Document:

mm06-1010_8ke041.htm

     

    EXHIBIT 4.1

     

    
 

    REGISTRATION
RIGHTS AGREEMENT

     

    This REGISTRATION RIGHTS AGREEMENT
(the “Agreement”)
dated as of June 9, 2010, is by and among: (i) Matthew Drakard, an individual
residing in the United Kingdom (“MD”);
(ii) Simon Booley, an individual residing in the United Kingdom (“SB”);
(iii) Thomas Morgan, an individual residing in the United Kingdom (“TM”
and together with MD and SB, the “Investors”);
and (v) Archipelago Learning, Inc., a Delaware corporation (the “Company”,
and, together with the Investors, the “Parties”).  Capitalized
terms used herein and not otherwise defined shall have that meaning ascribed to
them in the Share Purchase Agreement by and among the Parties and Archipelago
Learning Holdings UK Limited dated as of the date hereof (the “Share
Purchase Agreement”).

    

    W I T N E
S S E T H:

     

    WHEREAS, the Investors are
receiving shares (“Registrable
Securities”) of common stock of the Company (“Common
Stock”) as a portion of the consideration to be paid to the Investors,
directly pursuant to the Share Purchase Agreement; and

     

    WHEREAS, the delivery of this
Agreement is a condition to the Investors’ obligations under the Share Purchase
Agreement.

     

    NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements hereinafter contained, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

     

    Section
1. Definitions.  As
used in this Agreement, the following capitalized terms shall have the following
meanings:

     

    “Damages”
means any loss, damage, or liability (joint or several) to which a party hereto
may become subject under the Securities Act, the Exchange Act, or other federal
or state law, insofar as such loss, damage, or liability (or any action in
respect thereof) arises out of or is based upon: (i) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement of the Company, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto; (ii) an
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by the indemnifying party (or any of
its agents or Affiliates) of the Securities Act, the Exchange Act, any state
securities law, or any rule or regulation promulgated under the Securities Act,
the Exchange Act, or any state securities law.

     

    “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and any
successor thereto, and any rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time.

     

    

    
      
        
           

        

        
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    “Form
S-1” means such form under the Securities Act as in effect on the date
hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC.

     

    “Form
S-2” means such form under the Securities Act as in effect on the date
hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC.

     

    “Form
S-3” means such form under the Securities Act as in effect on the date
hereof or any registration form under the Securities Act subsequently adopted by
the SEC that permits incorporation of substantial information by reference to
other documents filed by the Company with the SEC.

     

    “Form
S-4” means such form under the Securities Act as in effect on the date
hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC.

     

    “SEC”
means the Securities and Exchange Commission.

     

    “SEC Rule
144” means Rule 144 promulgated by the SEC under the Securities
Act.

     

    “SEC Rule
145” means Rule 145 promulgated by the SEC under the Securities
Act.

     

    “Securities
Act” means the United States Securities Act of 1933, as amended, and any
successor thereto, and any rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time.

     

    “Selling
Expenses” means all underwriting discounts, selling commissions, and
stock transfer taxes applicable to the sale of Registrable Securities, and fees
and disbursements of counsel for any selling Investors, except for the fees and
disbursements of the one counsel (not to exceed $15,000) of the selling
Investors borne and paid by the Company as provided in Section
5.

     

    Section
2.   Registration
Rights.  If the Company proposes to register any of its Common
Stock under the Securities Act for its own account in connection with the public
offering of such securities solely for cash (other than (i) a registration on a
Form S-4; (ii) a registration on a Form S-8; (iii) a registration relating to an
SEC Rule 145 transaction; or (iv) a registration in which the only Common
Stock being registered is Common Stock issuable upon conversion of debt
securities that are also being registered) the Company shall, at such time,
promptly give each Investor notice of such registration.  Upon the
request of each Investor given within 20 days after such notice is given by the
Company, the Company shall, subject to the provisions of Section 3, cause to
be registered all of the Registrable Securities that each such Investor has
requested to be included in such registration.  There is no limitation
on the number of such piggyback registrations pursuant

     

    

    
      
        
           

        

        
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    to the
preceding sentence which the Company is obligated to effect.  In
accordance with the provisions of this Agreement, the Company shall have the
right to terminate or withdraw any registration initiated by it under this Section 2 before the
effective date of such registration, whether or not any Investor has elected to
include Registrable Securities in such registration.  The expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section
5.

     

    Section
3. 
Underwriting
Requirements.  In connection with any offering involving an
underwriting of shares of the Company’s capital stock pursuant to this
Agreement, the Company shall not be required to include any of the Investors’
Registrable Securities in such underwriting unless the Investors accept the
terms of the underwriting as agreed upon between the Company and its
underwriters, and then only in such quantity as the underwriters in their sole
discretion determine will not jeopardize the success of the offering by the
Company.  If the total number of securities, including Registrable
Securities, proposed to be included in such offering exceeds the number of
securities to be sold (other than by the Company) that the underwriters in their
reasonable discretion determine is compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters in
their sole discretion determine will not jeopardize the success of the
offering.  If the underwriters determine that less than all of the
securities requested to be registered can be included in such offering, then the
securities that are included in such offering shall be allocated among the
Investors and those shareholders having rights under the Company’s Stockholders
Agreement dated as of November 19, 2009 (the “Stockholders
Agreement”) in proportion (as nearly as practicable) to the number of
Registrable Securities (as that term is defined both herein and in the
Stockholders Agreement) owned by each such Investor and Stockholder (as that
term is defined in the Stockholders Agreement) or in such other proportion as
shall mutually be agreed to by all such Investors and Stockholders.

     

    Section
4. 
Furnish
Information.  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any selling Investor that such Investor
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as is reasonably required to effect the registration of such Investor’s
Registrable Securities.

     

    Section
5. 
Expenses of
Registration.  All expenses (other than Selling Expenses)
incurred in connection with registrations, filings, or qualifications pursuant
to this Agreement, including all registration, filing, and qualification fees;
printers’ and accounting fees; fees and disbursements of counsel for the
Company; and the reasonable fees and disbursements of one counsel for the
selling Investors (not to exceed $15,000), shall be borne and paid by the
Company.  All Selling Expenses relating to Registrable Securities
registered pursuant to this Agreement shall be borne and paid by the Investors
pro rata on the basis of the number of Registrable Securities registered on
their behalf.

     

    

    
      
        
           

        

        
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    Section
6. 
Delay of
Registration.  No Investor shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration pursuant
to this Agreement as the result of any controversy that might arise with respect
to the interpretation or implementation of this Agreement.

     

    Section
7. 
Indemnification.  If
any Registrable Securities are included in a registration statement under this
Agreement:

     

    (a)  To the
extent permitted by law, the Company will indemnify and hold harmless each
selling Investor, and the partners, members, officers, directors, and
stockholders of each such Investor; legal counsel and accountants for each such
Investor; any underwriter (as defined in the Securities Act) for each such
Investor; and each Person, if any, who controls such Investor or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
Damages, and the Company will pay to each such Investor, underwriter,
controlling Person, or other aforementioned Person any legal or other expenses
reasonably incurred thereby in connection with investigating or defending any
claim or proceeding from which Damages may result, as such expenses are
incurred; provided, that the
indemnity agreement contained in this Section 7(a) shall
not apply to amounts paid in settlement of any such claim or proceeding if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable for any Damages to
the extent that they arise out of or are based upon actions or omissions made in
reliance upon and in conformity with written information furnished by or on
behalf of any such Investor, underwriter, controlling Person, or other
aforementioned Person expressly for use in connection with such
registration.

     

    (b)  To the
extent permitted by law, each selling Investor, severally and not jointly, will
indemnify and hold harmless the Company, and each of its directors, each of its
officers who has signed the registration statement, each Person (if any), who
controls the Company within the meaning of the Securities Act, legal counsel and
accountants for the Company, any underwriter (as defined in the Securities Act),
any other selling shareholder(s) in such registration statement, and any
controlling Person of any such underwriter or other selling shareholder(s),
against any Damages, in each case only to the extent that such Damages arise out
of or are based upon actions or omissions made in reliance upon and in
conformity with written information furnished by or on behalf of such selling
Investor expressly for use in connection with such registration; and each such
selling Investor will pay to the Company and each other aforementioned Person
any legal or other expenses reasonably incurred thereby in connection with
investigating or defending any claim or proceeding from which Damages may
result, as such expenses are incurred; provided, that the
indemnity agreement contained in this Section 7(b) shall
not apply to amounts paid in settlement of any such claim or proceeding if such
settlement is effected without the consent of the Investor, which consent shall
not be unreasonably withheld; and provided further that in no
event shall the aggregate amounts payable by any Investor by way of indemnity or
contribution under Sections 7(b) and
7(d) exceed the
proceeds from the offering received by such Investor (net of any Selling
Expenses paid by such Investor), except in the case of fraud or willful
misconduct by such Investor.

     

    

    
      
        
           

        

        
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    (c)  Promptly
after receipt by an indemnified party under this Section 7 of notice
of the commencement of any action (including any governmental action) for which
a party may be entitled to indemnification hereunder, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section
7, give the indemnifying party notice of the commencement
thereof.  The indemnifying party shall have the right to participate
in such action and, to the extent the indemnifying party so desires, participate
jointly with any other indemnifying party to which notice has been given, and to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, that
an indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such action.  The failure to give
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7, to the
extent that such failure materially prejudices the indemnifying party’s ability
to defend such action.  The failure to give notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section
7.

     

    (d)  To
provide for just and equitable contribution to joint liability under the
Securities Act in any case in which either: (i) any party otherwise entitled to
indemnification hereunder makes a claim for indemnification pursuant to this
Section 7 but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this Section 7 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any party hereto for which indemnification is
provided under this Section 7, then, and
in each such case, such parties will contribute to the aggregate losses, claims,
damages, liabilities, or expenses to which they may be subject (after
contribution from others) in such proportion as is appropriate to reflect the
relative fault of each of the indemnifying party and the indemnified party in
connection with the statements, omissions, or other actions that resulted in
such loss, claim, damage, liability, or expense, as well as to reflect any other
relevant equitable considerations.  The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or allegedly untrue statement of a
material fact, or the omission or alleged omission of a material fact, relates
to information supplied by the indemnifying party or by the indemnified party
and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission; provided, that, in any such
case: (x) no Investor will be required to contribute any amount in excess of the
proceeds received from such Registrable Securities offered and sold by such
Investor pursuant to such registration statement; and (y) no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person

     

    

    
      
        
           

        

        
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    who was
not guilty of such fraudulent misrepresentation; and provided further that in no
event shall an Investor’s liability pursuant to this Section 7(d), when
combined with the amounts paid or payable by such Investor pursuant to Section 7(b), exceed
the proceeds from the offering received by such Investor (net of any Selling
Expenses paid by such Investor), except in the case of willful misconduct or
fraud by such Investor.

     

    (e)  Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.

     

    (f)  Unless
otherwise superseded by an underwriting agreement entered into in connection
with the underwritten public offering, the obligations of the Company and the
Investors under this Section 8 shall
survive the completion of any offering of Registrable Securities in a
registration under this Agreement, and otherwise shall survive the termination
of this Agreement.

     

    Section
8.“Market Stand-off”
Agreement.  Each Investor
hereby severally and not jointly agrees with the Company, and not with or for
the benefit of any other Investor, that if and when requested by an underwriter
in connection with any registration by the Company of shares of its Common Stock
or any other equity securities under the Securities Act on a registration
statement on Form S-1 or Form S-3, such Investor will deliver a customary
lock-up agreement containing terms consistent with the following: that such
Investor will not, without the prior written consent of the managing
underwriter, during the period commencing on the date of the final prospectus
relating to the registration by the Company of shares of its Common Stock
or any other equity securities under the Securities Act on a
registration statement on Form S-1 or Form S-3 (whether for its own account or
for any of its stockholders), and ending on the date specified by the
Company and the managing underwriter (such period not to exceed ninety (90)
days, which period may be extended upon the request of the managing underwriter,
to the extent required by any FINRA or NASD rules, for an additional period of
up to seventeen (17) days if the Company issues or proposes to issue an earnings
or other public release within seventeen (17) days of the expiration of the
90-day lockup period): (i) lend; offer; pledge; sell; contract to sell; sell any
option or contract to purchase; purchase any option or contract to sell; grant
any option, right, or warrant to purchase; or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable (directly or indirectly) for Common Stock
(whether such shares or any such securities are then owned by the Stockholder or
are thereafter acquired) or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of such securities, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or other
securities, in cash, or otherwise.  The foregoing provisions of this
Section 8 shall not apply to the sale of any shares to an underwriter pursuant
to an underwriting agreement.  The underwriters in connection with
such registration are intended third-party beneficiaries of this Section 8
and shall have the right, power, and authority to enforce the provisions hereof
as though they were a party

     

    

    
      
        
           

        

        
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    hereto.  Each
Investor further agrees to execute such agreements as may be reasonably
requested by the underwriters in connection with such registration that are
consistent with this Section 8
or that are necessary to give further effect thereto.  Any
discretionary waiver or termination of the restrictions of any or all of such
agreements by the Company or the underwriters shall apply pro rata to all
Investors subject to such agreements, based on the number of shares subject to
such agreements.  The provisions of this Section 8, if enforced by the
Company, may only be enforced by action of the independent directors of the
Board of Directors of the Company.

     

    Section
9. 
Reports Under Exchange
Act.  With a view to making available to the Investors the
benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at
any time permit an Investor to sell securities of the Company to the public
without registration, the Company shall:

     

    (a)  make and
keep available adequate current public information, as those terms are
understood and defined in SEC Rule 144, at all times;

     

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

     

    (c)  furnish
to any Investor, so long as the Investor owns any Registrable Securities,
forthwith upon request (i) to the extent accurate, a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after 90 days after the date of this Agreement), the Securities Act,
and the Exchange Act (at any time after the Company has become subject to such
reporting requirements); (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, only to the extent not otherwise publicly available or provided to all
stockholders generally; and (iii) such other information as may be reasonably
requested in availing any Investor of any rule or regulation of the SEC that
permits the selling of any such securities without registration (at any time
after the Company has become subject to the reporting requirements under the
Exchange Act).

     

    Section
10. 
Submission to Jurisdiction;
Consent to Service of Process.

     

    (a)  The
Parties hereby irrevocably submit to the exclusive jurisdiction of any federal
or state court located within the State of New York over any dispute arising out
of or relating to this Agreement or any of the transactions contemplated hereby
and each Party hereby irrevocably agrees that all claims in respect of such
dispute or any suit, action proceeding related thereto may be heard and
determined in such courts.  The Parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such
dispute.  Each of the Parties agrees that a judgment in any such
dispute may be

     

    

    
      
        
           

        

        
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    enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law.

     

    (b)  Each of
the Parties hereby consents to process being served by any Party to this
Agreement in any suit, action or proceeding by the delivery of a copy thereof in
accordance with the provisions of Section 13.1

     

    Section
11. 
Entire Agreement; Amendments
and Waivers.  This Agreement and the Share Purchase Agreement
represent the entire understanding and agreement between the Parties with
respect to the subject matter hereof.  This Agreement can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the Party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought.  No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any Party,
shall be deemed to constitute a waiver by the Party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein.  The waiver by any Party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent
breach.  No failure on the part of any Party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such Party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.  All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by
law.

     

    Section
12. 
Governing
Law.  This Agreement, and all claims or causes of action or
other matters (whether in contract, tort or otherwise) that may be based upon,
arise out of or relate to this Agreement or the negotiation, execution or
performance of this Agreement or the consummation of any of the transactions
contemplated hereby, shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and performed in such
State of New York, excluding any conflict or choice of law rule or principle
that might otherwise refer construction or interpretation thereof to the
substantive laws of another jurisdiction.

     

    Section
13. 
Notices.  All
notices and other communications under this Agreement shall be in writing and
shall be deemed given: (i) when delivered personally by hand (with written
confirmation of receipt); (ii) when sent by facsimile (with written confirmation
of transmission); or (iii) two Business Days following the day sent by overnight
courier (with written confirmation of receipt), in each case at the following
addresses and facsimile numbers (or to such other address or facsimile number as
a Party may have specified by notice given to the other Parties pursuant to this
provision):

     

    
_________________________

     

      1 NTD:
This provision is in the SPA and Escrow Agreement.  The miscellaneous
provisions of all of the transaction documents should remain
consistent.

    

    

    
      
        
           

        

        
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    If to the Investors, to:

     

    

    Matthew
Drakard

    Top
Cottage

    Stamford
Road

    Barnsdale

    Rutland,
LE15 8AB

    

    Simon
Booley

    9 The
Pines

    Bushby

    Leicester,
LE7 9RX

    

    Tom
Morgan

    371
Princess Park Manor

    Royal
Drive

    London,
N11 3GX

     

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

    

    Coman and
Anderson, P.C.

    2525
Cabot Drive, Suite 300

    Lisle,
Illinois 60532

    Facsimile:
630-428-2549

    Attention:
Daniel G. Coman

    

    and

    

    Solomon
Taylor & Shaw

    3 Coach
House Yard

    Hampstead
High Street

    London,
NW3 1QF

    Facsimile:
(44) 207 794 7485

    Attention:
Raymond Taylor

     

    If to the
Company, to:

    

    Archipelago
Learning, Inc.

    3400
Carlisle Street, Suite 345

    Dallas,
Texas 75204

    Facsimile:
(866) 515-9145

    Attention:
Chief Executive Officer

    

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

     

    

    
      
        
           

        

        
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    Weil,
Gotshal & Manges LLP

    100
Federal Street, 34th Floor

    Boston,
Massachusetts  02110

    Facsimile:  (617)
772-8333

    Attention:  Kevin
J. Sullivan

     

    Section
14. 
Severability.  If
any term or other provision of this Agreement is invalid, illegal, or incapable
of being enforced by any law or public policy, all other terms or provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party.  Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

     

    Section
15. 
Binding Effect;
Assignment.  This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns.  Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any person or entity not a party to
this Agreement except as provided below.  No assignment of this
Agreement or of any rights or obligations hereunder may be made by any Investor
(by operation of law or otherwise) without the prior written consent of the
Company and any attempted assignment without the required consent shall be
void.

     

    Section
16. 
Other Definitional and
Interpretive Matters.  Unless otherwise expressly provided, for
purposes of this Agreement, the following rules of interpretation shall
apply:

     

    (a)  Gender and
Number.  Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.

     

    (b)  Headings.  The
division of this Agreement into Articles, Sections and other subdivisions and
the insertion of headings are for convenience of reference only and shall not
affect or be utilized in construing or interpreting this Agreement.

     

    (c)  Herein.  The
words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this
Agreement as a whole and not merely to a subdivision in which such words appear
unless the context otherwise requires.

     

    (d)  Including.  The
word “including” or any variation thereof means “including, without limitation”
and shall not be construed to limit any general statement that it follows to the
specific or similar items or matters immediately following it.

     

    

    
      
        
           

        

        
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    (e)  Construction.  The
language used in this Agreement shall be deemed to be the language chosen by the
Parties hereto to express their collective mutual intent, and no rule of strict
construction shall be applied against any Party.

     

    Section
17. 
Counterparts.  This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

     

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

     

    

    
      
        	 	COMPANY: 
	 	 
	 	ARCHIPELAGO LEARNING,
      INC.
	 	 
	 
      	 
      
	 
      	
                By:

              	
                /s/   Tim
      McEwen

              
	 
      	
                Name:

              	
                Tim
      McEwen

              
	 
      	
                Title:

              	
                Chief
      Executive Officer

              

      

    

     

     

     

     

     

     

     

     

    

     

    

     

    

    
      
        
          
            [Signature
Page 1 of 4 to the EducationCity Registration Rights
Agreement]

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

     

    
      
        	 	INVESTORS: 
	 	 
	 	 
	 
      	 
      
	 
      	
                /s/  Matthew
      Drakard

              
	 
      	
                MATTHEW
      DRAKARD

              

      

    

    
       

       

       

       

       

       

       

       

       

       

       

       

    
      
        
          
            [Signature
Page 2 of 4 to the EducationCity Registration Rights
Agreement]

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    
      
        	 
      	 
      
	 
      	
                /s/  Simon
    Booley

              
	 
      	
                SIMON
      BOOLEY

              

      

       

       

       

       

       

       

       

       

       

       

       

       

    

    

    
      
        
          
            [Signature
Page 3 of 4 to the EducationCity Registration Rights
Agreement]

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
       

      
        	 
      	 
      
	 
      	
                /s/  Thomas
    Morgan

              
	 
      	
                THOMAS
      MORGAN

              

      

       

    

    

    

    

    

    

    

    

    

    

    

    

    

     

    

    
      
        
          
            Signature
Page 4 of 4 to the EducationCity
Registration Rights Agreementmm06-1010_8ke101.htm

     

    EXHIBIT 10.1

     

     

     

     

    
      

      

    

    

    
      

       

      

    

    SHARE
PURCHASE AGREEMENT

     

    by and
among

     

    MATTHEW
DRAKARD,

     

    SIMON
BOOLEY,

     

    THOMAS
MORGAN

     

    and

     

    ARCHIPELAGO
LEARNING HOLDINGS UK LIMITED.

     

    and

     

    ARCHIPELAGO
LEARNING, INC.

