval is required under any Environmental Law in order to
consummate the transaction contemplated hereby.

 

3.17        Transactions
with Related Parties

 

Except
as set forth in the SEC Reports filed with the Commission prior to the date
hereof or of transactions described on Schedule 3.17,
(a) neither the Company nor any Subsidiary is or has been a party to any
transaction or series of transactions described in Item

 

13

 

404 of
Regulation S-K under the Securities Act; provided, however, that for purposes
hereof, reference in such Item 404 to the “registrant” shall be deemed to be
references to the Company or such Subsidiary, as the case may be, and
references to the “beginning of the registrant’s last fiscal year” shall be
deemed to be references to the beginning of the Company’s fiscal year ended
December 31, 2000, and (b) no current or former officer or director of the
Company or any of its Subsidiaries and no Affiliate or associate of any such
current or former officer or director has, directly or indirectly, any interest
in any contract, arrangement or property (real or personal, tangible or
intangible) used by the Company and any such Subsidiary or in their respective
businesses, or in any supplier, distributor or customer of the Company or any
such Subsidiary.

 

3.18        Material
Contracts; Franchise Agreements

 

(a)           All
of the Company’s Contractual Obligations that are required to be described in
the SEC Reports or to be filed as exhibits thereto are described in the SEC
Reports or are filed as exhibits thereto, as so required.  Neither the Company nor any of its
Subsidiaries nor (to the Knowledge of the Company) any other party is in breach
in any material respect of, or in default in any material respect under, any of
its Contractual Obligations or organizational documents.

 

(b)           Set
forth in the SEC Reports or in Schedule 3.18(b)
is a list of all the Company’s and Subsidiaries franchise agreements and their
territory.  The Company has Furnished to
each Investor a copy of each of the franchise agreements to which the Company
or any of its Subsidiaries is a party (the “Franchise
Agreements”) and its current uniform offering circular.  Except as set forth on Schedule
3.18(b), each of the Franchise Agreements is currently in effect and
no breach or waiver by the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any other party thereto has occurred or is occurring.

 

3.19        Authorization;
No Conflict

 

The
Company has all the corporate right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby and
thereby.  All corporate action on the
part of the Company necessary for the authorization, execution, delivery and
performance of this Agreement by the Company, the authorization, sale, issuance
and delivery of Series A Stock contemplated hereby, and the performance of
the Company’s obligations hereunder has been taken.  Except as set forth on Schedule 3.19,
the issuance and sale of the Series A Stock contemplated hereby will not
give rise to any preemptive rights or rights of first refusal in existence on
the date hereof on behalf of any person.

 

3.20        Absence
of Violation

 

The
Company is not in violation of or default in any material respect under, nor
has it breached, any term or provision of its Certificate of Incorporation or
Bylaws or any Contractual Obligation. 
Neither the Company, nor to the Knowledge of the Company, any of its
officers, directors, employees or agents (or stockholders, distributors,
representatives or other persons acting on the express, implied or apparent
authority of the Company) have paid, given or received or have offered or
promised to pay, give or receive, any bribe or other unlawful,

 

14

 

questionable or
unusual payment of money or other thing of value, any extraordinary discount,
or any other unlawful or unusual inducement, to or from any person, business
association or governmental official or entity in the United States or
elsewhere in connection with or in furtherance of the business of the Company
(including, without limitation, any offer, payment or promise to pay money or
other thing of value (i) to any foreign official or political party (or
official thereof) for the purposes of influencing any act, decision or omission
in order to assist the Company in obtaining business for or with, or directing
business to, any person, or (ii) to any person, while knowing that all or
a portion of such money or other thing of value will be offered, given or
promised to any such official or party for such purposes).  The business of the Company is not in any
manner dependent upon the making or receipt of such payments, discounts or
other inducements.

 

3.21        Binding
Obligation

 

This
Agreement constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms, is in full force and effect and
constitutes a legal, valid and binding obligation of, and is legally
enforceable against, the Company, and each of the Company Agreements, when
executed and delivered in accordance with the provisions hereof, shall be a
valid and binding obligation of the Company, enforceable in accordance with its
terms except as such enforceability may be limited by general principles of
equity or to applicable bankruptcy, insolvency, recognization, moratorium,
liquidation or other similar laws relating, or affecting generally the
enforcement of applicable creditors’ rights and remedies.

 

3.22        Status
of Shares

 

The
Series A Stock to be issued to each Investor on the Closing Date has been
duly authorized by all necessary corporate action on the part of the Company,
and when issued in accordance with this Agreement, will be validly issued,
fully paid and nonassessable and will be free and clear of all Encumbrances
except for restrictions on transfer under applicable federal and state
securities laws and except as provided in the Company Agreements.  The shares of Common Stock issuable upon
conversion of the Series A Stock issued to each Investor on the Closing
Date have been duly authorized by all necessary corporate action on the part of
the Company and such shares of Common Stock have been validly reserved for
issuance, and upon issuance upon such conversion will be validly issued and
outstanding, fully paid and nonassessable and will be free and clear of all
Encumbrances except for restrictions on transfer under applicable federal and
state securities laws and except as provided in the Company Agreements.

 

3.23        Offering
of Shares

 

(a)           Assuming
the accuracy of the representations and warranties of each Investor set forth
in Section 4 hereof, the offer and
sale of the Series A Stock to each Investor is exempt from the
registration and prospectus delivery requirements of the Securities Act.  Neither the Company nor anyone acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Series A
Stock under the Securities Act and the rules and regulations of the Commission thereunder)
which would subject

 

15

 

the offering,
issuance and sale of the Series A Stock to the registration requirements
of the Securities Act.

 

(b)           Neither
the Company, nor any of its Affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of
the Series A Stock.  The Company
shall be responsible for the payment of any placement agent’s fees, financial
advisory fees, or brokers’ commissions (other than for persons engaged by any
Investor or its investment advisor) relating to or arising out of the
transactions contemplated hereby.  The
Company shall pay, and hold each Investor harmless against, any liability, loss
or expense (including, without limitation, attorney’s fees and out-of-pocket
expenses) arising in connection with any such claim.  The Company acknowledges that it has engaged
The Nassau Group, Inc. and Houlihan Lokey, Howard & Zurkin jointly as
placement agent (the “Agent”) in
connection with the sale of the Series A Stock.  Other than the Agent, the Company has not
engaged any placement agent or other agent in connection with the sale of the
Securities.

 

3.24        Disclosure

 

The
Company has Furnished the Investors with all applicable or relevant documents
and information that the Investors have requested in writing.  True and complete copies of all documents listed
in the Schedules to this Agreement have been Furnished to the Investors.  No representation or warranty of the Company
in this Agreement, as qualified by the Schedules, or the Company Agreements and
no certificate Furnished or to be Furnished to the Investors at the Closing,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they are made, not misleading.

 

3.25        Use
of Proceeds

 

The
Company shall use the proceeds of the sale of Series A Stock for the
acquisition of an accredited post-secondary institution (the “Requested Acquisition”) and general corporate purposes
associated with development of the business associated with the Requested
Acquisition; provided however, that the Company may use the proceeds of
the sale of the Series A Stock to repay indebtedness under the Company’s Credit
Facility, as defined in the Disclosure Schedules, upon the occurrence and during
the continuance of any Event of Default, as defined in the Credit Facility, and
upon the occurrence of the Term Maturity Date, as defined in the Credit
Facility.

 

3.26        Foreign
Corrupt Practices

 

Neither the Company, nor any of its Subsidiaries, nor, to the Knowledge
of the Company, any director, officer, agent, employee has, in the course of
its actions for, or on behalf of, the Company (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
U.S. Foreign Corrupt Practices Act of 1977,

 

16

 

as amended; or
(iv) made any unlawful bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or
employee.

 

3.27        Sarbanes-Oxley
Act

 

The
Company is in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any
and all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof, except where such
noncompliance would not have, individually or in the aggregate, a Material
Adverse Effect.

 

3.28        Application
of Takeover Protections.

 

The
Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, or other similar
anti-takeover provision under the Certificate of Incorporation or the laws of
the State of Delaware which is or could become applicable to any Investor as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Series A Stock and any Investor’s
ownership of the Series A Stock.

 

3.29        Investment
Company

 

The
Company represents and warrants that it is not an “investment company” or a
company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended (the “1940 Act”).  In addition, the Company agrees that it shall
not become an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the 1940 Act. 
In the event that the Company breaches the foregoing, the Company shall
forthwith notify the Investors and shall take immediate corrective action to
remedy such breach.

 

3.30        FIRPTA

 

The
Company is not a “foreign person” within the meaning of Section 1445 of
the Code.

 

3.31        United
States Real Property Holding Corporation

 

The
Company is not now and has never been a “United States real property holding
corporation” within the meaning of Code Section 897(c)(2) and any
regulations promulgated thereunder.

 

3.32        No
Brokers or Finders

 

Except
for the Agent, no agent, broker, finder or investment or commercial banker or
other Person (if any) engaged by or acting on behalf of the Company or any
Subsidiary or Affiliate is or will be entitled to any brokerage or finder’s or
similar fee or other commission as a result of the Company Agreements or the
transactions contemplated hereby.

 

17

 

4.             REPRESENTATIONS AND WARRANTIES OF THE
INVESTORS

 

Each
Investor hereby, severally and not jointly, represents and warrants to the
Company as to itself as follows:

 

4.1          Organization
and Standing

 

Each
Investor is duly organized, validly existing and in good standing under the laws
of the state or jurisdiction of its organization and has the full and
unrestricted power and authority to carry on its business as currently
conducted, to enter into this Agreement and to carry out the transactions
contemplated hereby.

