ENGLISH LANGUAGE LEARNING & INSTRUCTION SYSTEM, INC.
REGISTRATION RIGHTS AGREEMENT
Dated as of September 20, 2001
TABLE OF CONTENTS
Page
1. Definitions............................................................1
2. Required Registration..................................................2
3. Demand Registration....................................................3
4. Company Registration...................................................4
5. Registration on Form S-2 or S-3........................................4
6. Registration Procedures................................................4
7. Registration Expenses..................................................5
8. Indemnification........................................................6
9. Rule 144 Reporting.....................................................7
10. Successors and Assigns.................................................8
11. Other Registration Rights..............................................8
12. Miscellaneous..........................................................8
13. Definitions...........................................................10
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of the 20th day of September, 2001 by and among English
Language Learning and Instruction System, Inc., a Delaware corporation (the
"Company"), Camden Partners Strategic Fund II-A, L.P., a Delaware limited
partnership, and Camden Partners Strategic Fund II-B, L.P., a Delaware limited
partnership (the "Camden Purchasers").
RECITALS
A. The Camden Purchasers wish to acquire in the aggregate (i)
500,000 shares of the Common Stock, par value $.00001 per share (the "Common
Stock"), and (ii) 1,000,000 shares of the Series A Preferred Stock, par value
$.00001 per share (the "Series A Preferred Stock" and, together with the
Common Stock, the "Company Stock"), of the Company.
B. The Company and the Camden Purchasers have entered into that
certain Common Stock and Series A Preferred Stock Purchase Agreement dated as
of the date hereof (the "Purchase Agreement").
C. The Company wishes to grant the Camden Purchasers the
registration rights as set forth in this Agreement.
D. The Purchase Agreement provides that, as a condition precedent
to the obligations of the Investors under the Purchase Agreement, the Camden
Purchasers and the Company will have entered into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and other consideration, the receipt and adequacy of which hereby
is acknowledged, the parties agree as follows:
The Company and the Camden Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Holder" or "Holders" means each Camden Purchaser and any transferee
of Registrable Securities who, pursuant to Section 10 below, is entitled to
registration rights hereunder.
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"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Registrable Securities" means the shares of Common Stock and any
shares of common stock of the Company issued or issuable (i) upon conversion
of or with respect to the Series A Preferred Stock and (ii) as a dividend on
the Company Stock, and any shares of the Company's capital stock issued with
respect to (i) or (ii) as a result of any stock split, stock dividend,
recapitalization, exchange, merger, consolidation, reorganization,
combination, reclassification or similar event or otherwise, provided, that
any shares of the Company's securities acquired after the date hereof by a
Camden Purchaser shall also be considered "Registrable Securities" for
purposes of this Agreement.
"register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document
in compliance with the Securities Act and the automatic effectiveness, or the
declaration or ordering of effectiveness, of such registration statement or
document.
"Restricted Securities" means the securities of the Company required
to bear the legend set forth in Section 11 hereof (or any similar legend).
"Securities Act" means the Securities Act of 1933, as amended.