     

    Dated as
of June 9, 2010

     

    

     

    

    
      

      

    

    
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibits

    Exhibit
A: Form of Escrow Agreement

    Exhibit
B: Form of Matthew Drakard Services Agreement

    Exhibit
C: Form of Simon Booley Services Agreement

    Exhibit
D: Form of Thomas Morgan Services Agreement

    Exhibit
E: Form of Kwak Employment Agreement

    Exhibit
F: Form of Registration Rights Agreement

    Exhibit
G: Form of Tax Deed

    

    Schedules

    Schedule
1.1: Sample Net Working Capital Calculation

    Schedule
2.1: Sellers’ Representative’s Accounts, Purchased Shares Ownership andAllocation of Consideration
Securities

    Schedule
4.3: Educationcity-US Capitalization

    Schedule
4.10(b): Real Property Leases

    Schedule
4.11(b): Personal Property Leases

    Schedule
4.12(a): Owned Intellectual Property

    Schedule
4.12(e): Intellectual Property Licenses

    Schedule
4.12(m): Software

    Schedule
4.13(a): Material Contracts

    Schedule
4.14(a): Company Benefit Plans

    Schedule
4.14(f): Employees

    Schedule
4.16(b): Permits

    Schedule
4.17: Insurance

    Schedule
4.20: Customers and Suppliers

    Schedule
7.6: Stay Bonuses

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SHARE
PURCHASE AGREEMENT

     

    This
SHARE PURCHASE AGREEMENT
(the “Agreement”)
dated as of June 9, 2010, is by and among: (i) Matthew Drakard, an individual
residing in the United Kingdom (“MD”);
(ii) Simon Booley, an individual residing in the United Kingdom (“SB”);
(iii) Thomas Morgan, an individual residing in the United Kingdom (“TM”, and, together with MD and
SB, the “Sellers”);
and (iv) Archipelago Learning Holdings UK Limited, a United Kingdom private
limited company (the “Purchaser”);
and (v) Archipelago Learning, Inc. (the “Guarantor”), and, together with the
Purchaser and the Sellers, the “Parties”).

     

    W I T N E
S S E T H:

     

    WHEREAS, the Sellers
collectively own 100 ordinary shares of the Company (the “Purchased
Shares”), which Purchased Shares represent all of the issued and
outstanding equity interests of the Company; and

     

    WHEREAS, pursuant to the terms
and conditions set forth herein, the Sellers desire to sell to the Purchaser,
and the Purchaser desires to purchase from the Sellers the Purchased Shares;
and

     

    WHEREAS, the Guarantor is the
indirect parent of the Purchaser and  has become a party to this
Agreement for the purpose of entering into the guarantee set out in Article
XI.

     

    NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements hereinafter contained, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

     

    ARTICLE
I

     

    DEFINITIONS

     

    1.1 Certain
Definitions.

     

    For
purposes of this Agreement, the following terms shall have the meanings
specified in this Section
1.1:

     

    “Accounts
Receivable” shall have the meaning set forth in Section
4.17(a).

     

    “Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person, and the term “control”
(including the terms “controlled
by” and “under
common control with”) means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities, by contract or
otherwise.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Agreement”
shall have the meaning set forth in the preamble.

     

    “Audit and
Q1 Financials” means the Company’s: (i) consolidated audited financial
statements (including all footnotes) for each of the fiscal years ending: (x)
December 31, 2009; and (y) December 31, 2008, together with the unqualified
opinions and consents of Deloitte & Touche LLP; and (ii) unaudited statement
of assets and liabilities as of March 31, 2010 and the related statement of
revenue and expenses for the 3 month period then ended, in each case, prepared
by Deloitte & Touche LLP and in accordance with GAAP or IFRS.

     

    “Balance
Sheet” shall have the meaning set forth in Section
4.5(a).

     

    “Balance
Sheet Date” shall have the meaning set forth in Section
4.5(a).

     

    “Basket”
shall have the meaning set forth in Section
9.4(a).

     

    “Benefit
Plan” means all “employee benefit
plans”, as defined in Section 3(3) of ERISA, and all employment,
individual consulting, severance, termination, retirement, profit-sharing,
incentive or deferred compensation, retention or change in control, bonus,
equity or equity-based compensation, stock purchase, defined benefit pension,
savings, individual account based savings, supplemental executive retirement,
sick leave, vacation pay, salary continuation, disability, hospitalization,
medical insurance, life insurance, scholarship or other employee compensation or
benefit arrangements, agreements, plans, funds, commitments or payroll
practices, whether oral or written, in each case, sponsored, maintained by or
contributed to or required to be contributed to by the Company or
Educationcity-US for the benefit of Current Employees, Former Employees, or
their respective dependents or current or former directors or their respective
dependents, or pursuant to which the Company or Educationcity-US has or could
have any Liability.

     

    “Business
Day” means any day other than: (i) a Saturday; (ii) a Sunday; or (iii)
any day on which banks are required or authorized to close in the State of New
York or in the United Kingdom.

     

    “Cap”
shall have the meaning set forth in Section
9.4(b).

     

    “Cash”
means, for the Company and Educationcity-US, on a consolidated basis as of the
close of business as of the relevant date, the amount of cash and bank deposits
as reflected in bank statements, and certificates of deposit less escrowed
amounts or other restricted cash balances and less the amounts of any unpaid or
outstanding checks, drafts and wire transfers issued on or prior to the date of
determination, calculated in accordance with GAAP applied on a basis consistent
with the preparation of the Financial Statements.

     

    “Cash
Consideration” shall have the meaning set forth in Section
2.1.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Closing”
shall have the meaning set forth in Section
2.4.

     

    “Closing
Date” shall have the meaning set forth in Section
2.4.

     

    “Closing
Statement” shall have the meaning set forth in Section
2.3(b)(i).

     

    “Closing
Working Capital” shall have the meaning set forth in Section
2.3(b)(i).

     

    “COBRA”
means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
and Section 4980B of the Code.

     

    “Code”
means the Internal Revenue Code of 1986, as amended.

     

    “Commission”
means the U.S. Securities and Exchange Commission, and any successor commission
or agency having similar powers.

     

    “Company”
means Educationcity Limited.

     

    “Company
Benefit Plans” shall have the meaning set forth in Section
4.14(a).

     

    “Company
Intellectual Property” means all Intellectual Property used in the
conduct of the Company’s or Educationcity-US’s business, or owned or held for
use by the Company or Educationcity-US.

     

    “Company
Technology” means all Technology used in the conduct of the Company’s or
Educationcity-US’s business, or owned or held for use by the Company or
Educationcity-US, including all arrangements relating to the provision of
maintenance and support, security, disaster recovery, facilities management and
on-line services to the Company or Educationcity-US.

     

    “Confidential
Information” shall have the meaning set forth in Section
7.3(c).

     

    “Consideration
Securities” shall have the meaning set forth in Section
2.1.

     

    “Contract”
means any contract, agreement, indenture, note, bond, mortgage, loan,
instrument, lease (including capitalized lease), license, commitment, purchase
order or other obligation, whether written or oral.

     

    “Current
Employees” means all individuals (including common law employees,
independent contractors and individual consultants) who are employed by the
Company or Educationcity-US as of the Closing.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Current
UK Employees” means all individuals who are employed by the Company as of
the Closing.

     

    “Disclosure
Schedules” shall have the meaning set forth in Article
IV.

     

    “DPA”
means the Data Protection Act 1998, as in force in the United
Kingdom.

     

    “Educationcity
Companies” means the Company and Educationcity-US and any Person who has
been merged or liquidated into either of them.

     

    “Educationcity-US”
shall have the meaning set forth in Section
4.1(b).

     

    “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.

     

    “ERISA
Affiliate” means, with respect to any Person, any other Person (whether
or not incorporated) that, together with such Person, is or has been within the
6 years immediately prior to the date hereof, treated as a single employer under
Section 414 of the Code or Section 4001 of ERISA.

     

    “Escrow
Agent” shall have the meaning set forth in Section
9.5.

     

    “Escrow
Agreement” shall have the meaning set forth in Section
9.5.

     

    “Estimated
Closing Working Capital” shall have the meaning set forth in Section
2.3(a)(i).

     

    “Exchange
Act” means the U.S. Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission thereunder.

     

    “Final
Working Capital” shall have the meaning set forth in Section
2.3(b)(iv).

     

    “Financial
Statements” shall have the meaning set forth in Section
4.5(a).

     

    “Former
Employee” means all individuals (including common law employees,
independent contractors and individual consultants) who have been employed by
the Company or Educationcity-US but who are not Current Employees.

     

    “Former UK
Employee” means all individuals who have been employed by the Company but
who are not Current Employees.

     

    “Former
Worker” means any person who has provided individual service to the
Company, but who was not treated as an employee for the purposes of taxation
and/or employment law.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “Fundamental
Representations” shall have the meaning set forth in Section
9.1.

     

    “GAAP”
means generally accepted accounting principles in the United States as of the
date hereof.

     

    “Governmental
Body” means any government or governmental or regulatory body thereof, or
political subdivision thereof, whether foreign, federal, state, or local, or any
agency, instrumentality or authority thereof, or any court or arbitrator (public
or private).

     

    “Guarantor”
shall have the meaning set forth in the preamble.

     

    “Guarantor
Documents” shall have the meaning set forth in the Section
6.2.

     

    “IFRS”
means the International Financial Reporting Standards, as adopted by the
International Accounting Standards Board from time to time.

     

    “Indebtedness”
of any Person means, without duplication: (i) the principal, accreted value,
accrued and unpaid interest, prepayment and redemption premiums or penalties (if
any), unpaid fees or expenses and other monetary obligations in respect of: (A)
indebtedness of such Person for money borrowed; and (B) indebtedness evidenced
by notes, debentures, bonds or other similar instruments for the payment of
which such Person is responsible or liable; (ii) all obligations of such Person
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such Person and all obligations of such Person under any
title retention agreement (but excluding trade accounts payable and other
accrued current liabilities arising in the Ordinary Course of Business) (other
than the current liability portion of any indebtedness for borrowed money);
(iii) all obligations of such Person under leases required to be capitalized in
accordance with GAAP; (iv) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, banker’s acceptance or similar credit
transaction; (v) all obligations of the type referred to in clauses (i) through
(iv) of any Persons for the payment of which such Person is responsible or
liable, directly or indirectly, as obligor, guarantor, surety or otherwise,
including guarantees of such obligations; and (vi) all obligations of the type
referred to in clauses (i) through (v) of other Persons secured by (or for which
the holder of such obligations has an existing right, contingent or otherwise,
to be secured by) any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person).

     

    “Indemnity
Escrow Amount” shall have the meaning set forth in Section
9.5.

     

    “Independent
Accountant” shall mean any “big four” or other internationally recognized
accounting firm mutually agreeable to the Parties.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Intellectual
Property” means domain names and all right, title and interest in or
relating to intellectual property, whether protected, created or arising under
the laws of the United States or any other jurisdiction, including: (i) all
patents and applications therefor, including all continuations, divisionals, and
continuations-in-part thereof and patents issuing thereon, along with all
reissues, reexaminations and extensions thereof (collectively, “Patents”);
(ii) all trademarks, service marks, trade names, service names, brand names,
trade dress rights, corporate names, trade styles, logos and other source or
business identifiers and general intangibles of a like nature, together with the
goodwill associated with any of the foregoing, along with all applications,
registrations, renewals and extensions thereof (collectively, “Marks”);
(iii) all copyrights (including copyrights in software)  and all mask
work, database and moral rights, whether or not registered or published, all
registrations and recordations thereof and all applications in connection
therewith, along with all reversions, extensions and renewals thereof
(collectively, “Copyrights”);
(iv) all design rights, whether or not registered, all registrations and
recordations thereof and all applications in connection therewith (“Designs”);
and (v) all trade secrets and other proprietary confidential information (“Trade
Secrets”).

     

    “Intellectual
Property Licenses” means (i) any grant by the Company or Educationcity-US
to another Person of any right relating to or under the Company Intellectual
Property or Company Technology; and (ii) any grant by another Person to the
Company or Educationcity-US of any right relating to or under any third Person’s
Intellectual Property or Technology.

     

    “IRS”
means the United States Internal Revenue Service.

     

    “Knowledge”
means: (i) with regard to the Knowledge of any individual Seller, the knowledge
of any matter, fact or thing that is actually known to such Seller after
reasonable inquiry; (ii) with regard to the Knowledge of the Company, the
knowledge of any matter, fact or thing that is actually known to any of the
Sellers after reasonable inquiry; and (iii) with regard to the Knowledge of
Educationcity-US, the knowledge of any matter, fact or thing that is actually
known to any of the Sellers or Matt Kwak after reasonable inquiry.

     

    “Law”
means any foreign, federal, state or local law (including common law), statute,
code, ordinance, rule, regulation, Order or other requirement.

     

    “Legal
Proceeding” means any judicial, administrative or arbitral action, suit,
mediation, investigation, inquiry, proceeding or claim (including any
counterclaim) by or before a Governmental Body.

     

    “Liability”
means any debt, loss, damage, fine, penalty, liability or obligation (whether
direct or indirect, known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, matured or unmatured, determined or
determinable, disputed or undisputed, liquidated or unliquidated, or due or to
become due, and whether in contract, tort, strict liability or otherwise), and
including all

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    reasonable
costs and expenses relating thereto (including all fees, disbursements and
expenses of legal counsel, experts, engineers and consultants and costs of
investigation).

     

    “Lien”
means any lien, encumbrance, pledge, mortgage, deed of trust, security interest,
claim, lease, option, right of first refusal, easement, servitude, proxy, voting
trust or agreement, transfer restriction under any equity holder or similar
agreement or encumbrance or any other legal restriction or limitation
whatsoever.

     

    “Lock-Up”
shall have the meaning set forth in Section
7.5(a).

     

    “Loss”
shall have the meaning set forth in Section
9.2(a).

     

    “Material
Adverse Effect” means a material adverse effect, other than as a result
of any Excluded Matter, on: (i) the Company’s business, assets, liabilities,
properties, prospects, results of operations, or condition (financial or
otherwise), taken as a whole; or (ii) the ability of any Selling Party to
consummate the transactions contemplated by this Agreement or perform their
obligations under this Agreement or any of the Seller Documents.  For
the purposes of the preceding sentence, “Excluded
Matter” means any one or more of the following: (A) the effect of any
change in the United States or foreign economies or securities or financial
markets in general; (B) the effect of any change that generally affects any
industry in which the Company operates, provided that such change does not have
a disproportionate impact on the Company; or (C) the effect of any change
arising in connection with earthquakes, hostilities, acts of war, sabotage or
terrorism or military actions or any escalation or material worsening of any
such hostilities, acts of war, sabotage or terrorism or military actions
existing or underway as of the date hereof.

     

    “Material
Contracts” shall have the meaning set forth in Section
4.12(a).

     

    “MD”
shall have the meaning set forth in the preamble.

     

    “Member of
the Immediate Family” means, with respect to any individual: (i) each
spouse, child or grandchild of such individual or child or grandchild of such
individual’s spouse; (ii) each trust created solely for the benefit of one or
more of such individual and the Persons listed in clause (i) above; (iii) each
custodian or guardian of any property of one or more of the Persons listed in
clause (i) above, in his capacity as such custodian or guardian; and (iv) each
limited partnership or limited liability company controlled by such individual
or one or more of the Persons listed in clause (i) above for the benefit of one
or more of such Persons.

     

    “Net
Working Capital” means, for the Company and Educationcity-US, on a
consolidated basis as of the close of business as of the relevant date, total
current assets (consisting of all current assets required to be set forth
on a balance sheet prepared in accordance with GAAP, inclusive of Cash) minus total current
liabilities (consisting of all such current liabilities required to be set forth
on a balance sheet prepared in accordance with GAAP), provided, that the
calculation of Net Working

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    Capital:
(i) shall not include and shall be calculated without taking into account any
income or UK corporation tax assets, income or UK corporation tax liabilities,
deferred tax assets or deferred tax liabilities; (ii) shall include and shall be
calculated taking into account any long term deferred revenue amounts; (iii)
shall include and shall be calculated taking into account a liability of
$200,000 in respect of the stay bonuses provided for in Section 7.6; and (iv)
shall not include and shall be calculated without taking into account the out of
pocket third party costs, fees and expenses incurred by the Company directly in
connection with the Audit and the Q1 Financials.  Schedule 1.1 sets
forth a sample working capital calculation.  Except as explicitly
stated therein, such sample is attached for illustrative purposes only and does
not amend, broaden or narrow the above definition of “Net Working
Capital”.

     

    “Order”
means any order, injunction, judgment, doctrine, decree, ruling, writ,
assessment or arbitration award of a Governmental Body.

     

    “Ordinary
Course of Business” means the ordinary and usual course of operations of
the Business, as conducted by the Company consistent with past custom and
practice.

     

    “Parties”
shall have the meaning set forth in the preamble.

     

    “Permits”
means any approvals, authorizations, consents, licenses, permits or certificates
of a Governmental Body.

     

    “Permitted
Exceptions” means: (i) all defects, exceptions, restrictions, easements,
rights of way and encumbrances disclosed in policies of title insurance that
have been delivered to Purchaser; (ii) statutory liens for current Taxes,
assessments or other governmental charges not yet due and payable or the amount
or validity of which is being contested in good faith by appropriate
proceedings, provided, an
appropriate reserve has been established therefor in the Financial Statements;
(iii) mechanics’, carriers’, workers’ and repairers’ Liens arising or incurred
in the Ordinary Course of Business that are not material to the business,
operations and financial condition of the Company or Educationcity-US and that
are not resulting from a breach, default or violation by the Company or
Educationcity-US of any Contract or Law; (iv) undetermined or inchoate Liens
constituting or securing the payment of expenses which were incurred incidental
to the conduct of the business of the Company or Educationcity-US in the
Ordinary Course of Business and that are immaterial; and (v) zoning, entitlement
and other land use and environmental regulations by any Governmental Body,
provided that such regulations have not been violated.

     

    “Person”
means any individual, corporation, limited liability company, partnership, firm,
joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.

     

    “Personal
Property” shall have the meaning set forth in Section
4.10(a).

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    “Personal
Property Leases” shall have the meaning set forth in Section
4.10(b).

     

    “PII
Data” means, for US purposes, all personally identifiable information,
and, for United Kingdom purposes, all personal data (as defined by the DPA), in
either case, that was collected by or supplied to the Company or
Educationcity-US from individuals registering with the Company or
Educationcity-US via a website controlled by either of them, or by any other
means.

     

    “Purchase
Price” shall have the meaning set forth in Section
2.1.

     

    “Purchased
Shares” shall have the meaning set forth in the recitals.

     

    “Purchaser”
shall have the meaning set forth in the preamble.

     

    “Purchaser
Documents” shall have the meaning set forth in Section
5.2.

     

    “Purchaser
Group” shall mean the Guarantor and its Affiliates.

     

    “Purchaser
Indemnified Parties” shall have the meaning set forth in Section
9.2(a).

     

    “Real
Property Leases” shall have the meaning set forth in Section
4.9(b).

     

    “Registration
Rights Agreement”  shall have the meaning set forth in Section
8.1(g).

     

    “Related
Persons” shall have the meaning set forth in Section
4.18.

     

    “Release
Date” shall have the meaning set forth in Section
9.1.

     

    “Restricted
Business” shall have the meaning set forth in Section
7.3(a).

     

    “SB”
shall have the meaning set forth in the preamble.

     

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

     

    “Sellers”
shall have the meaning set forth in the preamble.

     

    “Seller
Documents” shall have the meaning set forth in Section
3.1.

     

    “Seller
Indemnified Parties” shall have the meaning set forth in Section
8.2(b).

     

    “Software”
means any and all: (i) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code; (ii) databases and compilations, including any and all
data

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    and
collections of data, whether machine readable or otherwise; (iii) descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing, screens, user interfaces, report formats, firmware,
development tools, templates, menus, buttons and icons; and (iv) all
documentation, including user manuals and other training documentation related
to any of the foregoing.

     

    “Straddle
Period” shall have the meaning set forth in Section
10.1(c).

     

    “Subsidiary”
means any Person of which: (i) a majority of the outstanding share capital,
voting securities or other equity interests are owned, directly or indirectly,
by the Company; or (ii) the Company is entitled, directly or indirectly, to
appoint a majority of the board of directors or managers or comparable
supervisory body of such Person.

     

    “Successor
Securities” shall have the meaning set forth in Section
3.6(a).

     

    “Target
Working Capital” means negative $6,418,188 of Net Working
Capital.

     

    “Tax”
or “Taxes”
means: (i) any federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments, including all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever; (ii) any interest, penalties, fines, additions to tax or
additional amounts imposed by any Taxing Authority in connection with any item
described in clause (i); and (iii) any liability in respect of any items
described in clauses (i) and/or (ii) payable by reason of Contract,
assumption, transferee liability, operation of law, Treasury Regulation section
1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar
provision of law) or otherwise.

     

    “Tax
Claim” shall have the meaning set forth in Section
10.1(d).

     

    “Tax
Deed” shall have the meaning set forth in Section
8.1(k).

     

    “Tax
Return” means any return, report or statement required to be filed with
respect to any Tax (including any elections, declarations, schedules or
attachments thereto, and any amendment thereof), including any information
return, claim for refund, amended return or declaration of estimated Tax, and
including, where permitted or required, com­bined, consolidated or unitary
returns for any group of entities that includes the Company, or any of its
Affiliates.

     

    “Taxing
Authority” means the IRS, any UK Tax Authority and any other Governmental
Body responsible for the administration of any Tax.

     

    
      
         

      

      
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    “Technology”
means, collectively, all computer hardware, networks, Software, information,
designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how,
research and development, technical data, programs, subroutines, tools,
materials, specifications, processes, inventions (whether patentable or
unpatentable and whether or not reduced to practice), apparatus, creations,
improvements, works of authorship and other similar materials, and all
recordings, graphs, drawings, reports, analyses, and other writings, and other
tangible embodiments of the foregoing, in any form whether or not specifically
listed herein, and all related technology, that are used in, incorporated in,
embodied in, displayed by or relate to, or are used in connection with the
foregoing.

     

    “Termination
Date” shall have the meaning set forth in Section
9.1(a).

     

    “Third
Party Claim” shall have the meaning set forth in Section
9.3(b).

     

    “Treasury
Regulations” means the regulations promulgated under the
Code.

     

    “UK
Tax” or “UK
Taxation” means all forms of taxation, duties, withholding, deductions,
imposts and levies imposed by a Tax Authority and any associated interest,
penalty, surcharge or fine.