 

4.2          Authorization

 

The
execution, delivery and performance by each Investor of each Company Agreement
to which it is a party and the transactions contemplated hereby, the
fulfillment of and the compliance with the respective terms and provisions
hereof, and the consummation by each Investor of the transactions contemplated
hereby has been duly authorized (which authorization has not been modified or
rescinded and is in full force and effect), and will not: (a) conflict
with, or violate any provision of, any term or provision of each Investor’s
certificate or agreement of limited partnership or other governing documents or
(b) conflict with, or result in any breach of, or constitute a default
under, any Company Agreement to which each Investor is a party or by which each
Investor is bound.  No other action is
necessary for each Investor to enter into each Company Agreement to which it is
a party and to consummate the transactions contemplated hereby.

 

4.3          Binding
Obligation

 

This
Agreement constitutes a valid and binding obligation of each Investor,
enforceable in accordance with its terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating, or affecting generally the enforcement of applicable creditors’
rights and remedies.  Each Company
Agreement to be executed by each Investor pursuant hereto, when executed and
delivered in accordance with the provisions hereof, shall be a valid and binding
obligation of each Investor, enforceable in accordance with its terms..

 

4.4          No
Registration Under the Securities Act

 

Each
Investor understands that the Series A Stock to be purchased by it
pursuant to the terms of this Agreement and the Common Stock of the Company
into which the Series A Stock is convertible (collectively, the “Securities”) have not been registered under the Securities
Act or any state securities law and will be issued, in reliance upon exemptions
contained in the Securities Act or interpretations thereof and in the
applicable state securities laws, and cannot be offered for sale, sold or
otherwise transferred unless the Securities are so registered or qualify for
exemption from registration under the Securities Act.

 

18

 

4.5          Acquisition
for Investment

 

The
Securities are being acquired under this Agreement by each Investor in good
faith solely for its own account, for investment and not with a view toward
resale or other distribution within the meaning of the Securities Act.  The Securities will not be offered for sale,
sold or otherwise transferred by each Investor without either registration or
exemption from registration under the Securities Act and any applicable state
securities laws.

 

4.6          Evaluation
of Merits and Risks of Investment

 

Each
Investor has such knowledge and experience in financial and business matters
such that is it capable of evaluating the merits and risks of its investment in
the Securities being acquired hereunder. 
Each Investor is an “accredited investor” within the meaning of Rule
501(a) under the Securities Act.  Each
Investor understands and is able to bear any economic risks associated with
such investment (including, without limitation, the necessity of holding the
Securities for an indefinite period of time, inasmuch as the Securities have
not been registered under the Securities Act).

 

4.7          Additional
Information

 

Each
Investor acknowledges that it has been afforded the opportunity to ask
questions and receive answers concerning the Company and to obtain additional
information that it has requested to verify the accuracy of the information
contained herein. Notwithstanding the foregoing, nothing contained herein shall
operate to modify or limit in any respect the representations and warranties of
the Company or to relieve them from any obligations to each Investor for breach
thereof or the making of misleading statements or the omission of material
facts in connection with the transactions contemplated herein.

 

4.8          Legend

 

The
certificates evidencing the Securities will bear a legend substantially similar
to the following:

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITEIS UNDER SUCH ACT AND ANY APPLICABLE
STATE SECURITIES LAW, (II) A “NO ACTION” LETTER OF THE SECURITIES AND EXCHANGE
COMMISSION WITH RESPECT TO SUCH SALE OR OFFER, OR (III) AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SUCH ACT AND ANY
APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED WITH RESPECT TO SUCH SALE OR
OFFER.

 

19

 

In
addition, for so long as the referenced Stockholders’ Agreement is in effect,
each such certificate shall also bear a legend substantially similar to the
following:

 

THE VOTING RIGHTS AND OBLIGATIONS WITH RESPECT TO, AND SALE
OR OTHER DISPOSITION OF, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
RESTRICTED BY AND SUBJECT TO THE PROVISIONS OF A STOCKHOLDERS’ AGREEMENT DATED
AS OF FEBRUARY [•], 2005, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.

 

5.             COVENANTS OF THE COMPANY

 

The
Company covenants and agrees with each Investor as follows:

 

5.1          Registered
Securities

 

For
so long as any of the Series A Stock is outstanding, and in any case for a
period of forty (40) calendar days thereafter, the Company will undertake
reasonable best efforts to cause its Common Stock to continue to be registered
under Section 12(b) or 12(g) of the Exchange Act, will timely file all
reports required to be filed with the SEC pursuant to the Exchange Act, will comply
in all material respects with its reporting and filing obligations under said
act, and will not knowingly and voluntarily take any action or file any
document (whether or not permitted by the Securities Act or the Exchange Act or
the rules thereunder) to terminate or suspend its reporting or filing
obligations under said acts, expect as permitted herein.  For so long as any of the Series A Stock
is outstanding, and in any case for a period of forty (40) calendar days
thereafter, the Company will use its reasonable best efforts to continue the
listing of trading of its Common Stock on the Nasdaq or on a national
securities exchange (as defined in the Exchange Act) and will comply in all
material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the National Association of Securities Dealers and
Nasdaq.  Notwithstanding the foregoing,
the provisions of this subsection shall not in any way restrict the Company’s
ability to negotiate and consummate the consolidation, reorganization or merger
of the Company with or into any other corporation or corporations or a sale,
conveyance or other disposition of all or substantially all of the Company’s
property or business.

 

5.2          Authorized
Common Stock

 

For
so long as any of the Series A Stock are outstanding, the Company shall at
all times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, for issuance upon conversion of such
Series A Stock (the “Conversion Stock”),
not less than the maximum number of shares of Conversion Stock then so
issuable.

 

5.3          Rule
144

 

With
a view to making available the benefits of certain rules and regulations of the
Commission that may at any time permit the sale of any restricted securities to
the public without registration, the Company agrees to:

 

20

 

(a)           use
its reasonable best efforts to make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act;

 

(b)           use
its reasonable best efforts to file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act; and

 

(c)           so
long as any Investor owns any Series A Stock, furnish to the Investor upon
request, a written statement by the Company as to its compliance with the
reporting requirements of said Rule 144 and of the Securities Act and of the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as the Investor
may reasonably request in availing itself of any rule or regulation of the
Commission allowing the Investor to sell any such securities without
registration.

 

5.4          Use
or Proceeds

 

The
Company will use the proceeds from the sale of the Series A Stock for the
Requested Acquisition and general corporate purposes associated with
development of the business associated with the Requested Acquisition and not
for any other purpose including, but not limited to: (i) the repayment of
any outstanding Indebtedness of the Company or any of its Subsidiaries or
(ii) redemption or repurchase of any of its equity securities, without the
written consent of the holders of a majority of the outstanding shares of
Series A Stock.   Notwithstanding the
foregoing, the Company may use the use of proceeds from the sale of the Series
A Stock to repay indebtedness under the Company’s Credit Facility, as defined
in the Disclosure Schedules, upon the occurrence and during the continuance of
any Event of Default, as defined in the Credit Facility, and upon the
occurrence of the Term Maturity Date, as defined in the Credit Facility.

 

5.5          Form
D and Blue Sky

 

The
Company agrees to file a Form D with respect to the Series A Stock as
required under Regulation D and to provide a copy thereof to each Investor
promptly after such filing.  The Company,
on or before the Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Series A Stock for sale to the Investors at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification).  The Company shall make all filings and
reports relating to the offer and sale of the Series A Stock required
under applicable securities or “Blue Sky” laws of the states of the United
States following the Closing Date.

 

5.6          Listing

 

The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Registrable Securities from time to time issuable under the
terms of the Company Agreements.  The
Company shall maintain the Common Stock’s

 

21

 

authorization
for listing on the Nasdaq National Market. 
Neither the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Nasdaq National Market. The Company shall pay all fees
and expenses in connection with satisfying its obligations under this Section 5.6.

 

5.7          Board
of Directors

 

As
of the Closing, the number of directors of the Company shall be fixed by the
Board of Directors of the Company at no less than seven (7) and no more than
nine (9).

 

5.8          Insurance

 

The
Company and its Subsidiaries shall maintain, with nationally reputable
insurers, insurance in such amounts, including deductible arrangements, and of
such a character as is usually maintained by reasonably prudent managers of
companies engaged in the same or similar business including, but not limited
to, directors and officers insurance and key man insurance.

 

5.9          Disclosure
of the Transaction.

 

Upon the Closing, the Company shall promptly issue a
press release reasonably acceptable to Camden disclosing all material terms of
the transactions contemplated hereby. 
Within four (4) Business Days following the Closing Date, the Company
shall file a Current Report on Form 8-K describing the terms of the
transactions contemplated by the Company Agreements in the form required by the
Exchange Act, and attaching the material Company Agreements (including, without
limitation, this Agreement, the Registration Rights Agreement and the
Stockholders Agreement) as exhibits to such filing (including all attachments,
the “8-K Filing”).  Subject to the foregoing, neither the Company
nor any Investor shall issue any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of any Investor, to
make any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations, including
the applicable rules and regulations of the Principal Market (provided that in
the case of clause (i) Camden shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release).

 

6.             CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE COMPANY

 

The
obligations of the Company under this Agreement are subject to the fulfillment,
at or prior to the Closing Date, of each of the following conditions, and
failure to satisfy any such condition shall excuse and discharge all
obligations of the Company to carry out the provisions of this Agreement,
unless such failure is waived in writing by the Company:

 

6.1          Representations
and Warranties

 

The
representations and warranties of the Investors contained in Section 4 shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the date of such Closing Date, except

 

22

 

for
representations and warranties made as of a particular date, which shall be
true and correct as of such date.

 

6.2          Performance

 

Each
Investor shall have performed, satisfied and complied with all agreements and
conditions required by this Agreement to be performed or complied with by them
on or prior to the Closing Date.