2. Required Registration.
(a) Shelf Registration. Promptly following the Closing, the Company
shall prepare and file with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-3 (or if Form S-3 is unavailable to the
Company, such other form as is available) for an offering to be made on a
continuous basis pursuant to a "shelf" registration statement under Rule 415
promulgated under the Securities Act (including, without limitation, filing
post-effective amendments, appropriate qualifications under applicable blue
sky or other state securities laws, and appropriate compliance with the
Securities Act) (the "Initial Registration Statement") which shall register
for resale all shares of Registrable Securities. The Initial Registration
Statement shall state, to the extent permitted by Rule 416 promulgated under
the Securities Act that it covers such indeterminate number of shares of
common stock of the Company as may be required to effect the registration of
the Common Stock and the common stock issuable upon conversion of the Series A
Preferred Stock and common stock issuable to prevent dilution resulting from
stock splits, stock dividends or similar events, or by reason of changes in
the conversion price in accordance with the terms of the Company's certificate
of incorporation, as amended from time to time. The Company shall use its
best efforts to cause the Initial Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event no later than 180 days after the date of the Closing
("Registration Deadline"), and to keep such Initial Registration Statement
continuously effective under the Securities Act, until the date when all
Registrable Securities covered by such Initial Registration Statement have
been sold or may be sold without volume restrictions pursuant to Rule 144,
without regard to whether the holder of the Registrable Securities is an
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affiliate of the Company (the "Effectiveness Period"). If (i) the Initial
Registration Statement is not declared effective by the Registration Deadline,
or (ii) the Company fails to register for resale all of the Registrable
Securities in the Initial Registration Statement, or (iii) at any time during
the Effectiveness Period sales of Registrable Securities cannot be made by a
Camden Purchaser for any reason within the control of the Company (including,
without limitation failing to maintain the effectiveness of the registration
statement), then the Company shall, from such time and for so long as the
triggering event described in item (i), (ii), or (iii) continues to exist, pay
an annual dividend on the Company Stock in an amount equal to 10% of the (i)
$3.00 per share of Series A Preferred Stock then held by each Camden
Purchaser, and (ii) $2.00 per share of Common Stock then held by each Camden
Purchaser, payable in cash in immediately available funds to an account or
accounts as designated by each Camden Purchaser is writing. This remedy shall
be in addition to any other remedy available to a Holder at law or in equity.
3. Demand Registration.
(a) Upon the earlier to occur of (i) sixty (60) days from the
Closing if the Company has failed to file the Initial Registration Statement,
and (ii) one (1) year from the Closing, the provisions of this Section 3 shall
apply. If the Company shall receive at any time a written request from one or
more Holders of at least twenty-five percent (25%) the Registrable Securities
issued to the Camden Purchasers on the Closing Date that the Company file a
registration statement under the Securities Act covering the registration of
Registrable Securities pursuant to this Section 3, then the Company shall,
within twenty (20) days after the receipt of such written request, give
written notice of such request (the "Request Notice") to all Holders, and
effect, as soon as practicable, the registration under the Securities Act of
all Registrable Securities which Holders (including the Initiating Holders (as
defined below)) request to be registered and included in such registration by
written notice given by such Holders to the Company within twenty (20) days
after receipt by such Holder of the Request Notice, subject only to the
limitations of this Section 3; provided that the Registrable Securities
requested by all Holders to be registered pursuant to such request must have
an anticipated aggregate public offering price (before any underwriting
discounts and commissions) of not less than Two Million Dollars ($2,000,000).
(b) Underwriting. If the Holders initiating the registration
request under this Section 3 (the "Initiating Holders") intend to distribute
the Registrable Securities covered by their request by means of an
underwriting, then they shall so advise the Company as a part of their request
made pursuant to this Section 3 and the Company shall include such information
in the Request Notice. In such event, the right of any Holder to include his,
her, or its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the managing underwriter or underwriters selected for such underwriting
by the Camden Purchasers and reasonably acceptable to the Company.
Notwithstanding any other provision of this Section 3, if the underwriter(s)
advise(s) the Company in writing that marketing factors require a limitation
of the number of securities to be underwritten then the Company shall so
advise all Holders of Registrable Securities that would otherwise be
registered and underwritten pursuant hereto, and the number of Registrable
Securities that may be included in the underwriting shall be reduced as
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required by the underwriter(s) and allocated among the Holders of Registrable
Securities on a pro rata basis according to the number of Registrable
Securities then outstanding held by each Holder requesting registration;
provided, however, that the number of shares of Registrable Securities to be
included in such underwriting and registration shall not be reduced unless all
other securities of the Company and each stockholder who is not a Holder are
first entirely excluded from the underwriting and registration. Any
Registrable Securities excluded and withdrawn from such underwriting shall be
withdrawn from the registration. If, in connection with such offering, the
Holders are unable to include in such registration the full number of
Registrable Securities for which registration has been requested as a result
of any limitation on the registration of shares placed by the managing
underwriter, then such registration shall not count as a demand registration
for purposes of Section 3(c).