     

    “UK Tax
Authority” or “UK
Taxation Authority” means any local, provincial, municipal, governmental,
state, federal or other fiscal, revenue, customs or excise authority, body or
official in the United Kingdom.

     

    “US
Benefit Plan” means any Benefit Plan: (i) of Educationcity-US; or (ii) of
which any individual residing in the United States is a
beneficiary.

     

    “Unresolved
Claims” shall have the meaning set forth in Section
9.5.

     

    “WARN
Act” means the federal Worker Adjustment and Retraining Notification Act,
29 U.S.C. §2101 et seq. (1988) and any similar Laws.

     

    “Worker” means any person who
provides individual services to the Company, but who is not treated as an
employee for the purposes of taxation and/or employment law.

     

    ARTICLE
II

     

    PURCHASE
AND SALE OF THE PURCHASED SHARES

     

    2.1 Purchase and Sale of the Purchased
Shares.  At the Closing, the Sellers shall sell to the
Purchaser, and the Purchaser shall purchase from the Sellers, the Purchased
Shares, in exchange for an aggregate of: (i) $66,817,462 in cash (the “Cash
Consideration”); (ii) 1,242,408 common shares of the Guarantor (the
“Consideration
Securities”); and (iii) the Additional Consideration Payments, as set
forth in Section
2.2 

     

     

     

     

    
      
         

      

      
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    (together
with the Cash Consideration and the Consideration Securities, the “Purchase
Price”).  At the Closing, the Cash Consideration, less the
Indemnity Escrow Amount, shall be paid to the Sellers by wire transfer of
immediately available funds into the account of the Sellers’ representative set
forth on Schedule
2.1.  The wire transfer to such account shall satisfy in full
the Purchaser’s obligation to pay the Sellers the Cash
Consideration.

     

    2.2 Deferred
Consideration.

     

    (a) On
December 31, 2010, the Guarantor shall pay the Sellers $2,500,000 in cash by
wire transfer of immediately available funds into the account of the Sellers’
representative set forth on Schedule 2.1 (or as
otherwise designated in writing by the Sellers).  The wire transfer to
such account shall satisfy in full the Purchaser’s obligation to pay the Sellers
such amount.

     

    (b) On
December 31, 2011, the Guarantor shall pay the Sellers $2,500,000 in cash by
wire transfer of immediately available funds into the account of the Sellers’
representative set forth on Schedule 2.1 (or as
otherwise designated in writing by the Sellers).  The wire transfer to
such account shall satisfy in full the Purchaser’s obligation to pay the Sellers
such amount.

     

    2.3 Working Capital
Adjustment.

     

    (a) Closing
Adjustment.

     

    (i) Prior to
the Closing Date, the Sellers shall provide the Purchaser with an estimate of
Net Working Capital on the date immediately prior to the date hereof (the “Estimated
Closing Working Capital”) and the back up calculations made in connection
with such estimate and such other back up documents as the Purchaser shall
reasonably request.

     

    (ii) If Target
Working Capital exceeds Estimated Closing Working Capital (including by being
less negative than Estimated Closing Working Capital), the Purchaser shall, as
an adjustment to Purchase Price, reduce the Cash Consideration to be paid by the
Purchaser to the Sellers by the amount of such excess.  If Estimated
Closing Working Capital exceeds Target Working Capital (including by being less
negative than Target Working Capital), the  Purchaser shall, as an
adjustment to the Purchase Price, pay or caused to be paid to the Sellers the
amount of such excess by wire transfer of immediately available funds into the
account of the Sellers’ representative set forth on Schedule
2.1.  Such wire transfer to such account shall satisfy in full
the Purchaser’s obligations pursuant to Section
2.3(a)(ii).

     

    (b) Post-Closing
Adjustment.

     

    (i) As
promptly as practicable, but no later than 90 days after the date hereof, the
Purchaser shall cause to be prepared and delivered to the Sellers a

     

     

     

     

    
      
         

      

      
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    statement
(the “Closing
Statement”) setting forth the Purchaser’s calculation of Net Working
Capital on the date immediately prior to the date hereof (“Closing
Working Capital”).

     

    (ii) If the
Sellers disagree with the Purchaser’s calculation of Closing Working Capital
delivered pursuant to Section 2.3(b)(ii),
the Sellers may, within 20 days after delivery of the Closing Statement, deliver
a notice to the Purchaser disagreeing with such calculation and setting forth
the Sellers’ calculation of such amount.  Any such notice of
disagreement shall specify, in reasonable detail, those items or amounts as to
which the Sellers disagree, and the Sellers shall be deemed to have agreed with
all other items and amounts contained in the Closing Statement and the
calculation of Closing Working Capital delivered pursuant to Section
2.3(b)(i).  If the Sellers do not deliver a notice of
disagreement within the 20 day period specified in the first sentence of this
Section
2.3(b)(ii), then the Sellers shall be deemed to have agreed to the
Closing Statement for all purposes.

     

    (iii) If a
notice of disagreement shall be duly delivered pursuant to Section 2.3(b)(ii),
the Purchaser and the Sellers shall, during the 15 days following such delivery,
use their commercially reasonable efforts to reach agreement on the disputed
items or amounts in order to determine, as may be required, the amount of
Closing Working Capital, which amount shall not be less than the amount thereof
shown in the Purchaser’s calculation delivered pursuant to Section 2.3(b)(i) nor
more than the amount thereof shown in the Sellers’ calculation delivered
pursuant to Section
2.3(b)(ii).  If the parties so resolve all disputes, the
computation of Closing Working Capital, as amended to the extent necessary to
reflect the resolution of the dispute, shall be conclusive and binding on the
parties.  If during such period, the Purchaser and the Sellers are
unable to reach an agreement, they shall promptly thereafter submit such dispute
to the Independent Accountant.  In making such calculation, the
Independent Accountant shall consider: (i) only written submissions by the
Purchaser and the Sellers with respect to each of their calculations of the
Closing Working Capital and not undertake any independent review; and (ii) only
those items or amounts in the Closing Statement as to which the Sellers have
disagreed and which are identified in the dispute notice delivered pursuant
Section
2.3(b)(ii).  In resolving such dispute, the Independent
Accountant shall be bound by the provisions of this Section
2.3(b).  The Independent Accountant shall deliver to the
Purchaser and the Sellers, as promptly as practicable (but in any case no later
than 30 days from the date of engagement of the Independent Accountant), a
report setting forth the Closing Working Capital.  Such report shall
be final and binding upon the Purchaser and the Sellers.  The fees,
costs and expenses of the Independent Accountant’s review and report shall be
allocated to and borne by the Sellers, jointly and severally, and the Purchaser
based on the inverse of the percentage that the Independent Accountant’s
determination (before such allocation) bears to the total amount of the total
items in dispute as originally submitted to the Independent
Accountant.  For example only and not by way of expansion or
limitation, should the items in dispute total in amount to $1,000 and the
Independent Accountant awards $600 

     

     

     

    
      
         

      

      
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    in favor
of the Sellers’ position, 40% of the costs would be borne by the Sellers,
jointly and severally, and 60% of the costs of its review would be borne by the
Purchaser.

     

    (iv) If
Estimated Working Capital exceeds Final Working Capital (including by being less
negative than Final Working Capital), the Sellers shall, jointly and severally,
pay to (or as directed by) the Purchaser, in the manner and with interest as
provided in Section
2.3(b)(v), the amount of such excess as an adjustment to the Purchase
Price.  If Final Working Capital exceeds Estimated Working Capital
(including by being less negative than Estimated Working Capital),
the  Purchaser shall pay or caused to be paid to the Sellers in the
manner and with interest as provided in Section 2.3(b)(v),
the amount of such excess as an adjustment to the Purchase
Price.  “Final
Working Capital” means Closing Working Capital: (i) as shown in the
Purchaser’s calculation delivered pursuant to Section 2.3(b)(i) if
no notice of disagreement with respect thereto is duly delivered pursuant to
Section
2.3(b)(ii); or (ii) if such a notice of disagreement is delivered: (A) as
agreed by the Purchaser and Sellers pursuant to Section 2.3(b)(iii);
or (B) in the absence of such agreement, as shown in the Independent
Accountant’s calculation delivered pursuant to Section 2.3(b)(iii);
provided, that
in no event shall Final Working Capital be more than the Sellers’ calculation of
Closing Working Capital delivered pursuant to Section 2.3(b)(ii) or
less than the Purchaser’s calculation of Closing Working Capital delivered
pursuant to Section
2.3(b)(i).

     

    (v) Any
payment pursuant to Section 2.3(b)(iv)
shall be made within 3 Business Days after Final Working Capital has been
determined by wire transfer by the Company or the Sellers, as the case may be,
of immediately available funds to the account of such other party as may be
designated in writing by such other party.  In the case of the
Sellers, the wire transfer shall be into the account of the Sellers’
representative set forth on Schedule
2.1.  The wire transfer to such account shall satisfy in full
the obligation of the paying party with respect to such amount.  The
amount of any payment to be made pursuant to this Section 2.3(b) shall
bear interest from and including the date hereof to but excluding the date of
payment at a rate per annum equal to the rate of interest published by The Wall
Street Journal, Eastern Edition, from time to time as the “prime rate” at the
large U.S. money center banks during the period from the date hereof to the date
of payment.  Such interest shall be payable at the same time as the
payment to which it relates and shall be calculated daily on the basis of a year
of 365 days and the actual number of days elapsed.

     

    2.4 Closing
Date.  The consummation of the sale and purchase of the
Purchased Shares provided for in Section 2.1 hereof
(the “Closing”)
shall take place at the offices of Weil Gotshal & Manges LLP, 100 Federal
Street, 34th Floor, Boston, Massachusetts (or at such other place as the Parties
may designate in writing) to be effective as of 12:01 a.m. (Dallas, Texas time)
on the date hereof (the “Closing
Date”).

     

     

    ARTICLE
III

     

    REPRESENTATIONS
AND WARRANTIES RELATED TO THE SELLERS

     

     

     

    
      
         

      

      
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    Each Seller hereby severally (and not
jointly) represents and warrants on behalf of itself to the Purchaser that the
statements contained in this Article III are true
and complete as of the date of this Agreement.

     

    3.1 Authorization of
Agreement.  Such Seller has all requisite power, authority and
legal capacity to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by such Seller in connection with the consummation of the transactions
contemplated by this Agreement (for all Sellers, the “Seller
Documents”), and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and performance of this Agreement
and each of the Seller Documents applicable to such Seller, and the consummation
of the transactions contemplated hereby and thereby, has been duly authorized
and approved by all required action on the part of such Seller.  This
Agreement has been, and each of the Seller Documents applicable to such Seller
will be at or prior to the Closing, duly and validly executed and delivered by
such Seller and (assuming due authorization, execution and delivery by
Purchaser) this Agreement constitutes, and each of the Seller Documents
applicable to such Seller when so executed and delivered will constitute, legal,
valid and binding obligations of such Seller, enforceable against such Seller in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

     

    3.2 Conflicts; Consents of Third
Parties.

     

    (a) None of
the execution and delivery by such Seller of this Agreement or the Seller
Documents applicable to such Seller, the consummation of the transactions
contemplated hereby or thereby, or compliance by such Seller with any of the
provisions hereof or thereof will conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination or cancellation under any provision of: (i) any
Contract or Permit to which such Seller is a party or by the Purchased Shares
owned by Seller is bound; (ii) any Order of any Governmental Body applicable to
such Seller or by which any of the properties or assets of such Seller are
bound; or (iii) any applicable Law.

     

    (b) No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is required on
the part of such Seller in connection with the execution and delivery of this
Agreement, the Seller Documents applicable to such Seller, the compliance by
such Seller with any of the provisions hereof, or the consummation of the
transactions contemplated hereby, except for such consents, waivers, approvals,
Orders, Permits, authorizations, declarations, filings or notifications that, if
not obtained, made or given, would not, individually or in the aggregate, have a
material adverse effect on the ability of such Seller to consummate the
transactions contemplated by this Agreement.

     

     

     

     

    
      
         

      

      
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    3.3 Ownership and Transfer of
the Purchased Shares.  Such Seller is the legal  and
beneficial owner of the Purchased Shares set forth opposite such Seller’s name
on Schedule
2.1, free and clear of any and all Liens.  Such Seller has the
power, authority and legal capacity to sell, transfer, assign and deliver the
Purchased Shares as provided in this Agreement, and such delivery will convey to
the Purchaser good and marketable title to such Purchased Shares, free and clear
of any and all Liens, except for requisite transfer tax stamps, which shall be
paid by the Purchaser.  Other than as provided in Section 2.1 hereof,
such Seller has not agreed, promised or made any commitment to transfer the
Purchased Shares to any Person.

     

    3.4 Litigation.  There
is no Legal Proceeding pending or, to the Knowledge of such Seller, threatened
against such Seller or to which such Seller is otherwise a party relating to
this Agreement, the Seller Documents applicable to such Seller, the Purchased
Shares owned by such Seller or the transactions contemplated hereby or
thereby.

     

    3.5 Financial
Advisors.  No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for such Seller in connection with the
transactions contemplated by this Agreement and no Person is or will be entitled
to any fee or commission or like payment in respect thereof.

     

    3.6 Consideration
Securities.

     

    (a) Such
Seller has such knowledge and experience in financial and business matters so
that such Seller is capable of protecting such Seller’s own interests in
connection with the acquisition of the Consideration Securities (and any
securities of the Guarantor or any other issuer issued, distributed or otherwise
received in exchange therefor or upon conversion thereof or as a dividend or
distribution on or otherwise in respect thereof (“Successor
Securities”)) and evaluating the merits and risks of such Seller’s
investment in the Purchaser.

     

    (b) Such
Seller and such Seller’s advisors have such knowledge and experience in
financial, tax and business matters so as to enable such Seller to utilize the
information made available to such Seller in connection with the investment
contemplated hereby to evaluate the merits and risks of an investment in the
Guarantor and to make an informed investment decision with respect thereto, and
such Seller is an “accredited investor” as defined in Regulation D promulgated
under the Securities Act.  Such Seller is familiar with the type of
investment that the Consideration Securities (and any Successor Securities
thereto) constitute and recognizes that an investment in the Guarantor involves
substantial risks, including risk of loss of the entire amount of such
investment.  Such Seller can bear the economic risk of the purchase of
the Consideration Securities (and any Successor Securities thereto) and of the
loss of the entire amount of the investment.

     

    (c) Such
Seller is aware that there are limitations and restrictions on the circumstances
under which such Seller may offer to sell, transfer or otherwise dispose of the
Consideration Securities (and any Successor Securities thereto).  Such

     

     

     

    
      
         

      

      
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    limitations
and restrictions include those set forth in Section 6.9 and those
imposed by operation of applicable securities laws and
regulations.  Such Seller acknowledges that as a result of such
limitations and restrictions, it might not be possible to liquidate an
investment in the Consideration Securities (and any Successor Securities
thereto) readily and that it may be necessary to hold such investment for an
indefinite period.

     

    (d) In
evaluating the suitability of an investment in the Guarantor, such Seller has
not relied upon any oral or written representations or other information from
the Purchaser or any Affiliate of the Purchaser or any agent or representative
of the Purchaser or its Affiliates except as set forth herein.

     

    (e) No
person, including, without limitation, the Purchaser and its Affiliates and each
of their managers, officers or their agents or employees, has warranted to such
Seller, either expressly or by implication, in respect of the profit or loss
(including tax write-offs and/or tax benefits) to be realized, if any, as a
result of such Seller’s investment in the Consideration Securities (and any
Successor Securities thereto).

     

    (f) Such
Seller is acquiring the Consideration Securities (and any Successor Securities
thereto) for such Seller’s own account, for investment and not with a view to
resale or distribution except in compliance with the Securities Act and this
Agreement.  Such Seller agrees not to sell or otherwise transfer the
Consideration Securities (and any Successor Securities thereto) without
registration under the Securities Act or applicable state securities laws or an
exemption therefrom and without complying with the Stockholders
Agreement.  Such Seller acknowledges that the Consideration Securities
(and any Successor Securities thereto) have not been and may not be registered
under the Securities Act or the securities laws of any state.

     

    (g) Such
Seller’s principal place of business or residence for tax purposes is in the
United Kingdom.

     

    (h) Such
Seller acknowledges and agrees that the certificates evidencing the
Consideration Securities (and any Successor Securities thereto) shall bear the
following legend:

     

    “The
securities represented by this certificate were issued in a private placement,
without registration under the Securities Act, as amended, and may not be sold,
assigned, pledged or otherwise transferred in the absence of an effective
registration under the Securities Act covering the transfer or an opinion of
counsel, satisfactory to the issuer, that registration under the Securities Act
is not required.”

     

     

     

     

    
      
         

      

      
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    ARTICLE
IV

     

    REPRESENTATIONS
AND WARRANTIES RELATED TO THE COMPANY

     

    Except as
disclosed by the Sellers in a written Company Disclosure Schedule and a written
Educationcity-US Disclosure Schedule provided by the Sellers to the Purchaser
dated as of the date hereof (the “Disclosure
Schedules”), the Sellers, jointly and severally, hereby represent and
warrant to the Purchaser that the statements contained in this Article IV are true
and complete as of the date of this Agreement.  The Disclosure
Schedules shall be arranged in sections corresponding to the numbered sections
contained in this Article IV, and any
disclosure in any section of the Disclosure Schedules shall qualify other
sections in this Article IV to the
extent it is reasonably apparent on its face that such disclosure also qualifies
such other section in this Article
IV.

     

    4.1 Organization and Good
Standing.

     

    (a) The
Company is a private limited company duly organized and validly existing under
the laws of England and Wales and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now
conducted.  The Company is duly qualified or authorized to do business
and is in good standing under the laws of each jurisdiction in which it owns or
leases real property and each other jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified or authorized could
not reasonably be expected to have a Material Adverse Effect.  The
statutory books of the Company have been properly kept and contain a complete
and accurate records of the matters which are required to be dealt with in them
and, to the Knowledge of the Company, there has been no allegation that any of
them is incorrect or should be rectified.  The Company has delivered
or made available to the Purchaser true, complete and correct copies of its
memorandum and articles of association as in effect on the date
hereof.

     

    (b) Educationcity
Inc. (“Educationcity-US”)
is a corporation duly organized and validly existing under the laws of the State
of Illinois and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now
conducted.  Educationcity-US is duly qualified or authorized to do
business and is in good standing under the laws of each jurisdiction in which it
owns or leases real property and each other jurisdiction in which the conduct of
its business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified or authorized could
not reasonably be expected to have a Material Adverse Effect.  The
Company has delivered or made available to the Purchaser true, complete and
correct copies of Educationcity-US’s certificate of incorporation and bylaws as
in effect on the date hereof.

     

     

     

    
      
         

      

      
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    4.2 Capitalization.  As
of the date hereof, the Purchased Shares are all of the issued or outstanding
equity interests in the Company.  The Purchased Shares are legally and
beneficially owned by the Sellers in the amounts set forth on Schedule
2.1.  The Purchased Shares were properly and validly issued and
allotted and are fully paid and non-assessable and were not issued in violation
of any purchase or call option, right of first refusal, subscription right,
preemptive right or any similar rights.  There are no existing
options, warrants, calls, rights or Contracts to which any Selling Party is a
party requiring, and there are no securities of the Company outstanding which
upon conversion or exchange would require, the issuance, sale or transfer of any
additional equity securities or other equity interests of the Company or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase equity securities of the Company, including the
Purchased Shares, or other equity interests of the Company.  There are
no obligations, contingent or otherwise, of the Company to: (i) repurchase,
redeem or otherwise acquire any equity securities; or (ii) provide material
funds to, or make any material investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect to the
obligations of, any Person.  There are no outstanding equity
appreciation, phantom equity, profit participation or similar rights with
respect to the Company.  There are no bonds, debentures, notes or
other Indebtedness of the Company having the right to vote or consent (or,
convertible into, or exchangeable for, securities having the right to vote or
consent) on any matters on which stockholders (or other equity holders) of the
Company may vote.

     

    4.3 Subsidiaries.  Schedule 4.3 sets
forth the names of all shareholders or other equity owners of Educationcity-US
and the number of shares of stock owned by each such shareholder or the amount
of equity owned by each such equity owner.  The outstanding shares of
capital stock or equity interests of Educationcity-US are validly issued, fully
paid and non-assessable and were not issued in violation of any purchase or call
option, right of first refusal, subscription right, preemptive right or any
similar right.  All such shares or other equity interests represented
as being owned by the Company are owned by the Company free and clear of any and
all Liens.  There is no existing option, warrant, call, right or
Contract to which Educationcity-US is a party requiring, and there are no
convertible securities of Educationcity-US outstanding which upon conversion
would require, the issuance of any shares of capital stock or other equity
interests of Educationcity-US or other securities convertible into shares of
capital stock or other equity interests of Educationcity-US.  The
Company has no Subsidiaries other than Educationcity-US and does not own,
directly or indirectly, any capital stock or equity securities of any Person
other than Educationcity-US.  There are no material restrictions on
the ability of Educationcity-US to make distributions of cash to its respective
equity holders.

     

    4.4 Conflicts; Consents of Third
Parties.

     

    (a) None of
the execution and delivery of the Seller Documents, the consummation of the
transactions contemplated thereby, or compliance by the Company with any of the
applicable provisions thereof will conflict with, or result in any violation or
breach of, or conflict with or default (with or without notice or lapse

     

     

     

    
      
         

      

      
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    of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or give
rise to any obligation of the Company to make any payment under, or to the
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under, or result in the creation of any Liens, other than Permitted
Exceptions, upon any of the properties or assets of the Company under any
provision of: (i) the organizational documents of the Company or
Educationcity-US; (ii) any material Contract or Permit to which the Company or
Educationcity-US is a party or by which any of the properties or assets of the
Company or Educationcity-US are bound; (iii) any Order binding on the Company or
Educationcity-US or by which any of the properties or assets of the Company or
Educationcity-US are bound; or (iv) any applicable Law.