 

6.3          Legal
Proceedings

 

No
action or proceeding by or before any governmental authority shall have been
instituted or threatened (and not subsequently dismissed, settled or otherwise
terminated) which is reasonably expected to restrain, prohibit or invalidate
the transactions contemplated by this Agreement, other than an action or
proceeding instituted or threatened by the Company.

 

6.4          Certificate
of Designations

 

The
Certificate required to designate the number, preferences and rights of the
Series A Stock, as set forth in Exhibit B  shall
have been accepted for filing by the Secretary of State for the State of
Delaware.

 

6.5          Documents
at Closing

 

All
documents required to be Furnished by the each Investor to the Company pursuant
to Section 8.2 shall have been so
Furnished.

 

7.             CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE INVESTORS

 

The
obligations of each Investor under this Agreement are subject to the
fulfillment, at or prior to the Closing, of each of the following conditions,
and failure to satisfy any such condition shall excuse and discharge all
obligations of such Investor to carry out the provisions of this Agreement,
unless such failure is waived in writing by such Investor:

 

7.1          Representations
and Warranties

 

The
representations and warranties made by the Company in this Agreement and the
statements contained on the Schedules and Exhibits attached hereto shall be
true and complete when made, and on and as of the Closing Date as though such
representations and warranties were made on and as of such date.

 

7.2          Performance

 

The
Company shall have performed, satisfied and complied with all agreements,
obligations and conditions required by this Agreement to be performed,
satisfied or complied with at or prior to the Closing Date.

 

23

 

7.3          Officer’s
Certificate

 

The
President and Chief Executive Officer of the Company shall deliver to the
Investors at the Closing a certificate stating that the conditions specified in
Sections 7.1 and 7.2 have
been fulfilled.

 

7.4          Secretary’s
Certificate

 

The Company shall have delivered to such Investor a certificate, in a
form reasonably acceptable to Camden, executed by the Secretary or Assistant
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions as adopted by the Company’s Board of Directors in a form reasonably
acceptable to Camden, (ii) the Certificate of Incorporation and
(iii) the Bylaws.

 

7.5          Legal
Proceedings

 

No
action or proceeding by or before any governmental authority shall have been
instituted or threatened (and not subsequently settled, dismissed or otherwise
terminated) which is reasonably expected to restrain, prohibit or invalidate
the transactions contemplated by this Agreement other than an action or
proceeding instituted or threatened by an Investor.

 

7.6          Stockholders’
Agreement

 

The
Company and each Investor shall execute and deliver a Stockholders’ Agreement
substantially in the form of Exhibit C.

 

7.7          Registration
Rights Agreement

 

The
Company and each Investor shall execute and deliver a Registration Rights
Agreement substantially in the form of Exhibit D.

 

7.8          Opinions
of Counsel

 

Each
Investor shall have received an opinion of Calfee, Halter & Griswold LLP,
counsel for the Company, dated as of the Closing Date, to the effect and
substantially in the form of Exhibit E.

 

7.9          Fairness
Opinion

 

The
Company’s Board of Directors shall have received the Financial Advisor Opinion
and shall have approved the transactions provided for herein;

 

7.10        Consents

 

The
Company shall have received on or prior to the Closing Date all consents,
authorizations and approvals of governmental, and private parties which are
required to be obtained in order to consummate the transactions contemplated
hereby on or prior to the Closing Date, as indicated on the Schedule 3.8.

 

24

 

7.11        Certificate
of Designations

 

The
Certificate required to designate the number, preferences and rights of the
Series A Stock, as set forth in Exhibit B
shall have been accepted for filing by the Secretary of State for the State of
Delaware.

 

7.12        Management
Rights Letter

 

Each
Investor shall have received a management rights letter signed by the
Corporation substantially in the form attached hereto as Exhibit F
(the “Management Rights Letter”)

 

7.13        Documents
at Closing

 

All
documents required to be Furnished by the Company to each Investor pursuant to Section 8.1 shall have been so Furnished.

 

8.             CLOSING

 

8.1          Deliveries
by the Company to the Investors at the Closing

 

At
the Closing, the Company shall deliver to each Investor the following:

 

(a)           stock
certificates in definitive form registered in the name of each Investor,
representing the Series A Stock being purchased by it at the Closing
pursuant hereto;

 

(b)           a
certified copy of the resolutions adopted by the Board of Directors authorizing
the transactions contemplated by this Agreement;

 

(c)           an
opinion of Calfee, Halter & Griswold LLP, dated as of the Closing Date, to the effect and
substantially in the form of Exhibit E,
as required by Section 7.8;

 

(d)           the
officer’s certificate required by Section 7.3 and certificates of incumbency
and specimen signatures of the signatory officers of the Company;

 

(e)           the
secretary’s certificate required by Section 7.4 and certificates of incumbency
and specimen signatures of the signatory officers of the Company;

 

(f)            good
standing certificates as of a date not more than five (5) days prior to the
Closing Date issued by the Secretary of State of Delaware of the Company;

 

(g)           the
Fairness Opinion required by Section 7.9;

 

(h)           certified
copies of the certificate of incorporation and bylaws of the Company;

 

(i)            the
Stockholders’ Agreement required by Section 7.6;

 

(j)            the
Registration Rights Agreement required by Section 7.7;

 

25

 

(k)           The
Management Rights Letter required by Section 7.13;
and

 

(l)            such
other Documents as the Investors may reasonably request.

 

8.2          Deliveries
by the Investors to the Company at the Closing

 

At
the Closing, the Investors shall deliver to the Company the following:

 

(a)           a
wire transfer of funds or other payment of funds to an account designated by
the Company in the amount of the total aggregate Purchase Price for all shares
of Series A Stock set forth on Schedule A
hereto;

 

(b)           the
Stockholders’ Agreement required by Section 7.6;

 

(c)           the
Registration Rights Agreement required by Section 7.7;
and

 

(d)           such
other Documents as the Company may reasonably request.

 

9.             SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION

 

9.1          Survival
of Representations

 

All
representations, warranties, covenants, indemnities and other agreements made
by a party to this Agreement herein or pursuant hereto shall also be deemed
made on and as of the Closing Date as though such representations, warranties,
covenants, indemnities and other agreements were made on and as of such date,
and all such representations, warranties, covenants, indemnities contained in
the Company Agreements shall survive the Closing and any investigation, audit
or inspection at any time made by or on behalf of any party hereto.  Each Investor shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.

 

9.2          Indemnification

 

In
consideration of each Investor’s execution and delivery of the Company
Agreements and acquiring the Series A Stock thereunder
and in addition to all of the Company’s other obligations under the Company
Agreements, the Company shall defend, protect, indemnify and hold harmless each
Investor and all of their stockholders, partners, members, officers, directors,
employees and direct or indirect investors and any of the foregoing Persons’
agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is sought), and
including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating
to (a) any misrepresentation or breach of any representation or warranty
made by the Company in the Company Agreements or any

 

26

 

other
certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company
contained in the Company Agreements or any other certificate, instrument or
document contemplated hereby or thereby or (c) any cause of action, suit
or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Company Agreements or any other
certificate, instrument or document contemplated hereby or thereby,
(ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Series A
Stock, or (iii) the status of such Investor as an investor in the
Company.  To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.  Except as otherwise set forth herein, the
mechanics and procedures with respect to the rights and obligations under this Section 9.2 shall be the same as those set forth in
Section 6 of the Registration Rights Agreement. 
The aggregate Indemnifiable Liabilities
payable by the Company to the Indemnities pursuant to this Section 9.2
shall be limited to the aggregate Purchase Price plus any accrued but unpaid
dividends owing to the Investors on the Series A Stock.

 

10.          MISCELLANEOUS

 

10.1        Additional
Actions and Documents

 

Each
of the parties hereto hereby agrees to take or cause to be taken such further
actions, to execute, deliver and file or cause to be executed, delivered and
filed such further Documents, and will obtain such consents, as may be
necessary or as may be reasonably requested by the other party hereto in order
to fully effectuate the purposes, terms and conditions of this Agreement.

 

10.2        No
Brokers

 

Except
as otherwise disclosed in this Agreement, each party hereto represents and
warrants to the other parties (and to each of them) that such party has not
engaged any broker, finder or agent in connection with the transactions
contemplated by this Agreement and has not incurred (and will not incur) any
unpaid liability to any broker, finder or agent for any brokerage fees, finders’
fees or commissions, with respect to the transactions contemplated by this
Agreement.  Each party agrees to
indemnify, defend and hold harmless each of the other parties from and against
any and all claims asserted against such parties for any such fees or
commissions by any persons purporting to act or to have acted for or on behalf
of the indemnifying party.

 

10.3        Expenses

 

Subject
to the provisions of this Section 10.3, each party hereto shall pay its own
expenses incident to this Agreement and the transactions contemplated
hereunder, including all legal and accounting fees and disbursements, except
that the Company agrees to pay at the Closing the reasonable out-of-pocket
expenses of Camden, including the fees and other charges of Hogan & Hartson  L.L.P., legal counsel to
Camden, and the fees and expenses of other advisors to Camden in and aggregate
amount not to exceed $75,000.

 

27

 

10.4        Assignment

 

This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchaser of
Series A Stock.  Each Investor shall
have the right to assign its rights and obligations under this Agreement, in
whole or in part, to an Affiliate or to a party reasonably acceptable to the
Company and Camden, in which event such assignee shall be deemed to be an
Investor hereunder with respect to such assigned rights.  The Company shall not assign its rights and
obligations under this Agreement, in whole or in part, whether by operation of
law or otherwise, without the prior written consent of Camden, and any such
assignment contrary to the terms hereof shall be null and void and of no force
and effect.