(c) Maximum Number of Demand Registrations. The Company is obligated
to effect only two (2) such registrations pursuant to this Section 3.
4. Company Registration. If the Company proposes to register any of its
capital stock under the Securities Act, whether for its own account or for the
account of stockholders other than the Holders, the Company shall, each such
time, promptly give each Holder written notice of such registration. Upon the
written request of any Holder given within twenty (20) days after receipt of
such notice from the Company, the Company shall, use its best efforts to cause
a registration statement covering all of the Registrable Securities that each
such Holder has requested to be registered to become effective under the
Securities Act and to be included in any underwriting involved therein, which
underwriting shall be conducted in accordance with the provisions of Section
3(b).
5. Registration on Form S-2 or S-3. In addition to the rights set forth
above, if the Holder(s) request in writing that the Company file a
registration statement on Form S-2 or S-3 (or any successors thereto)
("Follow-On Registrations") for a public offering of shares of Registrable
Securities the reasonably anticipated aggregate price to the public of which
would exceed $500,000, and the Company is entitled to use Form S-2 or S-3 to
register securities for such an offering, the Company shall use its best
efforts to effect such registration (including, without limitation, filing
post-effective amendments, appropriate qualifications under applicable blue
sky or other state securities laws, and appropriate compliance with the
Securities Act). The Company will promptly give written notice of the request
for the proposed registration to all other Holders of Registrable Securities
and include all Registrable Securities of any Holder joining in such request
as are specified in a written request received by the Company within thirty
(30) days after receipt of such written notice from the Company. The written
request of a Holder may specify that all or part of such Holder's Registrable
Securities will be included in such registration. If the Follow-On
Registration is for an underwritten offering, the provisions of Section 3(b)
shall apply to such registration. Notwithstanding the foregoing, the Company
shall not be required to effect more than one Follow-on Registration in any
6-month period.
6. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
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(a) prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for (i) until the distribution
described in the registration statement has been completed; and (ii) in the
case of any registration of Registrable Securities under Section 2(a) during
the Effectiveness Period;
(b) furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such number of copies of
the registration statement, preliminary prospectus, final prospectus and such
other documents as such Holders or underwriters may reasonably request in
order to facilitate the public offering of such securities;
(c) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered
by such registration statement or to applicable anti-fraud provisions;
(d) use its best efforts to register and qualify the securities
covered by such registration statement under such other applicable securities
or blue sky laws, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act;
(e) cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(f) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number for all such Registrable Securities, in each case not later than the
effective date of such registration;
(g) enter into an underwriting agreement in form reasonably
necessary to effect the offer and sale of Registrable Securities; and
(h) notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of circumstances
then existing.
7. Registration Expenses. All Registration Expenses (exclusive of
underwriting discounts and commissions) incurred in connection with any
registration, qualification or compliance pursuant to this agreement shall be
borne by the Company, including the reasonable expenses of one special counsel
for the Holders, provided, that the Company shall not be responsible for any
fees for such special counsel in excess of $100,000. "Registration Expenses"
shall mean all expenses incurred by the Company in complying with Sections 2,
3, 4,
5
and 5 hereof, including, without limitation, all registration, qualification
and filing fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration.