     

    (b) No
consent, waiver, approval, Permit or authorization of or filing with, or
notification to, any Person or Governmental Body is required on the part of the
Company or Educationcity-US in connection with: (i) the consummation of the
transactions contemplated hereby or the taking by the Company of any other
action contemplated hereby; or (ii) the continuing validity and effectiveness
immediately following the Closing of any material Contract or
Permit.

     

    4.5 Financial
Statements.

     

    (a) The
Company has delivered or made available to the Purchaser copies of: (i) its
unaudited consolidated financial statements (inclusive of Educationcity-US) as
of December 31, 2009 and December 31, 2008; and (ii) its unaudited consolidated
statement of assets and liabilities (inclusive of Educationcity-US) as of March
31, 2010 and the related statement of revenue and expenses for the 3 month
period then ended (such statements referred to in subsections (i) and (ii)
immediately above, including the schedules thereto, the “Financial
Statements”).  Each of the Financial Statements is complete and
correct in all material respects without modification of the accounting
principles used in the preparation thereof throughout the periods presented and
presents fairly in all material respects the financial position, results of
operations and cash flow of the Company and Educationcity-US as at the dates and
for the periods indicated subject to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be significant) and
the absence of notes.  For the purposes hereof, the unaudited
consolidated financial statements of the Company (inclusive of Educationcity-US)
as of December 31, 2009 is referred to as the “Balance
Sheet” and December 31, 2009 is referred to as the “Balance
Sheet Date.”

     

    (b) The
Company and Educationcity-US make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect, in all material respects, the
transactions and dispositions of their assets, and the Financial Statements are
based on such books, records and accounts.  The Company and
Educationcity-US maintain systems of internal accounting controls sufficient to
provide reasonable assurance that financial statements can be prepared in
conformity with GAAP.

     

     

     

     

    
      
         

      

      
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    4.6 No Undisclosed
Liabilities.  Neither the Company nor Educationcity-US has any
Indebtedness or Liabilities (whether or not required under GAAP to be reflected
on a balance sheet or the notes thereto) other than those: (i) incurred in
connection with the transactions contemplated by this Agreement; (ii)
specifically reflected and fully reserved against in the Balance Sheet; or (iii)
that are otherwise incurred in the Ordinary Course of Business since the Balance
Sheet Date and which do not exceed $25,000.

     

    4.7 Absence of Certain
Developments.  Except as expressly contemplated by this
Agreement, since the Balance Sheet Date: (i) the Company and Educationcity-US
have conducted their business only in the Ordinary Course of Business; (ii)
there has not been any event, change, occurrence or circumstance that,
individually or in the aggregate with any such events, changes, occurrences or
circumstances, has had or could reasonably be expected to have a Material
Adverse Effect; and (iii) except as contemplated by this Agreement, neither the
Company nor Educationcity-US has:

     

    (a) borrowed
any amount or incurred or become subject to any material Liabilities (whether or
not of the type required under GAAP to be reflected on a balance sheet or the
notes thereto) except Liabilities incurred in the Ordinary Course of Business
and Liabilities under contracts entered into in the Ordinary Course of
Business;

     

    (b) subjected
any portion of its assets to any Lien, except Liens for current property taxes
not yet due and payable;

     

    (c) terminated,
or had terminated by any other party thereto,  any material Contract
or any Contract with any customer;

     

    (d) satisfied
or discharged any material Lien or paid any material obligation, except for in
the Ordinary Course of Business;

     

    (e) sold,
assigned or transferred any tangible assets except in the Ordinary Course of
Business;

     

    (f) sold,
assigned, licensed (other than to a customer in the Ordinary Course of
Business), abandoned, transferred, encumbered or otherwise disposed of any
material Intellectual Property, Technology or any other material intangible
assets;

     

    (g) suffered
any extraordinary losses or waived any rights of material value;

     

    (h) made any
capital expenditures or commitments exceeding $25,000.00 per expenditure or
commitment;

     

    (i) made or
rescinded any election or settled or compromised any claim, in each case,
relating to Taxes;

     

     

     

    
      
         

      

      
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    (j) entered
into or made any material change in any Plans, compensation arrangements or
agreements with any employee, officer or director;

     

    (k) made any
change in accounting or Tax reporting principles, methods or policies;
or

     

    (l) made any
loans, advances or guarantees to or for the benefit of any employee or any
members of their immediate families, other than advances made in the Ordinary
Course of Business.

     

    4.8 Taxes.

     

    (a) US
Taxes.

     

    (i) Educationcity-US
has timely filed (or has had filed on its behalf) all Tax Returns (other than
Tax Returns which, if properly prepared, would involve an immaterial amount of
Tax) required to be filed by or with respect to Educationcity-US and has timely
paid, or caused to be timely paid, all material amounts of Taxes due and owing
by or with respect to Educationcity-US (whether or not shown to be due on any
Tax Returns) to the proper Governmental Body.  All such Tax Returns
are true, correct and complete in all material respects.

     

    (ii) No
actions, audits, investigations, claims, assessments or other administrative or
court proceedings are presently pending relating to the Tax Returns or any
liability in respect of Taxes of Educationcity-US and, to the Knowledge of
Educationcity-US, there is no threatened action, audit, investigation, claim,
assessment or other administrative or court proceeding against Educationcity-US
with respect to Taxes for any period.  No claim has been made by any
taxing authority in a jurisdiction where Educationcity-US does not file Tax
Returns to the effect that Educationcity-US is or may be subject to taxation by,
or required to file a Tax Return in, such jurisdiction.

     

    (iii) Educationcity-US:
(i) is not a party to or bound by, and does not have any obligation under, any
Tax allocation agreement, Tax indemnity agreement, Tax sharing agreement or
similar contract or arrangement or any other obligation to indemnify any other
person with respect to Taxes that will be in effect after the Closing; (ii) has
never been a member of an affiliated group of corporations (as defined in
Section 1504(a) of the Code) or filed or been included in or has been required
to file or be included in an affiliated, consolidated, combined, unitary or
similar Tax Return; (iii) does not have any current or potential liability for
the Taxes of any other person under Treasury Regulation section 1.1502-6 (or any
comparable provision of state, local or foreign Law), as transferee or
successor, or otherwise; (iv) has not agreed to and is not required to make any
adjustment pursuant to Section 481 of the Code or any similar provision of
state, local or foreign Law, nor,  to the Knowledge of
Educationcity-US, has any Governmental Body proposed any such adjustment; or (v)
does not have any application pending with any Governmental Body requesting
permission for any changes in accounting methods.

     

     

     

    
      
         

      

      
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    (iv) There are
no Liens on any of the assets of Educationcity-US that arose in connection with
any failure (or alleged failure) to pay any Tax other than for any Taxes: (i)
not yet delinquent; or (ii) that Educationcity-US is contesting in good faith
with appropriate proceedings as to which appropriate reserves have been set
aside on the Financial Statements.

     

    (v) Educationcity-US
has complied in all material respects with all applicable Laws, rules and
regulations relating to the payment and withholding of Taxes and has timely
withheld and paid all material amounts of Tax required to have been withheld and
paid in connection with amounts paid or owed to any employee, independent
contractor, creditor, shareholder, or other third party.

     

    (vi) The
Purchaser has been provided with true and complete copies of: (i) all Tax
Returns of Educationcity-US (which if properly prepared would result in a
material amount of Tax) for all taxable periods ending after December 31, 2005;
and (ii) all revenue agents’ reports and other similar reports relating to the
audit and examination of the Tax Returns of Educationcity-US for all taxable
periods ending after  December 31, 2005.

     

    (vii) Educationcity-US
has not: (i) constituted either a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying or intended to qualify for tax-free treatment
under Section 355 of the Code; (ii) been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii); or (iii) waived any statute
of limitations in respect of Taxes, agreed to any extension of time with respect
to a Tax assessment or deficiency, entered into a closing agreement under
applicable Tax Law or requested or is subject to any private letter ruling of
the Internal Revenue Service or comparable rulings of any taxing
authority.

     

    (viii) No
property owned by Educationcity-US is: (i) property required to be treated as
owned by another Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; (ii) “tax-exempt use property” within
the meaning of Section 168(h)(1) of the Code; (iii) “tax-exempt financed
property” within the meaning of Section 168(h)(5) of the Code; (iv) “limited use
property” within the meaning of Rev. Proc. 2001-28, 2001-1 C.B. 1156, (v)
subject to Section 168(g)(1)(A) of the Code; or (vi) subject to a “section 467
rental agreement” as defined in Section 467 of the Code.

     

    (b) UK
Taxes.

     

    (i) General.

     

    (1) The
Company has within applicable time limits made all returns, provided all
information and maintained all records in relation to UK 

     

     

     

    
      
         

      

      
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    Tax as it
is required to make, provide or maintain.  No return (and nothing in a
return) is disputed or is yet to be determined by, or is subject to agreement
with, a UK Tax Authority.

     

    (2) The
Company has paid all UK Tax which it has become liable to pay when due and is
not, and has not in the 6 years ending on the date of this Agreement been,
liable to pay a penalty, surcharge, fine or interest in connection with UK
Tax.

     

    (3) The
Company is not and does not expect to be involved in a dispute in relation to UK
Tax.  No UK Tax Authority has investigated or indicated that it
intends to investigate the Company’s UK Tax affairs.

     

    (4) The
Company has duly submitted all elections, claims and disclaimers which have been
assumed to have been made for the purposes of computing any provision for UK Tax
in the Financial Statements.

     

    (5) All
clearances obtained by the Company have been properly obtained and all
information supplied to any UK Tax Authority in connection with such clearances
was complete and accurate in all respects and any transaction for which such
clearance was obtained has been carried out only in accordance with the terms of
the clearance given therefore and the application on which the clearance was
based.

     

    (ii) Distributions And Loan
Relationships.

     

    (1) Since its
inception, the Company has not made a repayment of share capital to which
section 210 Taxes Act 1988 (bonus issue following repayment of share capital)
applies or issued share capital as paid up other than by the receipt of new
consideration within the meaning of Part VI Taxes Act 1988 (company
distributions, tax credits etc.).

     

    (2) All
interest, discounts or premiums payable by the Company in respect of its loan
relationships within the meaning of Chapter II, Part IV Finance Act 1996 are
capable of being brought into account as a debit for the purposes of that
Chapter as and to the extent that they are from time to time recognized in the
Financial Statements (assuming that the accounting policies and methods adopted
for the purpose of the Financial Statements continue to be so
adopted).

     

    (iii) Capital
Allowances.  The Company would not incur any balancing charge
on the disposal of any asset (or class of assets in respect of which a separate
computation for capital allowances is required, whether as a result of an
election or otherwise) if that asset (or all the assets in that class) were
disposed of for a consideration equal to the book value adopted for the purpose
of the Financial Statements for that asset (or that class of
assets).

     

     

     

    
      
         

      

      
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    (iv) Capital
Gains.  No chargeable gain would arise in respect of any asset
of the Company: (i) treated as such in the Financial Statements if that asset
were to be disposed of for a consideration equal to the value attributed thereto
in the Financial Statements; or (ii) acquired after the Balance Sheet Date if
that asset were to be disposed of for a consideration equal to the consideration
given for its acquisition, in each case disregarding any statutory rights to
claim any allowance or relief other than amounts deductible under section 38
TCGA 1992.

     

    (v) Residence.  The
Company is not treated for any taxation purpose as resident in a country other
than the country of its incorporation and does not have and nor has it within
the past six years had, a branch, agency or permanent establishment in a country
other than the country of its incorporation.

     

    (vi) Employees.

     

    (1) The
Company is not under any obligation to pay, nor has it since the Balance Sheet
Date paid or agreed to pay, any compensation for loss of office or any
gratuitous payment not deductible in computing its income for the purposes of
corporation tax.

     

    (2) All
National Insurance contributions and sums payable to HM Revenue & Customs
under the P.A.Y.E system and any amounts of a corresponding nature payable to
any non-UK Tax Authority due and payable by the Company up to the date hereof
have been paid and the Company has made all such deductions and retentions as
should have been made and has retained full, complete and accurate records in
relation to any such payments, withholdings or deductions.

     

    (vii) Stamp Taxes. All
documents by virtue of which the Company has any right which are required to be
stamped have been stamped and all duty, interest and penalties on those
documents have been paid.

     

    (viii) Value Added
Tax.

     

    (1) The
Company: (i) is registered for the purposes of the VATA; (ii) has made, given,
obtained and kept up to date, full and accurate records, invoices and documents
appropriate or required for the purposes of the VATA; (iii) is eligible for full
recovery of any VAT incurred; (iv) is not in arrears with payments or returns
due under the VATA; and (v) has not been required by a UK Tax Authority to give
security under the VATA.

     

    (2) The
Company is not a member of a group of companies for the purposes of section 43
VATA (groups of companies).

     

    (3) In the
three years ending on the date of this Agreement, the Company has not been in
default in respect of an accounting period, as 

     

     

     

    
      
         

      

      
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    the terms
“default” and “accounting period” are used in sub-section 59(1) VATA (the
default surcharge).

     

    (ix) Close
Companies.

     

    (1) The
Company is a close company for the purposes of the Taxes Act 1988.

     

    (2) The
Company has not made a distribution within the meaning of section 418 Taxes Act
1988 except as provided for and properly disclosed in the Financial
Statements.

     

    (3) During
all accounting periods ending within six years of the date hereof and the
current accounting period, the Company has not done anything so as to give rise
to an assessment under section 419 (as extended by section 422 Taxes Act 1988)
(loans to participators etc.).

     

    (4) The
Company is not a close investment-holding company as defined in section 13A
Taxes Act 1988.

     

    (x) Groups.  The
Company is not (and has not been in the past seven years) part of a group for
the purposes of section 170 TGCA 1992 (groups of companies), section 402 of the
Taxes Act 1988 (surrender of relief between members of a group) or Part 1,
Schedule 7 of the Finance Act 2003 (stamp duty land tax: group relief), nor is
it associated with any other company for the purposes of section 42 Finance Act
1930 (relief from stamp duty in case of transfer of property as between
associated companies).

     

    (xi) Secondary Liabilities and
Degrouping. No event, transaction, act or omission has occurred which
could result in the Company becoming liable for UK Tax which is primarily or
directly chargeable against or attributable to a person other than the Company
or which is charged by reference to the income or gains of another person and no
degrouping charge will arise or claw back of relief or exemption from tax
previously granted will be withdrawn or lost as a result of the transactions
contemplated hereby.

     

    (xii) Transfer Pricing. No
transactions or arrangements involving the Company have taken place or are in
existence which are such that the provisions of Schedule 28AA Taxes Act 1988
have been or could be applied to them.

     

    (xiii) Inheritance
Tax.

     

    (1) The
assets of the Company and the shares of the Company are not, and will not in
consequence of an event occurring on or before Completion (whether or not in
combination with an event occurring after Completion) 

     

     

     

    
      
         

      

      
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    become,
subject to a charge as mentioned in section 237 Inheritance Tax Act 1984
(imposition of charge).

     

    (2) No person
has, or could in consequence of an event occurring on or before Completion
(whether or not in combination with an event occurring after Completion) obtain,
the power under section 212 Inheritance Tax Act 1984 (powers to raise tax) to
raise inheritance tax by the sale or mortgage of, or by a terminable charge on,
an asset of the Company.

     

    (xiv) Avoidance.

     

    (1) The
Company has not entered into any arrangements or transactions the main purpose,
or one of the main purposes, of which was the avoidance of UK Tax.

     

    (2) Any gain
on the disposal of shares by the Company in Educationcity-US would not be a
chargeable gain by virtue of the exemption in Schedule 7AC TCGA
1992.

     

    4.9 Real
Property.

     

    (a) Neither
the Company nor Educationcity-US owns any real property or interests in real
property (including improvements thereon and easements appurtenant thereto) in
fee.

     

    (b) Schedule 4.9(b) sets
forth a complete list of all real property and interests in real property leased
by the Company or Educationcity-US (as lessee or lessor) (the “Real
Property Leases”).  The properties leased under the Real
Property Leases constitute all interests in real property currently used,
occupied or currently held for use by the Company or
Educationcity-US.  The Company has delivered to the Purchaser true,
correct and complete copies of the Real Property Leases, together with all
amendments, modifications or supplements, if any, thereto.

     

    (c) The
Company or Educationcity-US (as applicable) has a valid, binding and enforceable
leasehold interest under each of the Real Property Leases under which it is a
lessee, free and clear of all Liens other than Permitted
Exceptions.  Each of the Real Property Leases is in full force and
effect.  The Company or Educationcity-US (as applicable) is not in
default under any Real Property Lease and, to the Knowledge of the Company and
the Knowledge of Educationcity-US, no event has occurred which if not remedied,
and whether with or without notice or the passage of time or both, would result
in such a default.  Neither the Company nor Educationcity-US has
received or given any written notice of any default or event that with notice or
lapse of time, or both, would constitute a default by the Company or
Educationcity-US under any of the Real Property Leases and, to the Knowledge of
the Company and the Knowledge of Educationcity-US, no other party is in default

     

     

     

    
      
         

      

      
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    thereof,
and no party to any Real Property Lease has exercised any termination rights
with respect thereto.

     

    (d) To the
Knowledge of the Company and the Knowledge of Educationcity-US, no properties
leased under the Real Property Leases are subject to the payment of outgoings
except those specified in the Real Property Leases and the usual rates and
taxes.

     

    4.10 Tangible Personal
Property.

     

    (a) The
Company or Educationcity-US has good and marketable title to all of the items of
tangible personal property used or held for use or intended to be used by the
Company or Educationcity-US (the “Personal
Property”), free and clear of any and all Liens, other than Permitted
Exceptions.  All such items of Personal Property which are material to
the operation of the Company or Educationcity-US are in good condition and in a
state of good maintenance and repair (ordinary wear and tear
excepted).

     

    (b) Schedule 4.10(b) sets
forth all leases of personal property by the Company or Educationcity-US
involving annual payments in excess of $10,000 relating to personal property
(the “Personal
Property Leases”).  All of the items of personal property under
the Personal Property Leases which are material to the operation of the Company
or Educationcity-US, are in good condition and repair (ordinary wear and tear
excepted) and are suitable for the purposes used.  The Company has
delivered or made available to the Purchaser true, correct and complete copies
of the Personal Property Leases, together with all amendments, modifications or
supplements thereto.

     

    (c) The
Personal Property and the personal property leased by the Company or
Educationcity-US under the Personal Property Leases are sufficient for the
continued operation of the Company and Educationcity-US as their business is
currently conducted.  The Company or Educationcity-US (as applicable)
has a valid, binding and enforceable leasehold interest under each of the
Personal Property Leases under which it is a lessee.  Each of the
Personal Property Leases is in full force and effect and neither the Company nor
Educationcity-US has received or given any written notice of any default or
event that with notice or lapse of time, or both, would constitute a default by
the Company or Educationcity-US under any of the Personal Property Leases and,
to the Knowledge of the Company and the Knowledge of Educationcity-US, no other
party is in default thereof, and no party to the Personal Property Leases has
exercised any termination rights with respect thereto.

     

    4.11 Intellectual
Property.

     

    (a) Schedule 4.11(a) sets
forth an accurate and complete list of all Internet domain names, Patents,
registered and material unregistered Marks and Copyrights, registered Designs,
and pending applications for registration of Marks, 

     

     

     

    
      
         

      

      
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    Copyrights
and Designs owned by the Company or Educationcity-US.  Schedule 4.11(a)
lists: (i) the owner of each such item of Company Intellectual Property; (ii)
the jurisdictions in which each such item of Company Intellectual Property has
been issued, registered, or in which any such application for such issuance and
registration has been filed; and (iii) the registration or application date, as
applicable.

     

    (b) The
Company and Educationcity-US are the sole and exclusive legal and beneficial
owners of or have valid and continuing rights to use, sell or license, as the
case may be, all Company Intellectual Property and Company Technology as the
same is used, sold and licensed in their businesses as presently conducted, free
and clear of all Liens or obligations to others (except in relation to Company
Intellectual Property and Company Technology, in each case, not owned by the
Company or Educationcity-US, obligations in contracts or licenses with
counterparties thereunder).

     

    (c) The
Company Intellectual Property and Company Technology, the design, development,
manufacturing, distribution, offer for sale, sale or use of any products and
services in connection with their businesses as presently conducted, and the
present business practices, methods and operations of the Company and
Educationcity-US do not infringe, constitute an unauthorized use of,
misappropriate, dilute or violate any Intellectual Property or other right of
any Person (including pursuant to any non-disclosure agreements or obligations
to which the Company or Educationcity-US or any of its Current Employees or
Former Employees is a party). The Company Intellectual Property and the Company
Technology include all of the Intellectual Property and Technology and
respective rights thereto necessary and sufficient to enable the Purchaser to
conduct the businesses of the Company and Educationcity-US in the manner in
which such businesses are currently being conducted.

     

    (d) Except
with respect to licenses of commercial off the shelf Software available on
reasonable terms for a license fee of no more than $25,000, neither the Company
nor Educationcity-US is required, obligated, or under any liability whatsoever,
to make any payments by way of royalties, fees or otherwise to any Person with
respect to: (i) any Intellectual Property or the use thereof; or (ii) any
Technology or the use thereof.

     

    (e) Schedule 4.11(e) sets
forth a complete and accurate list of all Contracts: (i) to which the Company or
Educationcity-US is a party: (A) granting any Intellectual Property License,
other than those implied by the sale of goods or services; (B) containing a
covenant not to compete or otherwise limiting either of their ability to: (x)
exploit fully any of their Intellectual Property; or (y) conduct their
businesses in any market or geographical area or with any Person; or (ii) to
which the Company or Educationcity-US is a party containing an agreement to
indemnify any other Person against any claim of infringement, unauthorized use,
misappropriation, dilution or violation of Intellectual Property.  The
Company has delivered to 

     

     

     

    
      
         

      

      
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    Purchaser
true, correct and complete copies of each Contract set forth on Schedule 4.11(e)
together with all amendments, modifications or supplements thereto.