 

10.5        Entire
Agreement; Amendment

 

This
Agreement, including the Schedules and the Exhibits hereto, constitutes the
entire agreement between the parties hereto with respect to the transactions
contemplated herein, and it supersedes all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein.  No amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in writing and duly
executed and delivered by the Company, Camden, and the holders of the
Series A Stock representing a majority of the issued and outstanding Series A
Stock.

 

10.6        Waiver

 

No
delay or failure on the part of any party hereto in exercising any right, power
or privilege under this Agreement or under any other Documents Furnished in
connection with or pursuant to this Agreement shall impair any such right,
power or privilege or be construed as a waiver of any default or any
acquiescence therein.  No single or
partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege, or the exercise of any
other right, power or privilege.  No
waiver shall be valid against any party hereto unless made in writing and
approved by Camden and the holders of the Series A Stock representing a
majority of the issued and outstanding Series A Stock.  Any waiver effected in accordance with this Section 10.6 shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder or
all such securities and the Company.

 

10.7        Severability

 

If
any part of any provision of this Agreement or any other Agreement or document
given pursuant to or in connection with this Agreement shall be invalid or
unenforceable in any respect, such part shall be ineffective to the extent of
such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provision or the remaining provisions of this
Agreement.

 

10.8        Governing
Law; Jurisdiction; Jury Trial

 

This
Agreement, the rights and obligations of the parties hereto, and any claims or
disputes relating thereto, shall be governed by and construed in accordance
with the laws of the

 

28

 

State of
Delaware (excluding the choice of law rules thereof).  Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in
Wilmington, Delaware for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for
such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.  EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

10.9        Notices

 

All
notices, demands, requests, or other communications which may be or are
required to be given, served, or sent by any party to any other party pursuant
to this Agreement shall be in writing and shall be hand delivered, sent by
overnight courier or mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

 

(i)            If to the
Company:

New
Horizons Worldwide, Inc.

1900 S. State College Blvd., Suite 200

Anaheim, California 92806-6135

Attention:  Thomas J. Bresnan

 

with
a copy (which shall not constitute notice) to:

Calfee,
Halter, & Griswold, LLP

1400
McDonald Investment Center

800
Superior Avenue

Cleveland,
Ohio 44114-2688

Attention:
Scott R. Wilson

 

(ii)           If
to Camden:

Camden
Partners Holdings, LLC

One
South Street, Suite 2150

Baltimore,
Maryland 21202

Attention:  David L. Warnock

 

29

 

with
a copy (which shall not constitute notice) to:

Hogan
& Hartson  L.L.P.

111
South Calvert Street. Suite 1600

Baltimore,
Maryland 21202

Attention:  Thene M. Martin

 

(iii)          If
to any other Investor:

 

To
such Investor’s address shown on Schedule A
hereto.

 

Each
party may designate by notice in accordance with this Section 10.9
a new address to which any notice, demand, request or communication may
thereafter be so given, served or sent. 
Each notice, demand, request, or communication which shall be hand
delivered, sent, mailed, in the manner described above, shall be deemed
sufficiently given, served, sent, received or delivered for all purposes at
such time as it is delivered to the addressee (with the return receipt or the
delivery receipt being deemed conclusive, but not exclusive, evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.

 

10.10      No
Strict Construction

 

The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction
will be applied against any party.

 

10.11      Remedies

 

Each
Investor and each holder of the Series A Stock shall have all rights and
remedies set forth in the Company Agreements and all rights and remedies which
such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law.  Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. 
Furthermore, the Company recognizes that in the event that it fails to
perform, observe, or discharge any or all of its obligations under the Company
Agreements, any remedy at law may prove to be inadequate relief to the
Investors.  The Company therefore agrees
that the Investors shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and
without posting a bond or other security.

 

10.12      Independent
Nature of Investors’ Obligations and Rights

 

The
obligations of each Investor under any Company Agreements are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Company Agreement. 
Nothing contained herein or in any other Company Agreement, and no
action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the

 

30

 

Investors are
in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Company Agreement.  Each Investor confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors.  Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitations,
the rights arising out of this Agreement or out of any other Company
Agreements, and it shall not be necessary for any other Investor to be joined
as an additional party in any proceeding for such purpose.

 

10.13      Headings

 

Section
headings contained in this Agreement are inserted for convenience of reference
only, shall not be deemed to be a part of this Agreement for any purpose, and
shall not in any way define or affect the meaning, construction or scope of any
of the provisions hereof.

 

10.14      Execution
in Counterparts

 

To
facilitate execution, this Agreement may be executed in as many counterparts as
may be required.  It shall not be
necessary that the signatures of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signatures of the persons required to bind any party,
appear on one or more of the counterparts. 
All counterparts shall collectively constitute a single Agreement.  It shall not be necessary in making proof of
this Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.

 

10.15      Limitation
on Benefits

 

The
covenants, undertakings and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the parties hereto
and their respective successors, heirs, executors, administrators, legal
representatives and permitted assigns.

 

31

 

IN
WITNESS WHEREOF, the parties
hereto have duly executed this Agreement, or have caused this Agreement to be
duly executed on their behalf, as of the day and year first above written.

 

	
   

  	
  NEW HORIZONS WORLDWIDE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/Thomas
  J. Bresnan

  	
   

  
	
   

  	
   

  	
  Thomas J. Bresnan

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  INVESTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  CAMDEN PARTNERS STRATEGIC
  FUND III, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Camden Partners Strategic III, LLC,

  
	
   

  	
   

  	
    Its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/David L. Warnock

  	
   

  
	
   

  	
   

  	
  David L. Warnock

  
	
   

  	
   

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  CAMDEN PARTNERS STRATEGIC
  FUND III-A, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Camden Partners Strategic III, LLC,

  
	
   

  	
   

  	
    Its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/David L. Warnock

  	
   

  
	
   

  	
   

  	
  David L. Warnock

  
	
   

  	
   

  	
  Managing Member

  
						

 

 

EXHIBIT A

TO SERIES A STOCK PURCHASE AGREEMENT

DATED AS OF FEBRUARY 7, 2005

 

DEFINITIONS

 

“Act” has the meaning specified in Section 4.8.

 

“Affiliate” means: (a) with respect to a person, any
member of such person’s family; (b) with respect to an entity, any
officer, director, stockholder or partner of or in such entity or of or in any
Affiliate of such entity; and (c) with respect to a person or entity, any
person or entity which directly or indirectly, through one or more
intermediaries, Controls, is Controlled by, or is under common Control with
such person or entity.

 

“Agent” has the meaning specified in Section 3.23(b).

 

“Agreement” means this Series A Stock Purchase
Agreement, including the Disclosure Schedule and all Exhibits hereto.

 

“Assets” means assets of every kind and everything that is or
may be available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property.

 

“Board of Directors” shall mean the Board of Directors of the
Company.

 

“Bylaws” has the meaning specified in Section 3.2.

 

“Camden” means Camden Partners Strategic Fund III, L.P.,
a Delaware limited partnership and Camden Partners Strategic Fund III-A,
L.P., a Delaware limited partnership.

 

“Certificate” has the meaning specified in Section 2.1.

 

“Certificate of Incorporation” has the
meaning specified in Section 3.2.

 

“Claims” means all demands, claims, actions or causes of
action, assessments, complaints, directives, citations, information requests
issued by government authority, legal proceedings, orders, notices of potential
responsibility, losses, damages (including, without limitation, diminution in
value), liabilities, sanctions, costs and expenses, including, without
limitation, interest, penalties and attorneys’ and experts’ fees and
disbursements.

 

“Closing” has the meaning specified in Section 2.3
of this Agreement.

 

“Closing Date” has the meaning specified in Section 2.2.

 

“Code” means the Internal Revenue Code of 1986, as amended,
and all Laws promulgated pursuant thereto or in connection therewith.

 

 

“Commission” means the Securities and
Exchange Commission.

 

“Common Stock” means the common stock, $.01 par value per
share, of the Company.

 

“Company” means New Horizons Worldwide, Inc., a Delaware
corporation.

 

“Company Agreements” has the meaning set forth in Section 3.1 of this Agreement.

 

“Contractual Obligation” means, as to any
Person, any agreement, undertaking, contract, indenture, mortgage, deed of
trust, credit agreement, note, evidence of indebtedness or other instrument or
restriction, written or otherwise, to which such Person is a party or by which
it or any of its property is bound.

 

“Control” means possession, directly or indirectly, of power
to direct or cause the direction of management or policies (whether through
ownership of voting securities, by Agreement or otherwise).

 

“Conversion Stock” has the meaning specified in Section 5.2.

 

“Defined Benefit Plan” means a Plan that is or was a “defined benefit plan” as such term is defined in
Section 3(35) of ERISA.

 

“Disclosure Schedule” means the disclosure schedule
identified as the Disclosure Schedule to the Agreement.

 

“Documents” means any paper or other material (including,
without limitation, computer storage media) on which is recorded (by letters,
numbers or other marks) information that may be evidentially used, including,
without limitation, legal opinions, mortgages, indentures, notes, instruments,
leases, Agreements, insurance policies, reports, studies, financial statements
(including, without limitation, the notes thereto), other written financial information,
schedules, certificates, charts, maps, plans, photographs, letters, memoranda
and all similar materials.

 

“DOL” means the
United States Department of Labor.

 

“8-K Filing” has the meaning specified in Section 5.9.

 

“Encumbrance” means any mortgage, lien, pledge, encumbrance,
security interest, deed of trust, option, encroachment, reservation, order,
decree, judgment, condition, restriction, charge, Agreement, claim or equity of
any kind.