8. Indemnification.
(a) The Company will indemnify each Holder, each of its officers,
directors, members, stockholders, and partners, legal counsel, accountants and
each person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls any underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses,
damages and liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any 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 any
violation by the Company of the Securities Act or any rule or regulation
promulgated thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers, directors, members, stockholders and partners and each person
controlling such Holder, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or
alleged untrue statement or omission, made in reliance upon and in conformity
with written information furnished to the Company by such Holder or
underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities
Act, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
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information furnished to the Company by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of such
Holder hereunder shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities (or actions in respect thereof) if such
settlement is effected without the consent of such Holder and provided that
the obligations of each such Holder hereunder shall be limited to an amount
equal to the net proceeds after expenses and commissions to such Holder from
Registrable Securities sold in such offering.
(c) Each party entitled to indemnification under this Section 8 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense; and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to the extent, that the Indemnifying Party's ability to
defend against such claim or litigation is impaired as a result of such
failure to give notice.
No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect to such
claim or litigation.
9. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the sale
of shares of Registrable Securities to the public without registration, the
Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and
So long as any of the Holders own any Company Stock or other
securities issued pursuant to an exemption under Section 5 of the Securities
Act the Company shall furnish to Holders of Registrable Securities forthwith
upon written request, a written statement by the Company as to its compliance
with the reporting requirements of Rule 144, and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as such may
reasonably request in availing itself of any rule or regulation of the SEC
allowing such Holder to sell any such securities without registration.
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10. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The registration
rights contained in this Agreement may be assigned at any time, and from time
to time, by a Holder: (a) if the Holder is a partnership, to any constituent
partner or retired or former partner of a Holder, (b) to any affiliate (as
that term is defined in Rule 405 promulgated by the SEC under the Securities
Act) of a Holder, (c) to any officer, director, principal shareholder or
member thereof, where such Holder is a corporation or limited liability
company, (d) to the spouse, children, grandchildren or spouse of such children
or grandchildren of any Holder or to trusts for the benefit of any Holder or
such persons where the Holder is a natural person, (e) to any transferee who
acquires at least 10% of the shares of Registrable Securities originally
acquired by the Camden Purchasers, or (f) as otherwise required by law. A
Holder shall deliver notice of any transfer under this Section 10 to the
Company.
11. Other Registration Rights. The Company will not grant to any third
party any registration rights more favorable than or inconsistent with any of
those contained herein, so long as any of the registration rights under this
Agreement remain in effect.
12. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a
Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate. All remedies
either under this Agreement or by law or otherwise afforded to any Holder
shall be cumulative and not alternative.
(b) Changes in Common Stock or Preferred Stock. If, and as often
as, there is any change in the Common Stock or Series A Preferred Stock (or
common stock issuable upon conversion thereof) by way of a stock split, stock
dividend, combination or reclassification, or through a merger, consolidation,
reorganization or recapitalizations, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock or
Series A Preferred Stock (or common stock issuable upon conversion thereof) as
so changed.
(c) No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions
hereof. Neither the Company nor any of its subsidiaries has previously
entered into any agreement granting any registration rights with respect to
any of its securities to any Person. This Agreement, together with the
Purchase Agreement and the Related Agreements (as defined in the Purchase
Agreement), contain the entire understanding of the parties with respect
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to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters.
(d) Amendments and Waivers. Any provision of this Agreement may be
amended, waived or modified only upon the written consent of (i) the Company
and (ii) the Camden Purchasers. Any amendment or modification effected in
accordance with this Section shall be binding upon each Holder of Registrable
Securities and the Company. Any Holder may waive any of his or her rights or
the Company's obligations hereunder with respect to such Holder without
obtaining the consent of any other person only be a writing signed by such
Holder. Any amendment, waiver or modification not effected in accordance with
this Section shall be void.
(e) Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon (i) personal delivery, (ii) at the time of transmission
by facsimile addressed to the other party at its facsimile number specified
herein (or hereafter modified by subsequent notice to the parties hereto),
until confirmation of receipt made by printed confirmation sheet verifying
successful transmission of the facsimile, (iii) delivery by a nationally
recognized overnight courier or (iv) four (4) days after deposit with the
United States Post Office, by registered or certified mail, postage prepaid.