     

    (f) Each of
the Intellectual Property Licenses is in full force and effect and is the legal,
valid and binding obligation of the Company or Educationcity-US (as applicable),
enforceable against such party in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).  Neither
the Company nor Educationcity-US is in default under any Intellectual Property
License, nor, to the Knowledge of the Company or the Knowledge of
Educationcity-US, is any other party to an Intellectual Property License in
default thereunder, and, to the Knowledge of the Company or the Knowledge of
Educationcity-US, no event has occurred that with the lapse of time or the
giving of notice or both would constitute a default thereunder.  No
party to any of the Intellectual Property Licenses has exercised any termination
rights with respect thereto and, to the Knowledge of the Company and the
Knowledge of Educationcity-US, there are no material disputes regarding the
scope or performance of any such agreement.  The Company and
Educationcity-US have good and valid title to the Intellectual Property
Licenses, free and clear of all Liens other than Permitted Exceptions and those
set forth on Schedule
4.11(e).

     

    (g) No Trade
Secret material to the business of the Company or Educationcity-US as presently
conducted has been authorized to be disclosed or has been actually disclosed by
the Company, Educationcity-US or any of the Sellers to any of their Current
Employees or Former Employees or any third Person other than pursuant to a valid
and enforceable confidentiality or non-disclosure agreement.  The
Company and Educationcity-US have taken security measures to protect the
secrecy, confidentiality and value of all the Trade Secrets included in the
Company Intellectual Property and any other non-public, proprietary information
included in the Company Technology, which measures are reasonable in the
industry in which the Company and Educationcity-US operate.  None of
the Company Technology or Company Intellectual Property was developed by an
Current Employee or Former Employee or other third Person who has not executed a
valid written agreement pursuant to which such Current Employee or Former
Employee or other third Person has assigned to the Company or Educationcity-US
all of their rights to such portion or element of the Company Technology or
Company Intellectual Property and, if applicable, waived any moral rights in any
Copyrights.

     

    (h) Neither
the Company nor Educationcity-US is or has been the subject of any past, pending
or, to the Knowledge of the Company or the Knowledge of Educationcity-US,
threatened Legal Proceedings which involve a claim of infringement, unauthorized
use, misappropriation, dilution or violation by any Person against the Company
or Educationcity-US or challenging the ownership, use, validity or
enforceability of any Company Intellectual Property or Company
Technology.  Neither the Company nor Educationcity-US has received
written (including by 

     

     

     

    
      
         

      

      
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    electronic
mail) notice of any such threatened claim and, to the Knowledge of the Company
and the Knowledge of Educationcity-US, there are no facts or circumstances that
would form the basis for any such claim or challenge.  The Company
Intellectual Property and the Company Technology, and all of the Company’s and
Educationcity-US’s rights in and to the Company Intellectual Property and the
Company Technology, are valid and enforceable.

     

    (i) To the
Knowledge of the Company and the Knowledge of Educationcity-US, no Person is
infringing, violating, misusing or misappropriating any Company Intellectual
Property, and no such claims have been made against any Person by the Company or
Educationcity-US.

     

    (j) There are
no Orders binding upon the Company or Educationcity-US which restrict, in any
material respect, any rights to any Company Intellectual Property or which
affect the validity, use or enforceability of any Company Intellectual
Property.

     

    (k) The
consummation of the transactions contemplated hereby will not result in the loss
or impairment of the Company’s or Educationcity-US’s right to own or use any of
the Company Intellectual Property or Company Technology.

     

    (l) No
Current Employee or Former Employee has any right, title or interest, directly
or indirectly, in whole or in part, in any material Company Intellectual
Property.  To the Knowledge of the Company and the Knowledge of
Educationcity-US, no Current Employee or Former Employee is, as a result of or
in the course of such employee’s, consultant’s or independent contractor’s
engagement with the Company or Educationcity-US, in default or breach of any
material term of any employment agreement, non-disclosure agreement, assignment
of invention agreement or similar agreement.

     

    (m) Schedule 4.11(m) sets
forth a complete and accurate list of (i) all Software included in the Company
Technology legally and beneficially owned exclusively by the Company or
Educationcity-US that is material to the operation of the businesses of those
entities; and (ii) all other Software used in such businesses that is not
exclusively owned by the Company or Educationcity-US, excluding
commercial-off-the-shelf Software available on reasonable terms for a license
fee of no more than $25,000.

     

    (n) The
Company Technology is adequate for the businesses of the Company and
Educationcity-US, as presently conducted.  The Company Technology has
not suffered any material failure within the past 2 years and is reasonably
secure against intrusion.  To the Knowledge of the Company and the
Knowledge of Educationcity-US, neither the Company nor Educationcity-US has
suffered any security breaches within the past 2 years that have resulted in a
third party obtaining 

     

     

     

    
      
         

      

      
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    access to
any PII Data or confidential information of the Company or Educationcity-US or
any of their customers or suppliers.

     

    (o) All of
the source code relating to Software included in the Company Technology is in
the possession or control of the Company or Educationcity-US or is the subject
of enforceable escrow deposit arrangements with independent escrow
agents.

     

    (p) No open
source or public library Software (including any version of any Software
licensed pursuant to any GNU public license), has been incorporated into any
product of the Company or Educationcity-US where, as a result of the use of such
open source or public library Software: (i) the Company or Educationcity-US is
obligated to make available to third parties the source code for any of their
proprietary Software products; (ii) third parties are permitted to create any
derivative work based on such proprietary Software or any part thereof; or (iii)
third parties are permitted to distribute or redistribute such proprietary
Software at no charge.

     

    (q) The
Company and Educationcity-US have established and
maintained  commercially reasonable privacy policies and are and have
been in compliance therewith.

     

    (r) The
consummation of the transactions contemplated by this Agreement does not violate
any of the Company’s or Educationcity-US’s privacy policies, nor require the
Company or Educationcity-US to provide any notice to, or seek any consent from,
any employee, customer, user, supplier, service provider or other third party
under any such policy.  No privacy policy of the Company or
Educationcity-US will impose any restrictions upon the Company’s or
Educationcity-US’s ability to use, possess or disclose such PII Data in the
manner that such PII Data was used, possessed or disclosed prior to the date
hereof.

     

    (s) The
Company and Educationcity-US have materially complied with all relevant
requirements under the DPA, including: (i) the data protection principles set
out in the DPA; and (ii) any requests from data subjects (as defined by the DPA)
for access to PII Data held by the Company or
Educationcity-US.  Neither the Company nor Educationcity-US has
received notice from, nor been subject to, enquiries by the Information
Commissioner’s Office regarding non-compliance or alleged non-compliance by the
Company and/or Educationcity-US with any provisions of the DPA.  To
the Knowledge of the Company and the Knowledge of Educationcity-US, no
individual has alleged that the Company or Educationcity-US has failed to comply
with the provisions of the DPA or claimed compensation from the Company or
Educationcity-US under the DPA, including for unauthorized disclosure of PII
Data.

     

    4.12 Material
Contracts.

     

     

     

     

    
      
         

      

      
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    (a) Schedule 4.12(a) sets
forth a list of all of the Contracts to which the Company or Educationcity-US is
a party or by which any of their assets are bound (collectively, the “Material
Contracts”):

     

    (i) Contracts
with customers containing service level guarantees;

     

    (ii) Contracts
with any current or former officer, director, equity holder or Affiliate of the
Company or Educationcity-US;

     

    (iii) Contracts
for the sale of any of the assets of the Company or Educationcity-US (other than
customer contracts, in the Ordinary Course of Business) or for the grant to any
Person of any preferential rights to purchase any of their assets;

     

    (iv) Contracts
for joint ventures, strategic alliances, partnerships, or sharing of profits,
revenues or proprietary information;

     

    (v) Contracts
containing: (a) covenants of the Company or Educationcity-US not to compete in
any line of business or with any Person in any geographical area or not to
solicit or hire any Person with respect to employment; or (b) covenants of any
other Person not to compete with the Company or Educationcity-US in any line of
business or in any geographical area or not to solicit or hire any Person with
respect to employment;

     

    (vi) Contracts
relating to the acquisition (by merger, purchase of stock or assets or
otherwise) by the Company or Educationcity-US of any business or material asset
or the capital stock of any other Person;

     

    (vii) Contracts
relating to the incurrence, assumption or guarantee of any Indebtedness or
imposing a Lien on any of the assets of the Company or
Educationcity-US;

     

    (viii) Contracts
providing for payments by or to the Company or Educationcity-US in excess of
$5,000 in any fiscal year or $25,000 in the aggregate during the term
thereof;

     

    (ix) Contracts
providing for severance, retention, change in control or other similar
payments;

     

    (x) Contracts
for the employment of any individual on a full-time, part-time or consulting or
other basis;

     

    (xi) Contracts
with independent contractors or consultants (or similar
arrangements);

     

    (xii) Contracts
of guaranty, surety or indemnification, direct or indirect, by the Company or
Educationcity-US; and

     

     

     

    
      
         

      

      
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    (xiii) Labor,
collective bargaining or similar agreements.

     

    (b) Each of
the Material Contracts is in full force and effect and is the legal, valid and
binding obligation of the Company or Educationcity-US enforceable against the
Company or Educationcity-US (as applicable) and to the Knowledge of the Company
and the Knowledge of Educationcity-US the other parties thereto, in accordance
with its terms and, upon consummation of the transactions contemplated by this
Agreement, shall continue in full force and effect without penalty or
termination right.  Neither the Company nor Educationcity-US is in
default under any Material Contract, nor, to the Knowledge of the Company or the
Knowledge of Educationcity-US, is any other party to any Material Contract in
breach of or default thereunder, and to the Knowledge of the Company and the
Knowledge of Educationcity-US no event has occurred that with the lapse of time
or the giving of notice or both would constitute a breach or default by the
Company or Educationcity-US or any other party thereunder.  No party
to any of the Material Contracts has exercised any termination rights with
respect thereto, and no such party has given notice of any significant dispute
with respect to any Material Contract.  The Company has delivered or
made available to the Purchaser true, correct and complete copies of all of the
Material Contracts, together with all amendments, modifications or supplements
thereto.

     

    4.13 Employee
Benefits.

     

    (a) Schedule 4.13(a) set
forth a list of all Benefit Plans operated by the Company and Educationcity-US
(the “Company
Benefit Plans”).  Apart from the Company Benefit Plans, there
are no other Benefit Plans.  The Company has no obligation to make
contributions to any Company Benefit Plan, except as set forth under Schedule
4.13(a).

     

    (b) Neither
the Company nor Educationcity-US is or has at any time since 27 April 2004 been
an employer or been connected with or an associate of (as those terms are used
in the UK Pensions Act 2004) an employer in relation to an occupational pension
scheme (as defined in section 1 of the UK Pension Schemes Act 1993) established
in the UK which is not a money purchase scheme (as defined in section 181 of the
UK Pension Schemes Act 1993) and no Current Employee or Former Employee has any
entitlement under a Benefit Plan which is not an entitlement to money purchase
benefits (as defined in section 181 of the UK Pension Schemes Act
1993).  No amount due by the Company or Educationcity-US to a Company
Benefit Plan is unpaid.

     

    (c) The
Company and the Subsidiaries have complied with their obligations to consult,
designate and facilitate access to a stakeholder pension scheme as required by
the UK Welfare Reform and Pensions Act 1999.

     

    (d) No
Current Employee or Former Employee is entitled to early retirement terms which
are different from those in a Company Benefit Plan as a result 

     

     

     

    
      
         

      

      
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    of a
previous transfer under the UK Transfer of Undertakings (Protection of
Employment) Regulations 2006 (or its predecessor legislation).

     

    (e) The
Company Benefit Plans have been designed to comply in all material respects with
and have been administered in all material respects in accordance with all
applicable legal and administrative requirements and the trusts, powers and
provisions of the Company Benefit Plans.  The Company and
Educationcity-US have complied with Article 141 (ex Article 119) of the Treaty
of Rome as it applies to the eligibility of a Current Employee or Former
Employee to join, contributions made to and the provision of benefits under the
Company Benefit Plans.

     

    (f) Schedule 4.13(f) sets
forth: (i) details of the job titles, salaries, age and dates of commencement of
continuous service for each Current Employee.  There are no proposals
to change the terms, schemes, arrangements or policies relating to Current
Employees.

     

    (g) There are
no Current UK Employees who have been or are expected to be absent from work for
a period in excess of one month, where such employee has a right to return to
work, (whether contractual or otherwise).

     

    (h) The
Company has no obligation, on the redundancy of any person, to make any payment
in excess of any statutory minimum payment and has not in the past three years
preceding the date of this Agreement operated any discretionary practice of
making any such excess payments to any of its employees.  The Company
has no obligation to follow any contractual redundancy procedure.

     

    (i) The
Company has, in relation to each of the Current UK Employees and Workers and
their Former UK Employees and Former Workers,  complied with all
obligations imposed on it by all contracts, statutes, orders, regulations,
awards, codes of conduct and custom and practice, relevant to the terms and
conditions of service or engagement and to the relations between it and the
Current UK Employees and/or Workers and/or Former UK Employees or Former
Workers. Without limitation to the foregoing, this shall include maintaining up
to date and accurate records in relation to the same, and to the service of each
such person.

     

    (j) The
Company does not recognize, nor is it legally obliged to recognize, any trade
union, works council or any other body representing the Current UK Employees or
any of them for any purpose in any jurisdiction (including, without limitation,
collective bargaining or negotiating).  No industrial dispute has
arisen since the Company’s inception between the Company and the Current UK
Employees and/or Former Employees and/or any trade union, works council,
employee representatives or other organization formed for similar purpose, in
any jurisdiction.

     

    (k) Within
the last 24 months the Company has not given notice of any redundancies to the
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    been any
circumstances which would require the giving of such notice by the
Company).

     

    (l) United States Benefits
Matters.

     

    (i) None of
the Company, Educationcity-US or any ERISA Affiliate thereof contributes or has
been required to contribute (on a contingent basis or otherwise), to any
multiemployer plan within the meaning of Section 3(37) of ERISA.  No
US Benefit Plan has ever been subject to Title IV of ERISA and, to the Knowledge
of Educationcity-US, no event (including any action or any failure to take any
action) has occurred with respect to any US Benefit Plan currently maintained by
the Company, Educationcity-US or any ERISA Affiliate thereof that would subject
the Company or Educationcity-US to any liability under Title IV of
ERISA.

     

    (ii) The US
Benefit Plans have been maintained, in all material respects, in accordance with
their terms and with all provisions of ERISA, the Code and other applicable
federal and state laws, and none of the Company, Educationcity-US nor any “party
in interest” or “disqualified person” with respect to the US Benefit Plans has
engaged in a non-exempt “prohibited transaction” within the meaning of Section
4975 of the Code or Section 406 of ERISA.  No fiduciary has any
liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any US Benefit
Plan.

     

    (iii) The US
Benefit Plans intended to qualify under Section 401 of the Code are so qualified
and the trusts maintained pursuant thereto are exempt from federal income
taxation under Section 501 of the Code, and nothing has occurred with respect to
the operation of such plans which could cause the loss of such qualification or
exemption or the imposition of any liability, penalty or tax under ERISA or the
Code.

     

    (iv) There are
no pending actions, claims or lawsuits which have been asserted or instituted
against the US Benefit Plans, the assets of any of the trusts under such plans
or the plan sponsor or the plan administrator, or against any fiduciary of the
US Benefit Plans with respect to the operation of such plans (other than routine
benefit claims), nor, to the Knowledge of Educationcity-US are there any facts
which could form the basis for any such claim or lawsuit.

     

    (v) None of
the US Benefit Plans provide for post-employment life or health insurance,
benefits or coverage for any participant or any beneficiary of a participant,
except as may be required under COBRA and at the expense of the participant or
the participant’s beneficiary.

     

    (vi) No
payment pursuant to any US Benefit Plan or other arrangement between the Company
or Educationcity-US and any “service provider” (as such term is defined in
Section 409A of the Code and the Treasury Regulations and IRS guidance
thereunder), including, without limitation, the grant, vesting or exercise of
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    equity
option, would subject any Person to a Tax pursuant to Section 409A of the Code,
whether pursuant to the consummation of the transactions contemplated by this
Agreement or otherwise.

     

    (vii) The
consummation of the transactions contemplated by this Agreement will not by
itself: (i) result in any payment of severance or other compensation becoming
due to any Current Employee or Former Employee; (ii) increase any benefits under
any US Benefit Plan; or (iii) result in the acceleration of the time of payment,
vesting or funding of any such benefits under any US Benefit
Plan.  None of the Company nor Educationcity-US is a party to any
contract, agreement, plan or arrangement covering any Current Employee or Former
Employee that, individually or collectively, could give rise to imposition of
any excise tax or the payment of any amount that would not be deductible by
reason Section 280G of the Code.

     

    4.14 Litigation.  There
is no material Legal Proceeding pending or, to the Knowledge of the Company or
the Knowledge of Educationcity-US, threatened against the Company or
Educationcity-US (or to the Knowledge of the Company or the Knowledge of
Educationcity-US, pending or threatened, against any of the officers, directors
or employees thereof with respect to their business activities on behalf of the
Company or Educationcity-US), or to which the Company or Educationcity-US is
otherwise a party, before any Governmental Body nor, to the Knowledge of the
Company or the Knowledge of Educationcity-US, is there any reasonable basis for
any such Legal Proceeding.  Neither the Company nor Educationcity-US
is subject to any Order, and neither the Company nor Educationcity-US is in
breach or violation of any Order.  Neither the Company nor
Educationcity-US is engaged in any legal action to recover monies due it or for
damages sustained by it.  There are no Legal Proceedings pending or,
to the Knowledge of the Company or the Knowledge of Educationcity-US, threatened
against the Company or Educationcity-US or to which the Company or
Educationcity-US is otherwise a party relating to this Agreement, the Company’s
or Educationcity-US’s ability to perform hereunder, any Seller Document or the
transactions contemplated hereby or thereby.

     

    4.15 Compliance with Laws;
Permits.

     

    (a) The
Company and Educationcity-US are and have been in compliance in all material
respects with all Laws.  Neither the Company nor Educationcity-US have
received any written nor, to the Knowledge of the Company or the Knowledge of
Educationcity-US, other notice of or been charged with the violation of any
Laws.  Neither the Company nor Educationcity-US is under investigation
with respect to the violation of any Laws and there are no facts or
circumstances which could form the basis for any such violation.

     

    (b) Schedule 4.15(b)
contains a list of all Permits which are required for the operation of the
Company or Educationcity-US as their respective businesses are presently
conducted and as presently intended by the Company to be
conducted.  The Company and Educationcity-US currently have all
Permits which are 

     

     

     

    
      
         

      

      
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    required
for their respective operations as presently conducted and as presently intended
by the Company to be conducted, other than those the failure of which to have
would not have a Material Adverse Effect.  Neither the Company nor
Educationcity-US is in default or violation, and no event has occurred which,
with notice or the lapse of time or both, would constitute a default or
violation, in any material respect of any term, condition or provision of any
Permit and, to the Knowledge of the Company and the Knowledge of
Educationcity-US, there are no facts or circumstances which could form the basis
for any such default or violation.  None of the Permits will be
impaired or in any material way affected by the consummation of the transactions
contemplated by this Agreement.

     

    4.16 Insurance.  The
Company and Educationcity-US have insurance policies in full force and effect:
(a) for such amounts as are sufficient for all requirements of Law and all
agreements related thereto to which the Company or Educationcity-US is a party;
and (b) which are in such amounts, with such deductibles and against such risks
and losses, as are reasonable for the Company or Educationcity-US, as
applicable.  Set forth in Schedule 4.16 is a
list of all insurance policies and all fidelity bonds held by the Company or
Educationcity-US.

     

    4.17 Accounts and Notes
Receivable and Payable.

     

    (a) All
accounts and notes receivable of the Company or Educationcity-US have arisen
from bona fide transactions in the Ordinary Course of Business and are payable
on ordinary trade terms (“Accounts
Receivable”).  To the extent not paid prior to the date hereof,
all accounts and notes receivable of the Company or Educationcity-US are current
and collectible at the aggregate recorded amounts thereof, net of any applicable
reserve for returns or doubtful accounts reflected thereon, which reserves are
calculated in a manner consistent with past practice.  Other than in
the Ordinary Course of Business, none of the accounts or the notes receivable of
the Company or Educationcity-US: (i) are subject to any setoffs or
counterclaims; or (ii) represent obligations for goods sold on consignment, on
approval or on sale-or-return basis or subject to any other repurchase or return
arrangement.

     

    (b) All
accounts payable of the Company or Educationcity-US: (i) are reflected in the
Balance Sheet or arose after the date thereof; (ii) are the result of bona fide
transactions in the Ordinary Course of Business; and (iii) have been paid or are
not yet due and payable.

     

    4.18 Related Party
Transactions.  No Current Employee, Former Employee, officer,
director or equity holder of the Company or Educationcity-US, any member of
their immediate family or any Affiliate of the Company or Educationcity-US
(“Related
Persons”): (i) owes any amount to the Company or Educationcity-US, nor
does the Company or Educationcity-US owe any amount to, or has the Company or
Educationcity-US committed to make any loan or extend or guarantee credit to or
for the benefit of, any Related Person; (ii) is involved in any business
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    understanding
or contractual or other business relationship with the Company or
Educationcity-US (whether written or oral); (iii) owns any property or right,
tangible or intangible, that is used or held for use by the Company or
Educationcity-US; (iv) has any claim or cause of action against the Company or
Educationcity-US; or (v) owns any direct or indirect interest of any kind in, or
controls or is a director, officer, employee or partner of, or consultant to, or
lender to or borrower from or has the right to participate in the profits of,
any Person which is a competitor, supplier, customer, landlord, tenant, creditor
or debtor of the Company or Educationcity-US.  All agreements between
the Company and Educationcity-US on the one hand, and any Related Person, on the
other hand, are on arm’s length market terms and are reflected appropriately in
the Financial Statements.