 

“Environmental
Claims” means all Claims pursuant to Environmental Laws, including
but not limited to, those based on, arising out of or otherwise relating to:
(i) the Remediation, presence or Release of, or exposure to, Hazardous
Materials or other environmental conditions initiated, existing or occurring
prior to the Closing Date at, on, under, above, from, or about any Real
Property or any real properties formerly owned, leased or

 

2

 

operated by the Company or any of its
predecessors or Affiliates; (ii) the off-site Release, treatment,
transportation, storage or disposal prior to the Closing Date of Hazardous
Materials originating from the Company’s Assets or business; (iii) any
violations of Environmental Laws by the Company or its Subsidiaries prior to
the Closing Date, including reasonable expenditures necessary to cause the
Company or its Subsidiaries to be in compliance with or resolve violations of
Environmental Laws.

 

“Environmental Laws” means any Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act), now or hereafter in effect relating to the generation,
production, installation, use, storage, treatment, transportation, release,
threatened release, or disposal of Hazardous Materials, or noise control, or
the protection of human health, safety, natural resources, animal health or
welfare, or the environment.

 

“Environmental Permits” means any permit, licenses,
certificates and approvals required under Environmental Laws.

 

“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended, and all Laws promulgated pursuant
thereto or in connection therewith.

 

“ESOP” means an “employee stock option plan”
as such term is defined in Section 407(d)(6) of ERISA
or Section 4975(e)(7) of the Code.

 

“Exchange Act” means the Exchange Act of
1934, as amended and all rules and regulations promulgated pursuant thereto or
in connection therewith.

 

“Exhibit” means an exhibit attached to the Agreement.

 

“Financial Advisor Opinion” means an opinion
from the independent financial advisor to the Company confirming that the
consideration being paid in connection with the transactions contemplated by
this Agreement is fair from a financial point of view to the Company.

 

“Franchise Agreements” means the franchise agreements listed
in Section 3.18 of the Disclosure
Schedule.

 

“Furnished” means supplied, delivered, provided or made
available in any way.

 

“GAAP” means
United States generally accepted accounting principles in effect from time to
time.

 

“Governmental Entity” means the government
of any nation, state, city, locality or other political subdivision of any
thereof, and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government or any international
regulatory body having or asserting any jurisdiction of a Person, its business
or its property.

 

“Hazardous Materials” means any wastes, substances,
radiation, or materials (whether solids, liquids or gases): (i) which are
hazardous, toxic, infectious, explosive,

 

3

 

radioactive,
carcinogenic, or mutagenic; (ii) which are or become defined as “pollutants,”
“contaminants,” “hazardous materials,” “hazardous wastes,” “hazardous
substances,” “toxic substances,” “radioactive materials,” “solid wastes,” or
other similar designations in, or otherwise subject to regulation under, any
Environmental Laws; (iii) the presence of which on the Real Property cause
or threaten to cause a nuisance pursuant to applicable statutory or common law
upon the Real Property or to adjacent properties; (iv) which contain
without limitation polychlorinated biphenyls (PCBs), asbestos or
asbestos-containing materials, lead-based paints, urea-formaldehyde foam
insulation, or petroleum or petroleum products (including, without limitation,
crude oil or any fraction thereof); or (v) which pose a hazard to human
health, safety, natural resources, industrial hygiene, or the environment, or
an impediment to working conditions.

 

“Indemnitees” has
the meaning specified in Section 9.2.

 

“Indemnified Liabilities” has the meaning
specified in Section 9.2.

 

“Investor” means each of the persons listed on Schedule A hereto.

 

“Insolvent” has the meaning specified in Section 3.4.

 

“Intellectual Property” has the meaning specified in Section 3.11.

 

“Knowledge of the Company” means the knowledge of those
individuals set forth on Schedule B and
it shall be deemed that such persons shall have made reasonable inquiry of all
relevant employees and consultants of the Company and any of its Subsidiaries.

 

“Laws” means all foreign, federal, state and local statutes,
laws, ordinances, regulations, rules, resolutions, orders, determinations,
writs, injunctions, awards (including, without limitation, awards of any arbitrator),
judgments and decrees applicable to the specified persons or entities and to
the businesses and Assets thereof (including, without limitation, Laws relating
to securities registration and regulation; the sale, leasing, ownership or
management of real property; employment practices, terms and conditions, and
wages and hours; building standards, land use and zoning; safety, health and
fire prevention; and environmental protection, including Environmental Laws).

 

“Leases” has the meaning specified in Section 3.9.

 

“Material Adverse Effect” means any material
adverse change in or affecting (i) the business, properties, Assets,
liabilities, operations, results of operations, management, condition,
financial or otherwise, or prospects of the Company and its Subsidiaries, taken
as a whole, or (ii) the ability of the Company or its Subsidiaries to
consummate the transactions contemplated by or to perform its obligations under
the Company Agreements other than any effect resulting from changes in general
economic conditions.

 

“Multiemployer Plan” means a “multiemployer
plan” as such term is defined in Section 3(37) of ERISA.

 

“1940 Act” has the meaning specified in Section 3.29.

 

4

 

“Ordinary Course of Business” means ordinary course of
business consistent with past business practices of the Company.

 

“Other Arrangement” means a benefit program or practice
providing for bonuses, incentive compensation, deferred compensation, vacation
pay, severance pay, insurance, restricted stock, stock options, employee
discounts, company cars, tuition reimbursement or any other perquisite or
benefit (including, without limitation, any fringe benefit under
Section 132 of the Code) to employees, officers or independent contractors
of the Company or any of its Subsidiaries that is not a Plan.

 

“Pension Plan” means a Plan that is an “employee
pension benefit plan” as such term is defined in Section 3(2) of ERISA.

 

“Permitted Encumbrance” means (i) mechanics’, carriers’,
workmen’s, repairmen’s or other like Encumbrances arising or incurred in the
Ordinary Course of Business, (ii) Encumbrances arising under original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the Ordinary Course of Business and under which the
Company or a Subsidiary is not in default, (iii) Encumbrances for current
Taxes and utilities not yet due and payable or which are being contested in
good faith and, for which in each case appropriate reserves have been set aside
in accordance with GAAP, (iv) imperfections of
title, if any, that do not materially impair the value of or continued use and
operation of any asset to which they relate in the conduct of the business of
the Company or any Subsidiary as presently conducted, or (v) easements,
covenants, rights-of-way and other land use restrictions or conditions of
record or which would be shown by a current accurate survey of any of the Real
Property.

 

“Person” means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or department or
agency of a government.

 

“PBGC” means
the Pension Benefit Guaranty Corporation or its successor.

 

“Plan” means any plan, program or arrangement, whether or not
written, that is an “employee benefit plan”
as such term is defined in Section 3(3) of ERISA
and (a) which is established or maintained by the Company or any of its
Subsidiaries; (b) to which the Company or any of its Subsidiaries
contributed or is obligated to contribute or to fund or provide benefits; or
(c) which provides or promises benefits to any person who performs or who
has performed services for the Company or any of its Subsidiaries and because
of those services is (i) a participant therein or (ii) entitled to
benefits thereunder.

 

“Purchase Price” has the meaning specified in Section 2.2.

 

“Qualified Plan” means a Pension Plan that
satisfies, or is intended by the Company to satisfy, the requirements for tax
qualifications described in Section 401 of the Code.

 

“Real Property” means the real property owned, operated or
leased by the Company or its Subsidiaries as of December 31, 2002, and any
additional real property owned, operated or leased since that date, and, for
purposes of Section 3.16, any real
property formerly owned or operated by the Company, its Subsidiaries or any
predecessor in interest thereto.

 

5

 

“Registration Rights Agreement” means the
Registration Rights Agreement dated as of the Closing Date by and among the
Company and certain parties named therein.

 

“Regulatory Approvals” means any and all
certificates, permits, licenses, franchises, concessions, grants, consents,
approvals, orders, registrations, authorizations, waivers, variances or
clearance from a Governmental Entity.

 

“Release”
means any presence, emission, spill, seepage, leak, escape, leaching,
discharge, injection, pumping, pouring, emptying, dumping, disposal, migration,
or release of Hazardous Materials from any source into or upon the environment,
including the air, soil, improvements, surface water, groundwater, the sewer,
septic system, storm drain, publicly owned treatment works, or waste treatment,
storage, or disposal systems.

 

“Remediation”
means any investigation, clean-up, removal
action, remedial action, restoration, repair, response action, corrective
action, monitoring, sampling and analysis, installation, reclamation, closure,
or post-closure in connection with the suspected, threatened or actual Release
of Hazardous Materials.

 

“SEC Reports” means all proxy statements,
registration statements, reports, schedules, forms, statements, and other
documents filed or required to be filed by the Company and any of its
Subsidiaries with the Commission pursuant to the Securities Act or the Exchange
Act since January 1, 2001.

 

“Section” means a Section (or a subsection) of the Agreement.

 

“Securities” has the meaning specified in Section 3.23.

 

“Securities Act”
means the Securities Act of 1933, as amended, and all rules and regulations
promulgated pursuant thereto or in connection therewith.

 

“Series A Stock”
has the meaning set forth in Section 2.1 of
this Agreement.

 

“Significant Subsidiary” has the meaning set forth in Section
1-02 of Regulation S-X, promulgated by the Commission under the Exchange Act.

 

“Stockholders’ Agreement”
means the Stockholders’ Agreement dated as of the Closing Date by and among the
Company and certain parties named therein.

 

“Subsidiary” has the meaning set forth in Section 3.2 of this Agreement.

 

“Tax Return” means any return, report,
statement, schedule, notice, form or other document or information filed with
or submitted to any government authority in connection with the determination,
assessment, collection, or payment of any Taxes.

 

“Taxes” means all federal, state, local and foreign taxes
(including, without limitation, income, profit, franchise, sales, use, real
property, personal property, ad valorem, excise,
employment, social security and wage withholding taxes) and installments of
estimated taxes, assessments, deficiencies, levies, imports, duties,
withholdings, or other similar charges of

 

6

 

every kind,
character or description imposed by any governmental or quasi-governmental
authorities, and any interest, penalties or additions to tax imposed thereon or
in connection therewith.