Such notice shall be addressed to the party to be notified at the address
indicated for such party on the signature page to this Agreement, or at such
other address as such party may designate by ten (10) days' advance written
notice to the other parties.
(f) Counterparts. This Agreement may be executed by facsimile and in
any number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument. Any signature page delivered
by a fax machine or telecopy machine shall be binding to the same extent as an
original signature page, with regard to any agreement subject to the terms
hereof or any amendment thereto. Any party who delivers such a signature page
agrees to later deliver an original counterpart to any party which requests
it.
(g) Termination of Registration Rights. The registration rights
granted pursuant to this Agreement shall terminate as to any Holder, at such
time as such Holder has sold all Registrable Securities held by it.
(h) Governing Law. This Agreement and the legal relations between
the parties arising hereunder shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without regard to
principles of conflicts of laws.
(i) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
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13. Definitions. The defined terms below are found on the page indicated.
Term Page
----- ----
Agreement...................................................................1
Camden Purchasers...........................................................1
Common Stock................................................................1
Company.....................................................................1
Company Stock...............................................................1
Effectiveness Period........................................................2
Exchange Act................................................................7
Follow-On Registrations.....................................................4
Holder......................................................................1
Holders.....................................................................1
Indemnified Party...........................................................7
Indemnifying Party..........................................................7
Initial Registration Statement..............................................2
Initiating Holders..........................................................3
Person......................................................................2
Purchase Agreement..........................................................1
register....................................................................2
registered..................................................................2
Registrable Securities......................................................2
registration................................................................2
Registration Deadline.......................................................2
Registration Expenses.......................................................5
Request Notice..............................................................3
Restricted Securities.......................................................2
SEC.........................................................................2
Securities Act..............................................................2
Series A Preferred Stock....................................................1
(Signature pages follow.)
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
ENGLISH LANGUGE LEARNING & INSTRUCTION SYSTEM, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
By:___________________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: President and Chief Executive Officer
Address: ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
With a copy to: ▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
PURCHASERS:
CAMDEN PARTNERS STRATEGIC FUND II-A, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:_______________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
Address: Camden Partners
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CAMDEN PARTNERS STRATEGIC FUND II-B, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
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By:_____________________________________
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Title: Managing Member
Address: Camden Partners
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SCHEDULE A
The chart below sets forth the entities and groups that have piggyback
registration rights to register their shares or shares underlying warrants to
purchase shares of the Company's common stock, the number of such shares and
the percentage of shares this represents of the Company's currently
outstanding shares. All registration rights are piggyback in nature. Only
the Carriage House Capital, LLC shares and warrants are subject to penalty
provisions, which are described in footnote (1) below.
Percentage of Total
Name Number of Shares Outstanding
------ ---------------- -----------
Carriage House 1,531,428 10.7%
Capital, LLC (1)
Purchasers in $1.00
Offering closing on
January 31, 2001 503,775 3.5%
Online Research
Partners, LLP 83,750 0.6%
NetCap Ventures, Inc.(2) up to 250,000 1.8%
(1) Pursuant to an agreement with Carriage House Capital, LLC, the Company is
required to register all of their shares on an appropriate registration
statement on or before August 31, 2001, and such registration statement
must be declared effective on or before November 15, 2001. In the event
that either of these events were not to occur, Carriage House would be
entitled to receive 30,629 additional shares of the Company's common
stock every 30 days as penalty shares. However, total penalty shares may
not exceed 500,000 shares.
(2) The Company has granted full piggyback registration rights with respect
to the shares underlying the cashless warrants to purchase shares of
common stock equal to ten per cent of the number of shares issued by the
Company to investors (including Camden Partners and affiliates) between
September and December 31, 2001. However, only 25% of such shares will
not be subject to a lock-up agreement, the remaining 75% will be subject
to a lock-up agreement, released in three equal installments three, six
and nine months from the effective date of an applicable registration
statement.