     

    4.19 Customers and
Suppliers.

     

    (a) Schedule 4.19 sets
forth a list of the Company’s and Educationcity-US’s (on a consolidated basis):
(i) customers and the related invoice amounts as of January 1, 2009 to May 31,
2010; and (iii) 10 largest suppliers, measured by the dollar amount of
applicable purchases therefrom, during each of: (a) the fiscal year ended on
December 31, 2008; and (b) the fiscal year ended on December 31, 2009), showing
the approximate annual and/or total sales to the Company or Educationcity-US
from each such supplier during such periods.

     

    (b) Since the
Balance Sheet Date, no customer or supplier listed on Schedule 4.19 has
terminated its relationship with the Company or Educationcity-US or materially
changed the pricing, extent of services or other terms of its business with the
Company or Educationcity-US and, no customer or supplier listed on Schedule 4. 19 has
notified the Company or Educationcity-US that it intends to terminate or
materially change the pricing, extent of services or other terms of its business
with the Company or Educationcity-US, as applicable.  No customer on
Schedule 4. 19
has been provided discounts from the Company’s or Educationcity-US’s standard
rates or credits or similar incentives, except as set forth on Schedule
4.19.

     

    4.20 Financial
Advisors.  No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for the Company in connection with the
transactions contemplated by this Agreement and no Person is or will be entitled
to any fee or commission or like payment in respect thereof.

     

    4.21 Certain
Payments.  Neither the Company nor Educationcity-US nor, to the
Knowledge of the Company or the Knowledge of Educationcity-US, any Related
Party, or other Person associated with or acting on behalf of any of them, has
directly or indirectly: (i) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services: (a) to obtain
favorable treatment in securing business for the Company Educationcity-US; (b)
to pay for favorable treatment for business secured by the Company or
Educationcity-US; (c) to obtain special concessions or for special 

     

     

     

    
      
         

      

      
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    concessions
already obtained, for or in respect of the Company or Educationcity-US; or (d)
in violation of any Law; or (ii) established or maintained any fund or asset
with respect to the Company or Educationcity-US that has not be recorded in the
books and records of the Company or Educationcity-US (as
applicable).

     

    ARTICLE
V

     

    REPRESENTATIONS
AND WARRANTIES RELATED TO THE PURCHASER

     

    The
Purchaser hereby represents and warrants on behalf of itself to the Sellers that
the statements contained in this Article V are true
and complete as of the date of this Agreement.

     

    5.1 Organization and Good
Standing.  The Purchaser is a private limited company duly
organized, validly existing and in good standing under the laws of England and
Wales and has the requisite power and authority to carry on its business as now
being conducted.  The Purchaser is an indirect, wholly owned
subsidiary of the Guarantor.

     

    5.2 Authorization of
Agreement.  The Purchaser has full power and authority to
execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
the Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby (the “Purchaser
Documents”), and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and performance by the Purchaser of
each Purchaser Document has been duly authorized by all necessary action on
behalf of Purchaser.  Each Purchaser Document will be at or prior to
the Closing, duly executed and delivered by the Purchaser and (assuming the due
authorization, execution and delivery by the other parties thereto) each
Purchaser Document when so executed and delivered will constitute, the legal,
valid and binding obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

     

    5.3 Conflicts; Consents of Third
Parties.

     

    (a) None of
the execution and delivery by the Purchaser of the Purchaser Documents, the
consummation of the transactions contemplated thereby, or the compliance by the
Purchaser with any of the provisions thereof will conflict with, or result in
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination or cancellation under any
provision of (i) the memorandum and articles of association of the Purchaser;
(ii) any Contract, or Permit to which the Purchaser is a party or by which any
of the properties or assets of the Purchaser are bound; (iii) any Order of any
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    Purchaser
or by which any of the properties or assets of the Purchaser are bound; or (iv)
any applicable Law.

     

    (b) No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is required on
the part of the Purchaser in connection with the execution and delivery of the
Purchaser Documents or the compliance by the Purchaser with any of the
provisions thereof.

     

    5.4 Litigation.  There
are no Legal Proceedings pending or, to the knowledge of the Purchaser,
threatened that are reasonably likely to prohibit or restrain the ability of the
Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby.

     

     

    ARTICLE
VI

     

    REPRESENTATIONS
AND WARRANTIES RELATED TO THE GUARANTOR

     

    The
Guarantor hereby represents and warrants on behalf of itself to the Sellers that
the statements contained in this Article VI are true
and complete as of the date of this Agreement.

     

    6.1 Organization and Good
Standing.  The Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to carry on its business as now being
conducted.  The Guarantor is the indirect parent of the
Purchaser.

     

    6.2 Authorization of
Agreement.  The Guarantor has full power and authority to
execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
the Guarantor in connection with the consummation of the transactions
contemplated hereby and thereby (the “Guarantor
Documents”), and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and performance by the Guarantor of
each Guarantor Document has been duly authorized by all necessary action on
behalf of Purchaser.  Each Guarantor Document will be at or prior to
the Closing, duly executed and delivered by the Guarantor and (assuming the due
authorization, execution and delivery by the other parties thereto) and each
Guarantor Document when so executed and delivered will constitute, the legal,
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

     

    6.3 Conflicts; Consents of Third
Parties.

     

     

     

    
      
         

      

      
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    (a) None of
the execution and delivery by the Guarantor of the Guarantor Documents, the
consummation of the transactions contemplated thereby, or the compliance by the
Guarantor with any of the provisions thereof will conflict with, or result in
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination or cancellation under any
provision of (i) the certificate of incorporation of the Guarantor; (ii) any
Contract, or Permit to which the Guarantor is a party or by which any of the
properties or assets of the Guarantor are bound; (iii) any Order of any
Governmental Body applicable to the Guarantor or by which any of the properties
or assets of the Guarantor are bound; or (iv) any applicable Law.

     

    (b) No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is required on
the part of the Guarantor in connection with the execution and delivery of the
Guarantor Documents or the compliance by the Guarantor with any of the
provisions thereof.

     

    6.4 Litigation.  There
are no Legal Proceedings pending or, to the knowledge of the Guarantor,
threatened that are reasonably likely to prohibit or restrain the ability of the
Guarantor to enter into this Agreement or consummate the transactions
contemplated hereby.

     

     

    ARTICLE
VII

     

    COVENANTS

     

    7.1 Further Assurances.
The Parties shall use their respective commercially reasonable efforts to: (i)
take, or cause to be taken, all actions necessary or appropriate to consummate
the transactions contemplated by this Agreement; and (ii) cause the fulfillment
at the earliest practicable date of all of the conditions to their respective
obligations to consummate the transactions contemplated by this
Agreement.  At or after the Closing, and without further
consideration, the Sellers will execute and deliver to the Purchaser such
further instruments of conveyance and transfer as the Purchaser may reasonably
request: (a) to more effectively convey and transfer the Purchased Shares to the
Purchaser, free and clear of any Lien and subject to no legal or equitable
restrictions of any kind; or (b) to exercise rights with respect to such
Purchased Shares.

     

    7.2 Preservation of
Records.  The Sellers agree that each of them shall preserve
and keep the records held by them relating to the Company and Educationcity-US
for a period of 3 years from the date hereof and shall make such records
available to the Purchaser during normal business hours upon reasonable advance
notice as may be reasonably required by the Purchaser in connection with, among
other things, any insurance claims, legal proceedings or governmental
investigation or in order to enable the Purchaser to comply with its obligations
under this Agreement and each other agreement, document or instrument
contemplated hereby.  In the event the Sellers wish to destroy (or
permit to be destroyed) such records after that time, the Sellers shall first
give 

     

     

     

    
      
         

      

      
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    45 days
prior written notice to the Purchaser and the Purchaser shall have the right at
its option and expense, upon prior written notice given to the Sellers within
that 45 day period, to take possession of the records within 60 days after the
date of such notice.

     

    7.3 Non-Competition;
Non-Solicitation; Confidentiality.

     

    (a) For a
period from the date hereof until the fifth anniversary of the date hereof, the
Sellers shall not and shall cause their Affiliates (other than the Guarantor and
its Subsidiaries) not to, directly or indirectly, own, manage, operate, control
or participate in the ownership, management, operation or control of any
business (other than the Guarantor and its Subsidiaries), whether in corporate,
proprietorship or partnership form or otherwise, engaged in providing online
instruction, practice, assessment and/or reporting products, tools and/or
services to the K-12 (in the United States and applicable international
equivalents) education space or that otherwise competes with the Guarantor or
its Subsidiaries, the Company or Educationcity-US (a “Restricted
Business”); provided, however, that the
restrictions contained in this Section 7.3(a) shall
not restrict the acquisition by the Sellers, directly or indirectly, of less
than 5% of the outstanding capital stock of any publicly traded company engaged
in a Restricted Business.

     

    (b) For a
period from the date hereof to the fifth anniversary of the date hereof, the
Sellers shall not and shall cause their directors, officers, employees and
Affiliates not to: (i) cause, solicit, induce or encourage any Current Employee
to leave such employment or hire, employ or otherwise engage any such
individual; or (ii) cause, induce or encourage any actual or prospective client,
customer, supplier (including any content providers) or licensor of the Company
or Educationcity-US (including any existing or former customer of the Company or
Educationcity-US and any Person that becomes a client or customer of the Company
or Educationcity-US after the Closing) or any other Person who has a business
relationship with the Company or Educationcity-US, to terminate or modify any
such actual or prospective relationship.

     

    (c) From and
after the date hereof, the Sellers shall not and shall cause their Affiliates
not to, directly or indirectly, disclose, reveal, divulge or communicate to any
Person other than authorized officers, directors and employees of the Purchaser
and its Affiliates or use or otherwise exploit for its own benefit or for the
benefit of anyone other than the Purchaser and its Affiliates, any Confidential
Information (as defined below).  The Sellers and their Affiliates
shall not have any obligation to keep confidential any Confidential Information
if and to the extent disclosure thereof is specifically required by Law; provided, however, that in the
event disclosure is required by applicable Law, the applicable Seller shall, to
the extent reasonably possible, provide the Purchaser with prompt notice of such
requirement prior to making any disclosure so that Purchaser may seek an
appropriate protective order.  For purposes of this Section 7.3(c),
“Confidential
Information” means any non-public information with respect to the Company
or Educationcity-US, including methods of operation, customers, customer lists,
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    costs,
Technology, inventions, Trade Secrets, know-how, Software, marketing methods,
plans, personnel, suppliers, competitors, markets or other specialized
information or proprietary matters.  Confidential Information does not
include, and there shall be no obligation hereunder with respect to, information
that: (i) is generally available to the public on the date of this Agreement; or
(ii) becomes generally available to the public other than as a result of a
disclosure not otherwise permissible hereunder.

     

    (d) The
covenants and undertakings contained in this Section 7.3 relate to
matters which are of a special, unique and extraordinary character and a
violation of any of the terms of this Section 7.3 will
cause irreparable injury to the Purchaser, the amount of which will be
impossible to estimate or determine and which cannot be adequately
compensated.  Accordingly, the remedy at law for any breach of this
Section 7.3
will be inadequate.  Therefore, the Purchaser will be entitled to an
injunction, restraining order or other equitable relief from any court of
competent jurisdiction in the event of any breach of this Section 7.3 without
the necessity of proving actual damages or posting any bond
whatsoever.  The rights and remedies provided by this Section 7.3 are
cumulative and in addition to any other rights and remedies which the Purchaser
may have hereunder or at law or in equity.  In the event that the
Purchaser were to seek damages for any breach of this Section 7.3, the
Sellers acknowledge and agree that the portion of the Cash Consideration which
is allocated by the Parties to the foregoing covenant shall not be considered a
measure of or limit on such damages.

     

    (e) The
Parties hereto agree that, if any court of competent jurisdiction in a final
non-appealable judgment determines that a specified time period, a specified
geographical area, a specified business limitation or any other relevant feature
contained in this Section 7.3 is
unreasonable, arbitrary or against public policy, then a lesser time period,
geographical area, business limitation or other relevant feature which is
determined by such court to be reasonable, not arbitrary and not against public
policy may be enforced against the applicable Party.

     

    (f) The
Parties acknowledge that, in connection with this Agreement, the Sellers are
also entering into Service Agreements which contain provisions related to
non-competition, non-solicitation and confidentiality.  The Parties
acknowledge and agree that such provisions of such Services Agreements and their
obligations thereunder are separate and independent of the provisions of this
Section 7.3 and
do not conflict with, and are not modified by, nor modify, the provisions of
this Section
7.3.

     

    7.4 Publicity.  Neither
the Sellers nor the Purchaser shall issue any press release or public
announcement concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written approval of the other Party hereto, unless
disclosure is otherwise required by applicable Law, provided that, to the extent
required by applicable Law, the Party intending to make such release shall use
its commercially reasonable efforts consistent with such applicable Law to
consult with the 

     

     

    
      
         

      

      
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    other
Party with respect to the timing and content thereof.  Each of the
Purchaser and the Sellers agrees that the terms of this Agreement shall not be
disclosed or otherwise made available to the public and that copies of this
Agreement shall not be publicly filed or otherwise made available to the public,
except where such disclosure, availability or filing is required by applicable
Law and only to the extent required by such Law.  Notwithstanding
anything to the contrary in this Section
7.4, the Guarantor and its Affiliates may make any disclosure or filing
they reasonably deem to be required by applicable securities Laws or regulations
or any rules or regulations of the NASDAQ National Market System.  The
Sellers acknowledge and agree that the Guarantor will be required to file this
Agreement with the Commission and consent to such filing.

       

    

    7.5 Lock Up.

     

    (a) The
Sellers hereby agree that during the periods specified in Section 7.5(b), they
will not, directly or indirectly, do or permit any of the following (the “Lock-Up”):
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any Consideration Securities or any Successor Securities subject to
such Lock Up, enter into a transaction which would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of the Consideration
Securities or any Successor Securities subject to such Lock-Up, whether any such
aforementioned transaction is to be settled by delivery of the Consideration
Securities or any Successor Securities or such other securities, in cash or
otherwise, or publicly disclose the intention to make any such offer, sale,
pledge or disposition, or to enter into any such transaction, swap, hedge or
other arrangement.  In addition, the Sellers agrees that they will
not, during the Lock-Up, make any demand for or exercise any right with respect
to, the registration of any Consideration Securities or any Successor Securities
subject to such Lock Up.  Notwithstanding anything to the contrary in
this Section
7.5, the Sellers shall be allowed to participate in any secondary
offering of the Common Stock of the Guarantor under the Securities Act for the
Guarantor’s own account for cash (other than (i) a registration on a Form S-4;
(ii) a registration on a Form S-8; (iii) a registration relating to an SEC Rule
145 transaction; or (iv) a registration in which the only Common Stock being
issued is Common Stock issuable upon conversion of debt securities that are also
being issued).  Capitalized terms used in the previous sentence and
not otherwise defined herein shall have that meaning ascribed to them in the
Registration Rights Agreement.

     

    (b) The
Lock-Up shall apply as follows: (1) from the Closing Date until the date 12
months after the Closing Date, the Lock Up shall apply to 100% of the
Consideration Securities and any Successor Securities; (2) from the date 12
months after the Closing Date until the date 18 months after the Closing Date,
the Lock-Up shall apply to 75% of the Consideration Securities and any Successor
Securities; (3) from the date 18 months after the Closing Date until the date 24
months after the Closing Date, the Lock-Up shall apply to 50% of the
Consideration Securities and any Successor Securities; (4) from the date 24
months after the Closing Date until the date 30 months after the Closing Date,
the Lock-Up shall apply to 25% 

     

     

     

    
      
         

      

      
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    of the
Consideration Securities and any Successor Securities; and (5) on the date 30
months after the Closing Date, the Lock-Up shall expire with regard to all
Consideration Securities and any Successor Securities.

     

    (c) Notwithstanding
anything to the contrary in Section 7.5(b), if a
Seller resigns his employment with the Company other than for Good Reason (as
such term is defined in the applicable Seller’s Employment Agreement with the
Company) or is terminated for Cause (as such term is defined in the applicable
Seller’s Employment Agreement with the Company) prior to December 31, 2011, each
of the dates (other than the Closing Date) set forth in Section 7.5(b) shall
be extended with respect to the Consideration Securities issued to such Seller
pursuant to this Agreement and any Successor Securities thereto for that number
of days equal to the number of days that such resignation or termination date is
prior to December 31, 2011 (regardless of whether or not such securities have
been transferred pursuant to Section 7.5(d) or
otherwise).

     

    (d) A
transfer or disposition of Consideration Securities or any Successor Securities:
(i) to a Member of the Immediate Family of the applicable Seller; and (ii) upon
the death of any Seller, by will or other instrument taking effect at the death
of such Seller, or by applicable laws of descent and distribution, such Seller’s
estate, executors, administrators and personal representatives and then such
Seller’s heirs, legatees or distributees, whether or not such recipients are
Members of the Immediate Family of such Seller, shall not violate the provisions
of this Section
7.5, provided, however, in each
case, that such transferee agree to be bound by the provisions of this Section
7.5.

     

    (e) Notwithstanding
anything herein to the contrary, the  Guarantor may enter into a
written trading plan established pursuant to Rule 10b5-1 of the Exchange Act
during the Lock-Up, and the Company may announce the establishment of such a
plan, provided that no direct or indirect offers, pledges, sales, contracts to
sell, sales of any option or contract to purchase, purchases of any option or
contract to sell, grants of any option, right or warrant to purchase, loans, or
other transfers or disposals of any Consideration Securities or any Successor
Securities may be effected pursuant to such trading plan during the
Lock-Up.

     

    (f) The
Sellers acknowledge and agree that the certificates evidencing the Consideration
Securities (and any Successor Securities thereto) shall bear the following
legend for the period of the Lock-Up:

     

    “The
sale, encumbrance or other disposition of the securities represented by this
certificate are subject to the lock-up provisions of that certain Share Purchase
Agreement by and among Matthew Drakard, Simon Booley, Thomas Morgan, Archipelago
Learning Holdings UK Limited and Archipelago Learning, Inc. dated as of June 9,
2010 set forth in Section 7.5 of that
agreement, a copy of which may be inspected at the principal office of
Archipelago Learning, Inc. without charge.”

     

     

     

     

    
      
         

      

      
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    (g) In
furtherance of the foregoing, the Sellers hereby authorize the Guarantor and its
transfer agent and registrar to refuse to effect any transfer of any
Consideration Securities and any Successor Securities if such transfer would
constitute a violation or breach of this Section
7.5.

     

    7.6 Payment of Stay
Bonuses.

     

    (a) The
Purchaser shall procure that the Company shall pay the stay bonuses due to those
employees of the Company listed in Schedule 7.6 in the
amounts and currency shown opposite their names on Schedule 7.6 on
December 31st, 2010.

     

    (b) In the
event that any of the employees listed on Schedule 7.6 cease to
be employed by the Company prior to December 31st, 2010 the amount due to such
employees shall be divided between the remaining employees listed in Schedule 7.6 in the
proportion to which the stay bonus payable to each remaining employee bears to
the total amount of the stay bonuses payable to all the remaining
employees.

     

    7.7 Cash.  At
the Closing, the Company shall, and the Sellers shall cause the Company to, have
at least $2,500,000 of Cash.

     

    

     

    ARTICLE
VIII

     

     CLOSING
CONDITIONS AND DELIVERABLES

     

    8.1 Sellers Closing
Deliverables. Simultaneously with the execution and delivery of this
Agreement, the Sellers shall and hereby do take the following actions and make
the following additional deliverables to the Purchaser, all of which shall, in
form and substance, be reasonably acceptable to the Purchaser:

     

    (a) Purchased Shares
Certificates.  (i) The original share certificates of the
Company comprising the Purchased Shares, duly endorsed in blank or accompanied
by transfer powers to the Purchaser free and clear of all Liens except for
requisite transfer tax stamps, which shall be paid by the Purchaser (which
certificates will be cancelled by the Company and reissued to the Purchaser to
represent the Purchased Shares); (ii) an irrevocable power of attorney duly
executed by each of the Sellers in respect of their respective Purchased Shares,
appointing the Purchaser their lawful attorney in respect of such Purchased
Shares; and (iii) a reissued certificate from the Company representing the
Purchased Shares.

     

    (b) Escrow
Agreement.  Escrow Agreement, duly executed by the Sellers, in
the form attached as EXHIBIT A
hereto.

     

     

     

    
      
         

      

      
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    (c) MD Services
Agreement.  MD Services Agreement, duly executed by MD and the
Company, in the form attached hereto as EXHIBIT
B.

     

    (d) SB Services
Agreement. SB Services Agreement, duly executed by SB and the Company, in
the form attached hereto as EXHIBIT
C.

     

    (e) TM Services
Agreement.  TM Services Agreement, duly executed by TM and the
Company, in the form attached hereto as EXHIBIT
D.

     

    (f) Kwak Employment
Agreement.   Kwak Employment Agreement, duly executed by
Matthew Kwak and Educationcity-US, in the form attached hereto as EXHIBIT
E.

     

    (g) Registration Rights
Agreement. Registration Rights Agreement, duly executed by the Sellers,
in the form attached hereto as EXHIBIT F (the “Registration
Rights Agreement”).

     

    (h) Evidence of Ownership of
Educationcity-US.  Evidence of the Company’s 100% ownership of
the equity securities of Educationcity-US, free and clear of all Liens,
reasonably acceptable to the Purchaser.

     

    (i) Financials.  The
Company’s: (i) consolidated unaudited financial statements for each of the
fiscal years ending: (x) December 31, 2009; and (y) December 31, 2008; and (ii)
unaudited statement of assets and liabilities as of March 31, 2010 and the
related statement of revenue and expenses for the 3 month period then ended, in
each case, reasonably acceptable to the Purchaser.