 

“Third Party Intellectual Property Rights” has the meaning
specified in Section 3.11(b).

 

“Welfare Plan” means a Plan that is an “employee welfare benefit plan” as such term is defined in
Section 3(1) of ERISA

 

7Exhibit 10.2

 

STOCKHOLDERS’ AGREEMENT

 

AMONG

 

NEW HORIZONS WORLDWIDE, INC.

 

AND

 

THE STOCKHOLDERS LISTED ON EXHIBIT B
HERETO

 

 

DATED FEBRUARY 8, 2005

 

 

STOCKHOLDERS’ AGREEMENT

 

THIS
STOCKHOLDERS’ AGREEMENT (this “Agreement”)
is entered into as of February 8, 2005 by and among New Horizons
Worldwide, Inc., a Delaware corporation (the “Company”),
Camden Partners Strategic Fund III, L.P., a Delaware limited partnership, Camden Partners Strategic Fund III-A, L.P., a
Delaware limited partnership (collectively, “Camden”)
and other parties identified as Series A Preferred Stockholders on Exhibit B hereto, as may be amended
from time to time (collectively with Camden, the “Series A
Preferred Stockholders”).

 

WHEREAS,
simultaneously with the execution hereof, the Company has issued to the Series
A Preferred Stockholders 1,600,000 shares of Series A Convertible Preferred
Stock pursuant to a Series A Stock Purchase Agreement dated as of February 7,
2005 among the Company and the Series A Preferred Stockholders (the “Purchase Agreement”); and

 

WHEREAS,
it is a condition to the obligations of the Series A Preferred Stockholders
under the Purchase Agreement that this Agreement be executed by the parties
hereto, in order to provide, among other things, for certain rights and
responsibilities as set forth herein.

 

NOW,
THEREFORE, for and in consideration of the foregoing and of
the mutual covenants and agreements hereinafter set forth, the parties hereto
agree as follows:

 

1.                                      DEFINITIONS

 

For all purposes
of this Agreement, capitalized terms specified in Exhibit A
shall have the meanings set forth in Exhibit A,
except as otherwise expressly provided herein.

 

2.                                      DIRECTORS OF THE
COMPANY

 

In accordance with the Charter and the Bylaws of the
Company, one director of the Company shall be elected by the holders of the
Series A Convertible Preferred Stock (the “Series A Preferred
Director”) and all other directors of the Company shall be elected
by the holders of the Common Stock and the Series A Preferred Stock voting
together as a single class (with each share of Series A Preferred Stock
entitled to that number of votes equal to the number of full shares of Common
Stock into which such share of Series A Preferred Stock is then convertible
(calculated by rounding any fractional share down to the nearest whole number)
multiplied by .8260.).

 

Until this Agreement is terminated as provided herein,
the Company and each Series A Preferred Stockholder (for so long as such Series
A Preferred Stockholder owns any security of the Company) shall take or cause
to be taken all reasonably necessary actions within its respective power and
authority and in accordance with applicable law as may be required to effect
the agreements contained in this Section 2.

 

2.1.                            Board
of Directors

 

For so long as the holders of the Series A Convertible
Preferred Stock are entitled to nominate and elect a Series A Preferred
Director as set forth in the Charter, the Company and

 

 

each
Series A Preferred Stockholder shall take or cause to be taken all necessary
actions as may be required:

 

(1)                                  to
establish the authorized size of the Board of Directors of the Company at ten
(10) directors;

 

(2)                                  to
not authorize an increase in the size of the Board of Directors of the Company
to greater than ten (10) directors or a decrease in the size of the Board of
Directors to less than seven (7) directors;

 

(3)                                  to
cause to be elected to the Board of Directors the Series A Preferred Director
designated in writing from time to time by the holders of a majority of the
Series A Preferred Stock, such person initially being David L. Warnock;

 

(4)                                  to maintain
the voting requirements for actions of the Board of Directors at a majority of
directors present at a meeting at which there is a quorum, except in respect of
such matters as this Agreement, the Charter or the Bylaws or law may impose a
greater voting requirement;

 

(5)                                  to
cause to be removed forthwith from the Board of Directors any Series A
Preferred Director when removal is requested for any reason, with or without
cause, by the holders of a majority of the Series A Preferred Stock, and not to
remove a Series A Preferred Director for any other reason during the time of
the designation rights of the Series A Preferred Stockholders under this Section 2;

 

(6)                                  in
the case of death, resignation, or other removal as herein provided of any
Series A Preferred Director, to elect only another person designated by the
holders of a majority of the Series A Preferred Stock to fill the vacancy
created thereby; and

 

(7)                                  to
prevent any action from being taken by the Board of Directors of the Company
during the pendency of any vacancy due to death, resignation or removal of any
Series A Preferred Director, unless the Series A Preferred Stockholders shall
have failed for a period of five Business Days after written notice from the
Company of the vacancy to designate a replacement.

 

2.2.                            Board
Committees

 

For so long as the holders of the Series A Convertible
Preferred Stock are entitled to nominate and elect a Series A Preferred
Director as set forth in the Charter and subject to the applicable listing
standards of Nasdaq or any other any securities exchange on which any of the
Company’s securities are then traded or listed and any applicable Law, the
Board of Directors will not establish an executive committee authorized to
exercise the power of the Board of Directors generally unless the Series A
Preferred Director is granted representation on such committee proportional to
its representation on the Board of Directors, nor will the Board of Directors
establish or employ committees (unless the Series A Preferred Director is
granted proportional representation thereon) as a means designed to circumvent
or having the effect of

 

2

 

circumventing
the rights of the Series A Preferred Director under this Agreement or the
Charter to representation on the Board of Directors.

 

2.3.                            Election
of an Additional Independent Director

 

The Company will use its commercially reasonable
efforts to cause to be elected to the Board of Directors an additional
independent director as defined by the applicable listing standards of Nasdaq
or any other any securities exchange on which any of the Company’s securities
are then traded or listed with appropriate business background in the Company’s
industry within the lesser of (i) twelve (12) months from the date of this
Agreement or (ii) the time frame required by the standards of Nasdaq or any
other any securities exchange on which any of the Company’s securities are then
traded or listed to maintain a majority of independent directors on the Board
of Directors.

 

2.4                               Board
Compensation

 

The Series A Preferred Director shall be entitled to
receive such cash, equity-linked or other compensation and expense
reimbursement arrangements as shall be provided to each other non-employee
member of the Board of Directors in performing their duties as directors.

 

2.5.                            Board
Observer Rights

 

For so long as Camden owns twenty-five percent (25%) of
the shares of Series A Convertible Preferred Stock (as adjusted for stock
splits, stock combinations and similar events) issued on the date hereof, the Company agrees that Camden shall be permitted
to send one (1) representative (the “Representative”)
to attend, as a nonvoting observer, all meetings of the Company’s Board of
Directors or committees thereof and, in this respect, the Company shall provide
the Representative copies of all notices, minutes, consents and other materials
that it provides to its directors; provided, however, that the
Company reserves the right to exclude the Representative from access to any
material or meeting or portion thereof if the Company in good faith believes
upon the advice of counsel that such exclusion is reasonably necessary to (i)
preserve the attorney-client privilege or (ii) comply with the listing
standards of Nasdaq or any other securities exchange on which any of the
Company’s securities are then listed or traded and any applicable Law,
including without limitation the need to hold periodic executive sessions of
the Company’s Board of Directors.

 

3.                                      TRANSFER OF
EQUITY SECURITIES

 

3.1                               Permitted
Transfers

 

Subject to Section 3.2, a Series A Preferred Stockholder may transfer
its shares of Series A Preferred Stock without restriction.  In connection with any transfer under this Section 3.1, the transferee shall hold such Series A
Preferred Stock subject to the same restrictions applicable to its transferor
and shall agree to be bound by the terms of this Agreement.  Notwithstanding anything to the contrary
contained in this Section 3.1,
no Series A Preferred Stockholder shall be

 

3

 

permitted at any time to transfer to any Person any
shares of Series A Preferred Stock if such transfer would not be in compliance
with the Act or any applicable state securities laws.

 

3.2                               Right
of First Refusal

 

If any Series A Preferred Stockholder or any Person
who acquires any Series A Preferred Stock from a Series A Preferred Stockholder
in accordance with Section 3.2
(the “Transferring Holder”) shall
propose to Transfer to any Person (a “Proposed Transferee”)
any shares of Series A Preferred Stock, such Transfer shall be conditional upon
the satisfaction of the following conditions precedent:

 

(a)                                  Such
Transferring Holder shall first offer the Series A Preferred Stock that it
desires to Transfer (the “Offered Securities”)
to the Company, at the same price and on the same terms that the Transferring
Holder intends to Transfer the Offered Securities to the Proposed
Transferee.  Such offer shall be made by
a written notice (the “Notice of Proposed
Transfer”) delivered to the Company not less than twenty (20)
days prior to the proposed Transfer. 
Such notice shall set forth the identity of the Proposed Transferee, the
Offered Securities proposed to be sold, the terms and conditions of the
Proposed Transfer, including price per share, and any other material terms and
conditions or material facts relating to the proposed Transfer.  In addition, the Transferring Holder shall
provide to the Company all such other information relating to the Offered
Securities, the Proposed Transferee and the Proposed Transfer as the Company
may reasonably request.

 

(b)                                  Thereafter,
the Company shall have the right, exercisable within twenty (20) days after
receipt of the Notice of Proposed Transfer from the Transferring Holder, to
purchase from the Transferring Holder the Offered Securities.

 

(c)                                  If
the Company does not accept the offer made by the Transferring Holder with
respect to all of the Offered Securities within the time period provided above,
then the Transferring Holder shall have the right for a period of sixty (60)
days following the aforementioned twenty (20) day period, to Transfer all, but
not less than all, of such Offered Securities, but only to the Proposed Transferee,
at not less than the price, and upon terms not more favorable to the Proposed
Transferee, than were contained in the Notice of Proposed Transfer.  Offered Securities not sold within such
60-day period shall continue to be subject to the requirements of this Section 3.2.

 

4.                                      PREEMPTIVE
RIGHTS

 

(a)                                  The
Company hereby grants to each Series A Preferred Stockholder who owns at least
100,000 shares of Series A Preferred Stock (as adjusted for stock splits, stock
combinations and similar events) the right (but not the obligation) to purchase
its pro rata share of any New Securities that the Company may, from time to
time, propose to sell and issue.  Each
Series A Preferred Stockholders’ pro rata share, for purposes of this right, is
the ratio of the number of shares of Common Stock Equivalents then held by the
Series A Preferred Stockholder immediately prior to the issuance of the New
Securities, on an as converted basis, and the number of shares of Common Stock
Equivalents outstanding (whether vested or unvested)

 

4

 

immediately
prior to the issuance of the New Securities, on an as converted basis.  For purposes of this Section 4,
“New Securities” shall mean any common
stock or preferred stock of the Company, whether now authorized or not, and
rights, options or warrants to purchase such common stock or preferred stock,
and securities of any type whatsoever that are, or by their terms may become,
convertible into common stock or preferred stock of the Company, but shall not
include: (a) shares of Common Stock to be issued upon conversion of the Series
A Preferred Stock, (b) shares of Common Stock, warrants, options and other
rights to purchase shares of Common Stock and securities convertible into
shares of Common Stock, issued to officers, directors and employees of, and
consultants to, the Corporation as compensation for bona fide
services provided or to be provided to the Company by such persons and approved
by the Board of Directors or the Compensation Committee, as the case may be and
(iii) an aggregate of 75,000 shares of Common Stock or Common Stock issuable
upon the exercise of options, warrants or other rights of the Company issued to
financial institutions or lessors in connection with commercial credit
transactions, equipment financings or similar transactions approved by the
Board of Directors, and the issuance of Common Stock upon the exercise of any
such options, warrants or other rights.

 

(b)                                 In
the event the Company proposes to undertake an issuance of New Securities, it
shall give the Series A Preferred Stockholders eligible to exercise rights
under this Section 4 written notice of its intention, describing the type
of New Securities, the price and the general terms upon which the Company
proposes to issue the same (a “Sale Notice”).  Each Series A Preferred Stockholder shall
have thirty (30) days from the date of receipt of any such Sale Notice to elect
to purchase all or a portion of its pro rata share of the New Securities for
the price and upon the general terms specified in the Sale Notice by giving
written notice to the Company and stating therein the quantity of New
Securities to be purchased.

 

(c)                                  In
the event the Series A Preferred Stockholders fail to exercise fully the rights
granted hereunder within the 30-day period, the Company shall have ninety (90)
days to effect the sale of the New Securities at a price and on terms
substantially the same as those offered to the Series A Preferred Stockholders
in the Sale Notice.  In the event the sale
is not effected within the 90-day period, the Company shall not issue and sell
the New Securities without again offering the New Securities to the Series A
Preferred Stockholders in the manner provided in this Section 4.

 

(d)                                 Notwithstanding Section 6.4 below, each Series A Preferred Stockholder
may, from time to time, assign its rights under this Section 4 or any portion thereof to any of its Affiliates
who agree to be bound under this Agreement. 
The aggregate pro rata share of each Series A Preferred Stockholder and
its Affiliates as a group (a “Stockholder Group”)
shall be equal for all purposes to the number of securities which would have
constituted the pro rata share of such Series A Preferred Stockholder had no
such assignment been effected, and may be allocated among the members of the
Stockholder Group in any manner agreed upon by the Stockholder Group.  For purposes of this Section 4, the definition of “Affiliate” shall only include affiliated entities and shall
not include individuals.

 

(e)                                  Notwithstanding
the foregoing, (i) in the event that the Board of Directors determines in good
faith that the Company may be adversely affected by a delay in closing the

 

5

 

sale
of the New Securities, holders of a majority of the Series A Preferred Stock
with such rights granted hereunder may waive the rights granted in this Section 4 on behalf of all Series A
Preferred Stockholders with such rights granted hereunder prior to the end of
the 30-day period and upon receipt of the acceptances or waivers described
herein, the Company shall be free to consummate the issuance and sale of the
New Securities and (ii) in no event shall the Company be required to sell any
New Securities to a Series A Preferred Stockholder that is not an “accredited
investor” as such term is defined under the Act at the time of such proposed
sale.

 

5.                                      ADDITIONAL
COVENANTS OF THE COMPANY

 

The Company hereby covenants as set forth in the
following subsections with each Series A Preferred Stockholder as follows:

 

5.1.                            Financial
and Business Information

 

For so long as the Series A Preferred Stockholders own
at least fifty percent (50%) of the Series A Convertible Preferred Stock issued
on the date hereof, the Company shall furnish to the Series A Preferred
Stockholders:

 

(1)                                  as
soon as available and in any event within sixty (60) days after the end of each
fiscal year of the Company (or such shorter period as may be prescribed by law
or regulation with respect to annual filings on Form 10-K), a copy of the
audited balance sheet of the Company as of the end of such fiscal year and the
related audited statements of income and cash flows for the fiscal year, all
prepared in reasonable detail, and certified by independent certified public
accountants of recognized national standing as presenting fairly in all
material respects the financial position of the Company and approved by the
Board of Directors of the Company, including footnotes and setting forth in
comparative form the corresponding figures for the corresponding period of the
preceding fiscal year, prepared in accordance with GAAP, consistently applied;

 

(2)                                  as
soon as available and in any event within forty (40) days after the end of each
fiscal quarter of the Company (or such shorter period as may be prescribed by
law or regulation with respect to quarterly filings on Form 10-Q) (other than
the last quarter of each fiscal year), a copy of the unaudited balance sheet of
the Company as of the end of the quarter and the related unaudited statements
of income and cash flows of the Company for the periods commencing at the end
of the previous quarter and ending at the end of the quarter and commencing at
the beginning of the fiscal year and ending at the end of the quarter, in each
case setting forth in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, prepared in accordance with
GAAP, consistently applied, subject only to year-end audit adjustments, except
that such financial statements need not contain the notes required by GAAP, and
certified by the principal financial or accounting officer of the Company and
accompanied by a narrative management discussion and analysis of the operating
results and financial condition;

 

(3)                                  within
thirty (30) days after the end of each calendar month,  a copy of the unaudited balance sheet of the
Company as of the end of the month and the related unaudited

 

6

 

statements
of income and cash flows of the Company for the periods commencing at the end
of the previous month and ending at the end of the month and commencing at the
beginning of the fiscal year and ending at the end of the month, in each case
setting forth in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, prepared in accordance with
GAAP, consistently applied, subject only to year-end audit adjustments, except
that such financial statements need not contain the notes required by GAAP, and
certified by the principal financial or accounting officer of the Company and
accompanied by a narrative management discussion and analysis of the operating
results and financial condition;

 

(4)                                  as
soon as available and in any event no later than thirty (30) days after the
first day of each fiscal year of the Company beginning after the date hereof,
an annual operating plan and budget (including cash flow data) for the Company
for the fiscal year, each prepared in reasonable detail, including monthly
projections, as each operating plan and budget has been approved by the Board
of Directors of the Company;

 

(5)                                  as
soon as available, monthly updates to the information provided in subsection (4)
above;

 

(6)                                  at
least annually, letters from the Company’s independent accountants regarding
the sufficiency of internal controls and other matters customarily addressed in
“management letters;”;

 

(7)                                  Within
five days after receipt, a copy of any notification received by the Company
regarding (i) any defaults on any material contracts, loans or leases to which
the Company is a party or (ii) (A) any material litigation filed against the
Company or (B) any overtly threatened litigation that the Company reasonably
believes may be filed against the Company and may have a material adverse effect
on the condition (financial or other), business, results of operations, ability
to conduct business or properties of the Company and its subsidiaries, taken as
a whole; and

 

(8)                                  promptly,
from time to time, such other information (in writing if so required) regarding
the assets and properties and operations, business affairs, profit and loss
statements, budgets, initial projections and financial condition of the Company
as Camden may reasonably request.

 

5.2.                            Restrictive
Agreements Prohibited

 

The Company shall not become a party to any agreement
which by its terms or effects restricts or hinders the Company’s performance
of, or obligations pursuant to, this Agreement, the Registration Rights
Agreement, the Charter or the Bylaws.

 

5.3                               Executive
Vice President

 

In the event the Company acquires or establishes an
institution offering accredited post-secondary programs, the Company shall use
commercially reasonable efforts to identify and hire an executive vice
president for the business conducted thereby. 
The hiring of such an executive vice president shall be subject to the
approval of Camden.

 

7

 

6.                                      MISCELLANEOUS

 

6.1.                            Legend

 

The certificates or other evidence representing the
Series A Preferred Stock shall bear a legend (the “Legend”)
in substantially the following form:

 

THE VOTING RIGHTS AND
OBLIGATIONS WITH RESPECT TO, AND SALE OR OTHER DISPOSITION OF, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY AND SUBJECT TO THE PROVISIONS
OF A STOCKHOLDERS’ AGREEMENT DATED AS OF FEBRUARY 8, 2005, A COPY OF WHICH
IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
STATE SECURITIES LAWS, MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITEIS UNDER
SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW, (II) A “NO ACTION” LETTER OF
THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH SALE OR OFFER, OR
(III) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED WITH RESPECT TO SUCH SALE OR OFFER.