     

    (j) Resignations.  Resignations
of all of the directors of the Company and Educationcity-US, duly executed by
each such director.

     

    (k) Tax
Deed.  Tax Deed, duly executed by the Sellers, in the form
attached hereto EXHIBIT G (the “Tax
Deed”).

     

    (l) Estimate of Net Working
Capital.  The Sellers’ good faith estimate of Net Working
Capital as of the Closing Date and the back up calculations made in connection
with such estimate and such other back up documents as the Purchaser shall
reasonably request.

     

    (m) FIRPTA
Certificate.  (i) A certificate executed by a responsible
corporate officer of Educationcity-US dated as of the Closing Date, on behalf of
its stockholder that Educationcity-US is not, and has not been at any time
during the five years preceding the date of such certification, a United States
real property holding company, as defined in Section 897(c)(2) of the Code; and
(ii) proof reasonably satisfactory to the Purchaser that Educationcity-US has
provided notice of such certification to the Internal Revenue Service in
accordance with the provisions of Treasury Regulations Section
1.897-2(h)(2).

     

     

     

    
      
         

      

      
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    (n) Cash.  Evidence,
reasonably acceptable to the Purchaser of the Cash required pursuant to Section
7.7.

     

    8.2 Purchaser Closing
Deliverables.  Simultaneously with the execution and delivery
of this Agreement, the Purchaser shall and hereby does take the following
actions and makes the following additional deliverables to the Sellers, all of
which shall, in form and substance, be reasonably acceptable to the
Sellers:

     

    (a) Cash
Consideration.  The Cash Consideration.

     

    (b) Consideration Securities
Statements.  Effective DSR Statements providing for
Consideration Securities in the names of the Sellers in the amounts set forth on
Schedule
2.1.

     

    (c) Escrow
Agreement.  Escrow Agreement, duly executed by the Purchaser,
in the form attached as EXHIBIT A
hereto.

     

    (d) Registration Rights
Agreement. Registration Rights Agreement duly executed by the Guarantor,
in the form attached hereto as EXHIBIT
F.

     

    (e) Tax
Deed.  Tax Deed, duly executed by the Purchaser, in the form
attached hereto EXHIBIT
G.

     

    ARTICLE
IX

     

    INDEMNIFICATION

     

    9.1 Survival of Representations
and Warranties.  The representations and warranties of the
Parties contained in this Agreement, any certificate delivered pursuant hereto
or any Seller Document or Purchaser Document shall survive until the date which
is 18 months after the Closing Date (the “Release
Date”); provided, however, that the
following representations and warranties shall survive the Closing indefinitely,
except for Section
4.8 (Taxes), Section 4.12
(Intellectual Property) and Section 4.14
(Employee Benefits), which will survive until the date that is 60 days after the
expiration of the statute of limitations for assessments thereunder, taking into
account any extension or waiver of such statute of limitations: (i) related to
the Sellers, set forth in Section 3.1
(Authorization of Agreement), Section 3.3
(Ownership and Transfer of the Purchased Shares); and Section 3.5
(Financial Advisors); (ii) related to the Company, set forth in Section 4.1
(Organization and Good Standing), Section 4.2
(Capitalization), Section 4.3
(Subsidiaries), Section 4.4
(Authorization of Agreement), Section 4.8 (Taxes),
Section 4.12
(Intellectual Property), Section 4.14
(Employee Benefits) and Section 4.21
(Financial Advisors); and (iii) related to the Purchaser, set forth in Section 5.1
(Organization and Good Standing) and Section 5.2
(Authorization of Agreement) (the specific representations and warranties set
forth in clauses (i), (ii) and (iii) the “Fundamental
Representations”).  Notwithstanding anything to the contrary in
this Section
9.1, the obligations under Section 9.2(a)(i) and
Section
9.2(b)(i) shall not 

     

     

     

    
      
         

      

      
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    terminate
with respect to any matter as to which the Person to be indemnified shall have
given notice (stating in reasonable detail the basis of the claim for
indemnification, although the amount of such claim need not be fixed at such
time) to the indemnifying party in accordance with Section 9.3(a) before
the Release Date.

     

    9.2 Indemnification.

     

    (a) Subject
to Sections 9.1
and 9.4,
following the Closing, the Sellers hereby agree to jointly and severally
indemnify and hold the Purchaser and its Affiliates (which, for the avoidance of
doubt, after Closing shall include the Company and Educationcity-US) and their
respective directors, officers, employees, equity holders, members, partners,
agents, attorneys, representatives, successors and assigns (collectively, the
“Purchaser
Indemnified Parties”) harmless from and against, and pay to the
applicable Purchaser Indemnified Parties the amount of, any and all losses,
liabilities, claims, obligations, deficiencies, demands, judgments, damages
(including indirect, incidental and consequential damages), interest, fines,
penalties, claims, suits, actions, causes of action, assessments, awards, costs
and expenses (including reasonable costs of investigation and defense and
attorneys’ and other professionals’ fees), or any diminution in value, whether
or not involving a third party claim (individually, a “Loss”
and, collectively, “Losses”)
based upon, attributable to or resulting from:

     

    (i) any
breach or failure to be true of the representations or warranties made by any
Selling Party in this Agreement or in any Seller Document; or

     

    (ii) any
breach of any covenant or other agreement on the part of any Selling Party under
this Agreement or any Seller Document.

     

    (b) Subject
to Section 9.1
and 9.4,
following the Closing, the Purchaser hereby agrees to indemnify and hold the
Sellers and their Affiliates and their respective equity holders, directors,
officers, employees, members, partners, agents, attorneys, representatives,
successors and permitted assigns (collectively, the “Seller
Indemnified Parties”) harmless from and against, and pay to the
applicable Seller Indemnified Parties the amount of, any and all Losses based
upon, attributable to or resulting from:

     

    (i) any
breach or failure to be true of any of the representations or warranties made by
the Purchaser in this Agreement or in any Purchaser Document; or

     

    (ii) any
breach of any covenant or other agreement on the part of the Purchaser under
this Agreement or any Purchaser Document.

     

    (c) Notwithstanding
anything to the contrary in Section 9.2, “Losses”
shall not include any item which would otherwise be a Loss, but: (i) which is
fully reserved against or specifically and fully taken into account in the
calculation of Final Working Capital; (ii) which arises as a result of any
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    made
after the Closing Date having a retrospective effect; or (iii) which arises as a
result of any change after the Closing Date of any accounting policy or practice
or in the accounting reference date of the Company or Educationcity-US (other
than as a result of a change to accounting policy or practice that should have
been made prior to the date of Completion pursuant to applicable law or
regulation) having a retrospective effect.  In addition, no
Indemnifying Party will be liable for a Loss to the extent that such Loss has
already been fully recovered in respect of another claim by the Indemnifying
Party.

     

    (d) The right
to indemnification or any other remedy based on representations, warranties,
covenants and agreements in this Agreement, any Seller Document or Purchaser
Document shall not be affected by any investigation conducted at any time, or
any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or agreement.  The waiver of any condition based on
the accuracy of any representation or warranty, or on the performance of or
compliance with any such covenant or agreements, will not affect the right to
indemnification or any other remedy based on such representations, warranties,
covenants and agreements.

     

    9.3 Indemnification
Procedures.

     

    (a) A claim
for indemnification for any matter not involving a third party claim may be
asserted, in each case, by notice to the party from whom indemnification is
sought; provided, however, that failure to so notify the indemnifying party
shall not preclude the indemnified party from any indemnification which it may
claim in accordance with this Article VIII, except
to the extent that the indemnifying party can demonstrate actual loss and
prejudice as a result of such failure.

     

    (b) In the
event that any Legal Proceedings shall be instituted or that any claim or demand
shall be asserted by any third party in respect of which indemnification may be
sought under Section
9.2 hereof (regardless of the limitations set forth in Section 9.4) (“Third
Party Claim”), the indemnified party shall promptly cause written notice
of the assertion of any Third Party Claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying
party.  The failure of the indemnified party to give reasonably prompt
notice of any Third Party Claim shall not release, waive or otherwise affect the
indemnifying party’s obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure. Subject to the provisions of this Section 9.3, the
indemnifying party shall have the right, at its sole expense, to be represented
by counsel of its choice, which must be reasonably satisfactory to the
indemnified party, and to defend against, negotiate, settle or otherwise deal
with any Third Party Claim which relates to any Losses indemnified against by it
hereunder; provided that the indemnifying
party shall have acknowledged in writing to the indemnified party its
unqualified obligation to 

     

     

     

    
      
         

      

      
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    indemnify
the indemnified party for such Third Party Claim as provided
herein.  If the indemnifying party elects to defend against,
negotiate, settle or otherwise deal with any Third Party Claim which relates to
any Losses indemnified against by it hereunder, it shall within 10 Business Days
of the indemnified party’s written notice of the assertion of such Third Party
Claim (or sooner, if the nature of the Third Party Claim so requires) notify the
indemnified party of its intent to do so; provided that the indemnifying
party must conduct its defense of the Third Party Claim actively and diligently
thereafter in order to preserve its rights in this regard.  If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Third Party Claim which relates to any Losses indemnified against
by it hereunder, fails to notify the indemnified party of its election as herein
provided or contests its obligation to indemnify the indemnified party for such
Losses under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Third Party Claim.  If
the indemnified party defends any such Third Party Claim, then the indemnifying
party shall reimburse the indemnified party for the expenses of defending such
Third Party Claim upon submission of periodic bills.  If the
indemnifying party shall assume the defense of any Third Party Claim, the
indemnified party may participate at his or its own expense, in the defense of
such Third Party Claim; provided, however, that such
indemnified party shall be entitled to participate in any such defense with
separate counsel at the expense of the indemnifying party if: (i) so requested
by the indemnifying party to participate; or (ii) in the reasonable opinion of
counsel to the indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that would make such
separate representation advisable; and provided, further, that the
indemnifying party shall not be required to pay for more than one such counsel
(plus any appropriate local counsel) for all indemnified parties in connection
with any Third Party Claim.  Each party hereto agrees to provide
reasonable access to each other party to such documents and information as may
reasonably be requested in connection with the defense, negotiation or
settlement of any such Third Party Claim.  Notwithstanding anything in
this Section
9.3 to the contrary, the indemnifying party shall not, without the
written consent of the other party (which consent shall not be unreasonably
withheld or delayed), settle or compromise any Third Party Claim or permit a
default or consent to entry of any judgment unless: (x) the claimant (or
claimants) provides an unqualified release of the indemnified party and all of
its Related Persons from all liability in respect of the Third Party Claim; and
(y) the consideration for such settlement and release is solely monetary and
such monetary consideration is paid solely by the indemnifying
party.  If the indemnifying party makes any payment on any Third Party
Claim, the indemnifying party shall be subrogated, to the extent of such
payment, to all rights and remedies of the indemnified party to any insurance
benefits or other claims of the indemnified party with respect to such Third
Party Claim.  The Sellers shall not settle any Third Party Claim with
respect to Taxes without the prior written consent of Purchaser.

     

    (c) After any
final decision, judgment or award shall have been rendered by a Governmental
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    time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement, in each case with respect to a Third Party Claim hereunder,
the indemnified party shall forward to the indemnifying party notice of any sums
due and owing by the indemnifying party pursuant to this Agreement with respect
to such matter and the indemnifying party shall pay all of such remaining sums
so due and owing to the indemnified party in accordance with Section
9.5.

     

    9.4 Limitations on
Indemnification for Breaches of Representations and
Warranties

     

    (a) An
indemnifying Party shall not have any liability under Sections 9.2(a)(i) or
Sections
9.2(b)(i) hereof unless the aggregate amount of Losses incurred by the
indemnified parties and indemnifiable hereunder exceeds $500,000 and that for
the purposes of this calculation any individual Losses of less than $2,500 shall
be ignored (provided, that claims of a similar nature or type shall be
aggregated for purposes of this threshold) (the “Basket”)
and, in such event, the indemnified party shall be entitled to seek
indemnification for the full amount of such Losses; provided that the Basket shall
not apply to Losses related to the failure to be true and correct or breach of
any of the Fundamental Representations.

     

    (b) The
Sellers shall not have any liability under Section 9.2(a)(i) for
an aggregate amount of Losses exceeding $6,250,000 (the “Cap”);
provided that: with respect to
Losses related to the failure to be true and correct or breach of any
Fundamental Representation: (i) there shall be no Cap; and (ii) such Losses
shall not be included in any calculation of the aggregate amount of Losses for
purposes of determining whether or not the Cap has been exceeded.

     

    (c) For
purposes of determining the failure of any representations or warranties to be
true and correct or any breach thereof, the breach of any covenants or
agreements, and calculating Losses hereunder, any materiality or Material
Adverse Effect qualifications in the representations, warranties, covenants and
agreements shall be disregarded.

     

    (d) If an
Indemnifying Party pays in full the amount payable to the Indemnified Party in
respect of any Loss and the Indemnified Party or its Affiliates subsequently
recovers from a third party (including an insurer) an unconditional and final
payment which relates to the matter that gave rise to that Loss, the Purchaser
must notify the Indemnifying Party and: (i) if the amount paid by the
Indemnifying Party to the Indemnified Party is less than the amount recovered
from the third party (net of collection expenses, deductibles and taxes
associated with such recovery), the Indemnified Party shall pay the Indemnifying
Party an amount equal to the amount that the Indemnifying Party paid to the
Indemnified Party; or (ii) if the amount paid by the Indemnifying Party to the
Indemnified Party is more than the amount recovered from the third party (net of
collection expenses, deductibles and taxes associated with such recovery), the
Indemnified Party shall pay the Indemnifying 

     

     

     

    
      
         

      

      
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    Party an
amount equal to the amount recovered from the third party (net of collection
expenses, deductibles and taxes associated with such recovery).

     

    (e) The
Purchaser shall cause the Company and Educationcity-US to take all steps
required by Law to avoid or mitigate any Loss.

     

    (f) The
Purchaser agrees that rescission shall not be available as a remedy for the
breach of this Agreement and agrees not to claim that remedy, except in the case
of claims based on fraud, intentional misrepresentation or willful
misconduct.

     

    9.5 Indemnity
Escrow.  On the date hereof, the Purchaser shall, on behalf of
the Sellers, pay to Wells Fargo N.A., as escrow agent for the Purchaser and the
Sellers (the “Escrow
Agent”), in immediately available funds, to the account designated by the
Escrow Agent, an amount equal to $6,250,000 (together with interest earned
thereon the “Indemnity
Escrow Amount”), in accordance with the terms of this Agreement and the
Escrow Agreement, which will be executed at the Closing, by and among the
Purchaser, the Sellers and the Escrow Agent (the “Escrow
Agreement”) in the form attached hereto as EXHIBIT
A.  Any payment any Seller is obligated to make to any
Purchaser Indemnified Parties after the rendering of a final decision, judgment
or award of a Governmental Body of competent jurisdiction pursuant to this Article IX or Article X or under
the Tax Deed shall be paid first, to the extent there are sufficient funds in
the Indemnity Escrow Amount, by release of funds to the Purchaser Indemnified
Parties from the Indemnity Escrow Amount by the Escrow Agent in accordance with
the terms of the Escrow Agreement, and shall accordingly reduce the Indemnity
Escrow Amount and, second, to the extent the Indemnity Escrow Amount is
insufficient to pay any remaining sums due, then the Sellers or Seller (as
applicable) shall be required to pay all of such additional sums due and owing
to the Purchaser Indemnified Parties by wire transfer of immediately available
funds within 5 Business Days after the date of such notice.  On the 12
month anniversary of the Closing Date, the Escrow Agent shall release $3,125,000
to the Sellers (by wire transfer of immediately available funds into the account
of the Sellers’ representative set forth on Schedule 2.1 (or as
otherwise designated in writing by the Sellers)) less: (i) any amount previously
utilized to pay any Purchaser Indemnified Party; and (ii) the amount of any
claims for indemnification by any Purchaser Indemnified Party asserted prior to
such date but not yet resolved.  The wire transfer to such account
shall satisfy in full the Escrow Agent’s obligation (if any) to release to the
Sellers such amount.  On the Release Date, the Escrow Agent shall
release the remainder of the Indemnity Escrow Amount (to the extent not utilized
to pay any Purchaser Indemnified Parties for any indemnification claims) to the
Sellers (by wire transfer of immediately available funds into the account of the
Sellers’ representative set forth on Schedule 2.1 (or as
otherwise designated in writing by the Sellers), which wire transfer to such
account shall satisfy in full the Escrow Agent’s obligation (if any) to release
to the Sellers such amount), except that the Escrow Agent shall retain an amount
(up to the total amount then held by the Escrow Agent) equal to the amount of
claims for indemnification under this Article IX or Article X or claims
under the Tax Deed asserted prior to such date but not yet resolved (“Unresolved
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    Amount
retained for Unresolved Claims shall be released by the Escrow Agent (to the
extent not utilized to pay any Purchaser Indemnified Parties for any such claims
resolved in favor of such Purchaser Indemnified Parties) upon their resolution
in accordance with this Article IX or Article X or the Tax
Deed and the Escrow Agreement.

     

    9.6 Tax Treatment of Indemnity
Payments.  The Sellers and the Purchaser agree to treat any
indemnity payment made pursuant to this Article IX as an
adjustment to the Purchase Price for all Tax purposes.  If,
notwithstanding the treatment required by the preceding sentence, any
indemnification payment under Article IX (including
this Section
9.6) is determined to be taxable to the Purchaser Indemnified Parties,
the Sellers shall also indemnify such Purchaser Indemnified Parties for any
Taxes incurred by reason of the receipt of such payment and any Losses incurred
by the such Purchaser Indemnified Parties in connection with such Taxes (or any
asserted deficiency, claim, demand, action, suit, proceeding, judgment or
assessment, including the defense or settlement thereof, relating to such
Taxes).

     

    9.7 Exclusive
Remedy.  Except for: (i) claims based on fraud, intentional
misrepresentation or willful misconduct; (ii) claims based on any breach of
Section 7.3 or
Section 7.5;
and (iii) claims for non-monetary injunctive relief to enforce post-Closing
covenants, the respective indemnifications and rights to recover provided for in
this Article IX
shall be the sole and exclusive remedy for Losses arising solely under this
Agreement.

     

    ARTICLE
X

     

    TAXES

     

    10.1 U.S. Tax
Matters.

     

    (a) Tax
Indemnification.  The Sellers hereby agree to be liable for and
to indemnify the Purchaser Indemnified Persons from and against, and pay to the
Purchaser Indemnified Persons any Losses arising out of, attributable to or
resulting from: (i) all income taxes of Educationcity-US: (A) for any taxable
period ending on or prior to the Closing Date; and (B) for the portion of any
Straddle Period (as defined below) ending at the close of business on the
Closing Date; (ii) all income taxes imposed on Educationcity-US, pursuant to
Treasury Regulation section 1.1502-6 (or any predecessor or successor thereof or
any analogous or similar provision under state, local or foreign Law) by reason
of their having been a member of a consolidated, combined, unitary or similar
group on or prior to the Closing Date; and (iii) the failure of any of the
representations or warranties contained in Section 4.8 to be
true and correct in all respects as of the Closing Date or the failure to
perform any covenant with respect to Taxes.

     

    (b) Filing of Tax Returns;
Payment of Taxes.

     

     

     

    
      
         

      

      
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    (i) The
Sellers shall timely file or cause to be timely filed, all Tax Returns of or
with respect to Educationcity-US required to be filed on or prior to the Closing
Date and shall pay or cause to be paid all Taxes shown due
thereon.  The Sellers shall provide the Purchaser with copies of such
completed Tax Returns at least 20 days prior to the due date for filing thereof,
along with supporting workpapers for the Purchaser’s review and
approval.  The Sellers and the Purchaser shall attempt in good faith
to resolve any disagreements regarding such Tax Returns prior to the due date
for filing.  In the event that the Sellers and the Purchaser are
unable to resolve any dispute with respect to such Tax Return at least 10 days
prior to the due date for filing, such dispute shall be resolved pursuant to
Section
10.1(e), which resolution shall be binding on the parties.

     

    (ii) Following
the Closing, the Purchaser shall cause to be timely filed all Tax Returns of or
with respect to Educationcity-US, and, subject to the right to payment from the
Sellers under Section
10.1(a), pay or cause to be paid all Taxes shown due
thereon.  To the extent any Taxes shown due on any Tax Return
described in the preceding sentence are subject to payment by the Sellers, the
Purchaser shall cause Educationcity-US to provide the Sellers with copies of
such completed Tax Returns at least 20 days prior to the due date for filing
thereof, along with supporting workpapers for the Sellers’ review and
approval.  The Sellers and the Purchaser shall attempt in good faith
to resolve any disagreements regarding such Tax Returns prior to the due date
for filing.  In the event that the Sellers and the Purchaser are
unable to resolve any dispute with respect to such Tax Return at least 10 days
prior to the due date for filing, such dispute shall be resolved pursuant to
Section
10.1(e), which resolution shall be binding on the parties.

     

    (iii) Not later
than 10 days prior to the due date for the payment of Taxes with respect to any
Tax Return which the Purchaser has the responsibility to cause to be filed
pursuant to Section
10.1(b)(ii), the Sellers shall pay to the Purchaser the amount of Taxes,
as reasonably determined by the Purchaser, owed by the Sellers pursuant to Section
10.1(a).  No payment pursuant to this Section 10.1(b)(iii)
shall excuse the Sellers from its indemnification obligation pursuant to Section 10.1(a) if
the amount of Taxes as ultimately determined (on audit or otherwise) for the
periods covered by such Tax Returns exceeds the amount of the Sellers’ payment
under this Section
10.1(b)(iii).