 

6.2.                            Specific
Performance

 

In addition to any other remedies which the Series A
Preferred Stockholders may have at law or in equity, the Company and the Series
A Preferred Stockholders hereby acknowledge that the harm which might result to
the Series A Preferred Stockholders from breaches by the Company or the Series
A Preferred Stockholders of their respective obligations to take all necessary
actions with respect to the election and the removal of directors of the
Company cannot be adequately compensated by damages.  Accordingly, the Company and each Series A
Preferred Stockholder agrees that each other Series A Preferred Stockholder
shall have the right to have all obligations and undertakings set forth in Section 2 specifically performed by the Company or the
other Series A Preferred Stockholders, as the case may be, and that any other
Series A Preferred Stockholder shall have the right to obtain an order or
decree of such specific performance in any of the courts of the United States
of America or of any state or other political subdivision thereof.

 

8

 

6.3.                            Termination

 

Unless earlier terminated as provided herein, this
Agreement, and the agreements, covenants and obligations of the parties
hereunder, shall forthwith terminate and become wholly void and of no effect at
such time as there are less twenty-five percent (25%) of the Series A Preferred
Stock issued on the date hereof outstanding (subject to adjustment for splits,
combinations and the like).

 

6.4.                            Assignment

 

Except as expressly contemplated by Section 3, neither the Company nor any
Series A Preferred Stockholder shall assign this Agreement, in whole or in
part, whether by operation of law or otherwise, unless such person shall have
obtained the prior written consent of all the other parties.  Any purported assignment of this Agreement
contrary to the terms hereof shall be null and void and of no force and effect.

 

6.5.                            Entire Agreement; Amendment;
and Waivers

 

This Agreement, including the Exhibits hereto,
constitutes the entire agreement among the parties hereto with respect to the
matters provided for herein, and it supersedes all prior oral or written
agreements, commitments or understandings with respect to the matters provided
for herein.  No amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in writing and duly
executed and delivered by the Company and the holders of the Series A
Preferred Stock representing a majority of the outstanding shares of Series A
Preferred Stock.  No delay or
failure on the part of any party hereto in exercising any right, power or
privilege under this Agreement or under any other instruments given in
connection with or pursuant to this Agreement shall impair any such right,
power or privilege or be construed as a waiver of any default or any
acquiescence therein.  No single or
partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege, or the exercise of any
other right, power or privilege.  No waiver shall be valid against any party
hereto unless made in writing and approved by the holders of the Series A
Preferred Stock representing a majority of the outstanding shares of Series A
Preferred Stock.  Any waiver effected in
accordance with this Section 6.5
shall be binding upon each Series A Preferred Stockholder whether or not they
have signed the instrument providing for such waiver.  Upon the effectuation of each such waiver or
amendment, the Company shall promptly give written notice thereof to the Series
A Preferred Stockholders who have not previously consented thereto in writing.

 

6.6.                            No
Third Party Beneficiaries

 

It is the explicit intention of the parties hereto
that no person or entity other than the parties hereto is or shall be entitled
to bring any action to enforce any provision of this Agreement against any of
the parties hereto, and the covenants, undertakings and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable
only by, the

 

9

 

parties
hereto or their respective successors, heirs, executors, administrators, legal
representatives and permitted assigns.

 

6.7.                            Binding Effect

 

This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors, heirs,
executors, administrators, legal representatives and permitted assigns.

 

6.8.                            Governing Law

 

This Agreement, the rights
and obligations of the parties hereto, and any claims or disputes relating
thereto, shall be governed by and construed in accordance with the laws of the
State of Delaware (excluding the choice of law rules thereof).  Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in
Wilmington, Delaware for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for
such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

6.9.                            Notices

 

All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:

 

(i)                                     If
to the Company:

New Horizons Worldwide, Inc.

1900 S. State College Blvd., Suite 200

Anaheim, California

Attention: 
Thomas J. Bresnan

 

with a copy (which shall not constitute notice) to:

Calfee, Halter, & Griswold, LLP

1400 McDonald Investment Center

 

10

 

800 Superior Avenue

Cleveland, Ohio 44114-2688

Attention: Scott R. Wilson

 

(ii)                                  If
to Camden:

Camden Partners Holdings, LLC

One South Street, Suite 2150

Baltimore, Maryland 21202

Attention: 
David L. Warnock

 

with a copy (which shall not constitute notice) to:

Hogan & Hartson L.L.P.

111 South Calvert Street. Suite 1600

Baltimore, Maryland 21202

Attention: 
Thene M. Martin

 

(iii)                               If
to any other Series A Preferred Stockholder:

 

To such Series A Preferred Stockholders’ address shown
on Exhibit B hereto.

 

Each
party may designate by notice in accordance with this Section 6.9
a new address to which any notice, demand, request or communication may
thereafter be so given, served or sent. 
Each notice, demand, request, or communication which shall be hand
delivered, sent, mailed, in the manner described above, shall be deemed
sufficiently given, served, sent, received or delivered for all purposes at
such time as it is delivered to the addressee (with the return receipt or the
delivery receipt being deemed conclusive, but not exclusive, evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.

 

6.10.                     Aggregation
of Stock

 

All Common Stock Equivalents held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.

 

6.11                        Execution in Counterparts

 

To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each counterpart;
but it shall be sufficient that the signature of, or on behalf of, each party,
or that the signatures of the persons required to bind any party, appear on one
or more of the counterparts.  All
counterparts shall collectively constitute a single agreement.  It shall not be necessary in making proof of
this Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.

 

[Signatures Appear on
Following Pages]

 

11

 

IN WITNESS WHEREOF, the
undersigned have duly executed this Stockholders’ Agreement, or have caused
this Stockholders’ Agreement to be duly executed on their behalf, as of the day
and year first hereinabove set forth.

 

	
   

  	
  NEW HORIZONS WORLDWIDE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Thomas
  J. Bresnan

  	
   

  
	
   

  	
  Name:
  Thomas Bresnan

  
	
   

  	
  Title: President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  STOCKHOLDERS:

  
	
   

  	
   

  
	
   

  	
  CAMDEN
  PARTNERS STRATEGIC
  FUND III, L.P.

  
	
   

  
	
   

  	
   

  
	
   

  	
  By:
  Camden Partners Strategic III, LLC,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/David
  L. Warnock

  	
   

  
	
   

  	
  Name:
  David L. Warnock

  
	
   

  	
  Title:
  Managing Member

  
	
   

  	
   

  
	
   

  	
  CAMDEN
  PARTNERS STRATEGIC
  FUND III-A, L.P.

  
	
   

  
	
   

  	
   

  
	
   

  	
  By:
  Camden Partners Strategic III, LLC,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/David
  L. Warnock

  	
   

  
	
   

  	
  Name:
  David L. Warnock

  
	
   

  	
  Title:
  Managing Member

  

 

 

EXHIBIT A

 

DEFINITIONS

 

“Act” shall mean the Securities Act of 1933, as
amended.

 

“Affiliate”
shall mean: (a) with respect to a person, any member of such person’s family;
(b) with respect to an entity, any officer, director, Stockholder, partner or
investor of or in such entity or of or in any Affiliate of such entity; and
(c) with respect to a person or entity, any person or entity which
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such person or entity.

 

“Agreement” shall mean this Stockholders’ Agreement.

 

“Business Day” shall mean Monday through Friday and
shall exclude any federal or religious holidays.

 

“Bylaws” shall mean the Company’s Amended and Restated
Bylaws of the Company.

 

“Charter” shall mean the Restated Certificate of
Incorporation of the Company.

 

“Common Stock” shall mean the common stock, $.01 par
value, of the Company.

 

“Common Stock Equivalent” shall mean a share of Common
Stock, or the right to acquire, whether or not immediately exercisable, a share
of Common Stock, whether evidenced by an option, warrant, convertible security
or other instrument or agreement.

 

“Company” shall mean New Horizons Worldwide, Inc., a
Delaware corporation, or any successor thereto.

 

“Governmental Entity” means a court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority or agency.

 

“Law” means any law, statute, ordinance, rule,
regulation, order, writ, judgment, injunction or decree of any Governmental
Entity.

 

“New Securities” has the meaning set forth in Section 4.

 

“Registration Rights Agreement” has the meaning set
forth in the Purchase Agreement.

 

“Series A Preferred Director” has the meaning set
forth in Section 2.

 

2

 

“Series A Preferred Stockholders” has the meaning set
forth in the Recitals.

 

“Sale Notice” has the meaning set forth in Section 4.

 

“Series A Preferred Stock” shall mean the Series A
Convertible Preferred Stock, no par value, of the Company.

 

“Stockholder Group” has the meaning set forth in Section 4.

 

“Transfer” means the sale, gift, mortgage, pledge,
exchange, assignment or other disposition or transfer, including a disposition
under judicial order, legal process, execution, attachment or enforcement of an
encumbrance, but shall not include: (a) a transfer by any Series A Preferred
Stockholder that is a party to this Agreement to any other Series A Preferred
Stockholder that is a party to this Agreement; (b) a transfer by a Series A
Preferred Stockholder to such Series A Preferred Stockholder’s spouse, children
or grandchildren, or to trustees or custodians for their benefit; or (c) a
transfer by a Series A Preferred Stockholder to any limited or general partner
or Affiliate of the Series A Preferred Stockholder.

 

3

 

EXHIBIT B

 

Series A Preferred Stockholders

 

Camden
Partners Strategic Fund III, L.P.

Camden
Partners Strategic Fund III-A, L.P.

One
South Street, Suite 2150

Baltimore,
Maryland 21202

Phone:
(410) 895-3800

Fax:  (410) 895-3805

Attention:  David L. Warnock

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