     

    (c) Straddle Period Tax
Allocation.  Educationcity-US shall, to the extent permissible
by applicable Law, close the taxable period of Educationcity-US as of the close
of business on the Closing Date.  If applicable Law does not permit
Educationcity-US to close its taxable year on the Closing Date or in any case in
which a Tax is assessed with respect to a taxable period which includes, but
does not end on, the Closing Date (a “Straddle
Period”), the Taxes, if any, attributable to a Straddle Period shall be
allocated: (i) to the Sellers for the period up to and including the close of
business on the Closing Date; and (ii) to the Purchaser for the period
subsequent to the Closing Date.  Any allocation of income or
deductions required to determine any Taxes attributable to a Straddle Period
shall be made by means of a closing of the books and records of Educationcity-US
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    provided
that exemptions, allowances or deductions that are calculated on an annual basis
(including depreciation and amortization deductions) shall be allocated between
the period ending on the Closing Date and the period after the Closing Date in
proportion to the number of days in each such period.

     

    (d) Tax
Audits.

     

    (i) If notice
of any audit or administrative or court proceeding relating to the Taxes of
Educationcity-US (a “Tax
Claim”) shall be received by either party for which the other party may
reasonably be expected to be liable pursuant to Section 10.1(a), the
notified party shall notify such other party in writing of such Tax Claim; provided, however, that the
failure of the notified party to give the other party notice as provided herein
shall not relieve such failing party of its obligations under this Article X, except to
the extent that the other party is actually prejudiced thereby.

     

    (ii) The
Purchaser shall have the right to represent the interests of Educationcity-US in
any Tax Claim; provided, that with
respect to a Tax Claim that is subject to indemnification by the Sellers, the
Purchaser will not enter into a  settlement with respect thereto
without Sellers’ consent, which consent will not be unreasonably
withheld.

     

    (e) Disputes.  Any
dispute as to any matter covered by this Section 10.1 shall be
resolved by an Independent Accountant.  The fees, costs and expenses
of the Independent Accountant’s review and report shall be allocated to and
borne by the Sellers, jointly and severally, and the Purchaser based on the
inverse of the percentage that the Independent Accountant’s determination
(before such allocation) bears to the total amount of the total items in dispute
as originally submitted to the Independent Accountant.  For example
only and not by way of expansion or limitation, should the items in dispute
total in amount to $1,000 and the Independent Accountant awards $600 in favor of
the Sellers’ position, 40% of the costs would be borne by the Sellers, jointly
and severally, and 60% of the costs of its review would be borne by the
Purchaser.  If any dispute with respect to a Tax Return is not
resolved prior to the due date of such Tax Return, such Tax Return shall be
filed in the manner which the party responsible for preparing such Tax Return
deems correct without prejudice to any rights of the other party under this
Agreement.

     

    (f) Time
Limits.  Any claim for indemnity under this Section 10.1 may be
made at any time prior to 60 days after the expiration of the applicable Tax
statute of limitations with respect to the relevant taxable period (including
all periods of extension, whether automatic or permissive).

     

    (g) Exclusivity.  The
indemnification provided for in this Section 10.1 shall be
the sole remedy for any claim in respect of Taxes of Educationcity-US, including
any claim arising out of or relating to a breach of Section
4.9.  In the event of a conflict between the provisions of this
Section 10.1,
on the one hand, and the provisions of Article X, on the
other, the provisions of this Section 10.1 shall
control.

     

     

     

    
      
         

      

      
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    10.2 UK Tax
Matters.  The Tax Deed shall have effect from and after the
Closing.

     

    ARTICLE
XI

     

    UNCONDITIONAL
GUARANTEE

     

    In consideration of the entry by the
Sellers into this Agreement and the payment by them of $1.00 (receipt of which
is hereby acknowledged) the Guarantor hereby unconditionally and irrevocably
guarantees to the Sellers the due and punctual performance and observance by the
Purchaser, of all its obligations, commitments, undertakings and indemnities
under or pursuant to this Agreement.  The liability of the Guarantor
under this Agreement shall not be released or diminished by any variation of the
terms of this Agreement any forbearance, indulgence, neglect or delay in seeking
performance of the obligations hereby imposed or any granting of time for such
performance

     

    11.1 The Purchaser’s
Default.  Subject to the other terms and provisions of this
Agreement, if and whenever the Purchaser defaults for any reason whatsoever in
the performance of any obligation or liability undertaken or expressed to be
undertaken to the Sellers pursuant to this Agreement, the Guarantor shall
forthwith upon demand unconditionally perform (or procure performance of) and
satisfy (or procure the satisfaction of) the obligation or liability in regard
to which such default has been made in the manner prescribed by this Agreement
and so that the same benefits shall be conferred on the Sellers they would have
received if such obligation or liability had been duly performed and satisfied
by the Purchaser.

     

    11.2 Continuing
Guarantee.  This guarantee is to be a continuing guarantee and
accordingly is to remain in force until all the obligations etc. of the
Purchaser referred to in Section 11.1 shall
have been performed or satisfied. This guarantee is in addition to and without
prejudice to and not in substitution for any rights or security which the
Sellers may now or hereafter have or hold for the performance and observance of
the obligations commitments and undertakings of the Purchaser under or in
connection with this Agreement

     

    11.3 Legal
Limitations.  As a separate and independent stipulation the
Guarantor agrees that any obligation expressed to be undertaken by the Purchaser
(including, without limitation, any moneys expressed to be payable under this
Agreement) which may not be enforceable against or recoverable from the
Purchaser by reason of any legal limitation, disability or incapacity on or of
the Purchaser or any other fact or circumstance (other than any limitation
imposed by this Agreement) shall nevertheless be enforceable against and
recoverable from the Guarantor as though the same had been incurred by the
Guarantor and the Guarantor were the sole or principal obligor in respect
thereof and shall be performed or paid by the Guarantor on demand.

     

     

     

    
      
         

      

      
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    ARTICLE
XII

     

    MISCELLANEOUS

     

    12.1 Expenses.  The
Parties shall each bear their own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby, except that the Purchaser will pay
the reasonable out of pocket third party costs, fees and expenses incurred by
the Company directly in connection with the Audit and the Q1
Financials.

     

    12.2 Specific
Performance.  Except as provided in Section 9.8, each
Selling Party acknowledges and agrees that the breach of this Agreement would
cause irreparable damage to the Purchaser and that the Purchaser will not have
an adequate remedy at law.  Therefore, the obligations of the Sellers
under this Agreement, including the obligation to sell the Purchased Shares to
Purchaser, shall be enforceable by a decree of specific performance issued by
any court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith.  Such remedies shall,
however, be cumulative and not exclusive and shall be in addition to any other
remedies which any Party may have under this Agreement or
otherwise.

     

    12.3 Submission to Jurisdiction;
Consent to Service of Process.

     

    (a) The
Parties hereby irrevocably submit to the exclusive jurisdiction of any federal
or state court located within the State of New York over any dispute arising out
of or relating to this Agreement or any of the transactions contemplated hereby
and each Party hereby irrevocably agrees that all claims in respect of such
dispute or any suit, action proceeding related thereto may be heard and
determined in such courts.  The Parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such
dispute.  Each of the Parties agrees that a judgment in any such
dispute may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.

     

    (b) Each of
the Parties hereby consents to process being served by any Party to this
Agreement in any suit, action or proceeding by the delivery of a copy thereof in
accordance with the provisions of Section 12.6.

     

    12.4 Entire Agreement; Amendments
and Waivers.  This Agreement (including the schedules and
exhibits hereto, the Seller Documents and the Purchaser Documents) represents
the entire understanding and agreement between the Parties with respect to the
subject matter hereof.  This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the Party against whom
enforcement of any such amendment, supplement, modification or waiver is
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    this
Agreement, including without limitation, any investigation by or on behalf of
any Party, shall be deemed to constitute a waiver by the Party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein.  The waiver by any Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach.  No failure on the part of any Party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such Party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.  All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by
law.

     

    12.5 Governing
Law.  This Agreement, and all claims or causes of action or
other matters (whether in contract, tort or otherwise) that may be based upon,
arise out of or relate to this Agreement or the negotiation, execution or
performance of this Agreement or the consummation of any of the transactions
contemplated hereby, shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and performed in such
State of New York, excluding any conflict or choice of law rule or principle
that might otherwise refer construction or interpretation thereof to the
substantive laws of another jurisdiction.

     

    12.6 Notices.  All
notices and other communications under this Agreement shall be in writing and
shall be deemed given: (i) when delivered personally by hand (with written
confirmation of receipt); (ii) when sent by facsimile (with written confirmation
of transmission); or (iii) two Business Days following the day sent by overnight
courier (with written confirmation of receipt), in each case at the following
addresses and facsimile numbers (or to such other address or facsimile number as
a Party may have specified by notice given to the other Parties pursuant to this
provision):

     

    If to the
Sellers, to:

    

    Matthew
Drakard

    Top
Cottage

    Stamford
Road

    Barnsdale

    Rutland
LE15 8AB

    

    Simon
Booley

    9,  The
Pines

    Bushby

    Leicester
LE7 9RX

    

    and

    

    Thomas
Morgan

    371
Princess Park Manor

    Royal
Drive

    London
N11 3GX

     

     

     

    
      
         

      

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

    

    Coman and
Anderson, P.C.

    2525
Cabot Drive, Suite 300

    Lisle,
Illinois 60532

    Facsimile:
630-428-2549

    Attention:
Daniel G. Coman

    

    and

    

    Solomon
Taylor & Shaw

    3 Coach
House Yard

    Hampstead
High Street

    London,
NW3 1QF

    Facsimile:
(44) 207 794 7485

    Attention:
Raymond Taylor

     

    If to
Purchaser or Guarantor, to:

    

    Archipelago
Learning Holdings UK Limited

    Archipelago
Learning, Inc.

    3400
Carlisle Street, Suite 345

    Dallas,
Texas 75204

    Facsimile:
(866) 515-9145

    Attention:
Chief Executive Officer

    

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

     

    Weil,
Gotshal & Manges LLP

    100
Federal Street, 34th Floor

    Boston,
Massachusetts  02110

    Facsimile:  (617)
772-8333

    Attention:  Kevin
J. Sullivan

     

    12.7 Severability.  If
any term or other provision of this Agreement is invalid, illegal, or incapable
of being enforced by any law or public policy, all other terms or provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party.  Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
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    contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

     

    12.8 Binding Effect;
Assignment.  This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns.  Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any person or entity not a party to
this Agreement except as provided below.  No assignment of this
Agreement or of any rights or obligations hereunder may be made by any Seller or
the Purchaser (by operation of law or otherwise) without the prior written
consent of the other Parties hereto and any attempted assignment without the
required consents shall be void; provided, however, that the
Purchaser may assign this Agreement and any or all rights or obligations
hereunder (including, without limitation, the Purchaser’s rights to seek
indemnification hereunder) to any Affiliate of the Purchaser or any Person from
which it has borrowed money.  Upon any such permitted assignment, the
references in this Agreement to the Purchaser shall also apply to any such
assignee unless the context otherwise requires.

     

    12.9 Non-Recourse.  No
past, present or future director, officer, employee, incorporator, member,
partner, equity holder, Affiliate, agent, attorney or representative of the
Purchaser or its Affiliates shall have any liability for any obligations or
liabilities of the Purchaser under this Agreement or the Purchaser Documents of
or for any claim based on, in respect of, or by reason of, the transactions
contemplated hereby and thereby.

     

    12.10 Other Definitional and
Interpretive Matters.  Unless otherwise expressly provided, for
purposes of this Agreement, the following rules of interpretation shall
apply:

     

    (a) Currency.  Any
reference in this Agreement to “$” or “dollars” shall refer to the currency of
the United States of America.

     

    (b) Gender and
Number.  Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.

     

    (c) Headings.  The
provision of a Table of Contents, the division of this Agreement into Articles,
Sections and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized in construing
or interpreting this Agreement.

     

    (d) Herein.  The
words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this
Agreement as a whole and not merely to a subdivision in which such words appear
unless the context otherwise requires.

     

    (e) Including.  The
word “including” or any variation thereof means “including, without limitation”
and shall not be construed to limit any 

     

     

     

    
      
         

      

      
        62

        
          

        

      

      
         

      

    

     

     

    general
statement that it follows to the specific or similar items or matters
immediately following it.

     

    (f) Construction.  The
language used in this Agreement shall be deemed to be the language chosen by the
Parties hereto to express their collective mutual intent, and no rule of strict
construction shall be applied against any Party.

     

    12.11 Counterparts.  This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

     

    [Remainder
of page intentionally left blank]

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
           

           

        

         

      

      
        63

        
          

        

      

      
         

      

    

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

     

    

     

    
      	 	SELLERS: 
	 	 
	 	 
	  	  
	  	
              /s/  Matthew
      Drakard

            
	  	
              MATTHEW
DRAKARD

            

    

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
          [Signature
Page 1 of 5 to the EducationCity Share Purchase Agreement]

           
 

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    

     

    
      	 
      	 
      
	 
      	
              /s/  Simon
    Booley

            
	 
      	
              SIMON
      BOOLEY

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
          [Signature
Page 2 of 5 to the EducationCity Share Purchase Agreement]

           
 

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	 
      
	 
      	
              /s/  Thomas
    Morgan

            
	 
      	
              THOMAS
      MORGAN

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
          [Signature
Page 3 of 5 to the EducationCity Share Purchase Agreement]

        

         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 	ARCHIPELAGO LEARNING HOLDINGS UK
      LIMITED 
	 	 
	 
      	  
	  	
              By:

            	
              /s/   Tim
      McEwen

            
	  	
              Name:

            	
              Tim McEwen

            
	  	
              Title:

            	
              Chief Executive
Officer

            

    

    

     

     

     

     

     

     

     

     

     

     

     

     

     

    

     

    
      
        
          [Signature
Page 4 of 5 to the EducationCity Share Purchase Agreement]

           
 

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        	 	ARCHIPELAGO LEARNING,
  INC.
	 	 
	 
      	  
	  	
                By:

              	
                /s/   Tim
      McEwen

              
	  	
                Name:

              	
                Tim McEwen

              
	  	
                Title:

              	
                Chief Executive
Officer

              

      

    

     

     

     

     

     

     

     

     

     

     

     

     

     

    

     

    

    

    

    
      
        
          [Signature
Page 5 of 5 to the EducationCity Share Purchase Agreement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
1.1

     

    Sample
Net Working Capital Calculation

    

     

    

     

    

     

    

     

    Attached
hereto.

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
2.1

     

    Sellers’
Representative’s Accounts, Purchased Shares Ownership andAllocation of Consideration
Securities

    

    

    Account Details of the
Sellers’ Representative:

    

    Solomon
Taylor & Shaw US Dollar Client Premium Account

    Barclays
Bank plc

    Branch
Details Barclays Hampstead

    Sort code
20 36 16

    Account
no 53161566

    Swift
address – BARCGB22

    

    

    Purchased Shares and
Consideration Securities:

    

    
      	
              Name

            	
              Purchased
      Shares

            	
              Consideration
      Securities

            
	
              Matthew
      Drakard

            	
              42

            	
              521,811

            
	
              Simon
      Booley

            	
              42

            	
              521,811

            
	
              Thomas
      Morgan

            	
              16

            	
              198,786

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    SCHEDULE
7.6

     

    Stay
Bonuses

     

    UK

    
      	
              First
      Name

            	
                    
                Last
      Name

              

            	
              Bonus
      (£)

            
	
              Gillian

            	
              Penrose

            	
              £6,099.60

            
	
              Natalia

            	
              Milton

            	
              £6,670.80

            
	
              Michael

            	
              Thompson

            	
              £6,528.00

            
	
              Nicholas
      Phillip

            	
              Lomas

            	
              £5,508.00

            
	
              Kathryn
      Joy

            	
              Marchant

            	
              £4,569.60

            
	
              Hannah

            	
              McCarthy

            	
              £5,304.00

            
	
              Matthew

            	
              Plant

            	
              £5,202.00

            
	
              Khuram

            	
              Masood

            	
              £5,202.00

            
	
              Bhupat

            	
              Daya

            	
              £4,896.00

            
	
              Hetal

            	
              Vanmali

            	
              £3,876.00

            
	
              Danielle

            	
              Barnetche

            	
              £4,692.00

            
	
              Alexandra

            	
              Stewart

            	
              £4,590.00

            
	
              Daniel

            	
              Merrison

            	
              £4,488.00

            
	
              Amy
      Jayne

            	
              Gibbard

            	
              £4,386.00

            
	
              Charlotte

            	
              Kennedy

            	
              £4,284.00

            
	
              Alan
      Neil

            	
              Palmer

            	
              £4,182.00

            
	
              Andrea

            	
              Frasca-Polara

            	
              £4,080.00

            
	
              John
      Michael

            	
              White

            	
              £3,978.00

            
	
              Mark

            	
              Pytlik

            	
              £3,774.00

            
	
              John
      Morris

            	
              Welbourn-Smith

            	
              £3,672.00

            
	
              James

            	
              Lison

            	
              £3,468.00

            
	
              Gemma

            	
              Charles

            	
              £3,162.00

            
	
              Julie
      Ann Tina

            	
              Whitmore

            	
              £3,060.00

            
	
              Adam

            	
              Basey

            	
              £2,958.00

            
	
              Amanda

            	
              McPherson

            	
              £2,856.00

            
	
              Edmond

            	
              Leung

            	
              £2,754.00

            
	
              Dean

            	
              Adams

            	
              £2,652.00

            
	
              Andrew

            	
              Platt

            	
              £2,652.00

            
	
              Helen

            	
              Munton

            	
              £2,652.00

            
	
              Dean

            	
              Smith

            	
              £2,448.00

            
	
              Tom

            	
              Bakker

            	
              £2,346.00

            
	
              Kirsty

            	
              Fuller

            	
              £2,448.00

            
	
              Oliver
      Yin-Kin

            	
              Leung

            	
              £2,142.00

            
	
              Joanne
      Marie

            	
              O'Gorman

            	
              £1,938.00

            
	
              Anna

            	
              Wood

            	
              £1,938.00

            
	
              Sandra*

            	
              Ejarque
      Pellicer

            	
              £1,734.00

            
	
              Christopher

            	
              Brown

            	
              £1,836.00

            
	
              Charlotte

            	
              Fenton

            	
              £1,632.00

            
	
              Ellen

            	
              Hartshorn

            	
              £1,530.00

            
	
              Simon

            	
              Calderbank

            	
              £1,530.00

            
	
              Kieran

            	
              Dwyer

            	
              £1,428.00

            
	
              Daniel

            	
              Cresswell

            	
              £1,428.00

            
	
              Jack

            	
              Ross

            	
              £1,428.00

            

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

       

      	      
              First
      Name

            	      
              Last
      Name

            	      
              Bonus
      (£)

            
	
              James

            	
              Bullock

            	
              £1,428.00

            
	
              Duncan

            	
              Weir

            	
              £1,326.00

            
	
              Jamie

            	
              Southerington

            	
              £1,224.00

            
	
              Edward

            	
              Walsh

            	
              £1,122.00

            
	
              Jessica

            	
              Edmonds

            	
              £1,020.00

            
	
              Stuart

            	
              McPherson

            	
              £918.00

            
	
              Michael

            	
              Fuller

            	
              £918.00

            
	
              Andrew

            	
              Grindle

            	
              £918.00

            
	
              Daniel

            	
              Wilkinson

            	
              £714.00

            
	
              Sharon

            	
              Warr

            	
              £612.00

            
	
              Harriet

            	
              Scott-Howes

            	
              £510.00

            
	
              Olivia

            	
              Sayer

            	
              £510.00

            
	
              James

            	
              Knowland

            	
              £510.00

            
	
              Michelle

            	
              King

            	
              £510.00

            
	
              David

            	
              McDonald

            	
              £408.00

            
	
              Stephanie

            	
              Lee

            	
              £408.00

            
	
              Allen

            	
              Samantha
      Jane

            	
              £204.00

            
	
              Matthew

            	
              Frost

            	
              £306.00

            
	
              Emma

            	
              Spry

            	
              £102.00

            

    

    

    US

    
      	
              First
      Name

            	
              Last
      Name

            	Bonus
      ($)
	Ryan  	Lovell	 	$	4,896.00	 
	
              Jessica

            	
              Gant

            	 	$	4,590.00	 
	
              Bill

            	
              Feisler

            	 	$	3,978.00	 
	
              Camille

            	
              Johnson

            	 	$	2,754.00	 
	
              Denise

            	
              Clinton

            	 	$	2,754.00	 
	
              Patrick

            	
              Scianna

            	 	$	2,601.00	 
	
              Linda

            	
              Thomas

            	 	$	2,601.00	 
	
              Jamie

            	
              McIntyre

            	 	$	2,448.00	 
	
              Ryan

            	
              Witort

            	 	$	2,448.00	 
	
              Megan

            	
              Courtney

            	 	$	2,295.00	 
	
              Jose

            	
              Razo

            	 	$	1,989.00	 
	
              June

            	
              Martinez

            	 	$	1,836.00	 
	
              Jenna

            	
              Mills

            	 	$	1,836.00	 
	
              Jill

            	
              Riggs

            	 	$	1,836.00	 
	
              Ernest

            	
              Wells

            	 	$	1,683.00	 
	
              Frank

            	
              Tyse

            	 	$	1,530.00	 
	
              Clayton

            	
              Wheat

            	 	$	1,377.00	 
	
              Sharena

            	
              Flowers

            	 	$	1,071.00	 
	
              Angela

            	
              Freeman

            	 	$	8,109.00	 
	
              Matthew

            	
              Bocker

            	 	$	765.00	 
	
              Dylan

            	
              Coster

            	 	$	612.00	 
	
              Jessica

            	
              Linger

            	 	$	612.00	 
	
              Randy

            	
              Jones

            	 	$	612.00	 
	
              Emily

            	
              Matzelle

            	 	$	612.00	 
	
              Shaun

            	
              Payne

            	 	$	612.00	 
	
              Angie 

            	
              Liautaud

            	 	$	459.00	 
	
              Gary

            	
              Gauthier

            	 	$	306.00

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