EXHIBIT 4
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ENGLISH LANGUAGE LEARNING & INSTRUCTION SYSTEM, INC.
REGISTRATION RIGHTS AGREEMENT
Dated as of September 20, 2001
TABLE OF CONTENTS
Page
1. Definitions............................... 1
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2. Required Registration..................... 2
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3. Demand Registration....................... 3
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4. Company Registration...................... 4
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5. Registration on Form S-2 or S-3........... 4
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6. Registration Procedures................... 4
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7. Registration Expenses..................... 5
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8. Indemnification........................... 6
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9. Rule 144 Reporting........................ 7
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10. Successors and Assigns.................... 8
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11. Other Registration Rights................. 8
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12. Miscellaneous............................. 8
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13. Definitions............................... 10
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i
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of the 20/th/ 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
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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
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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.
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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
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registration rights hereunder.
1
"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).
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"Securities Act" means the Securities Act of 1933, as amended.
2. Required Registration.
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(a) Shelf Registration. Promptly following the Closing, the Company
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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.
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(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
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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,
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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
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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
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request under this Section 3 (the "Initiating Holders") intend to distribute the
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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
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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
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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
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3(c).
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(c) Maximum Number of Demand Registrations. The Company is obligated
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to effect only two (2) such registrations pursuant to this Section 3.
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4. Company Registration. If the Company proposes to register any of its
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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).
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5. Registration on Form S-2 or S-3. In addition to the rights set forth
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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,
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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
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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
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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.
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(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 information
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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
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"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
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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
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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.
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11. Other Registration Rights. The Company will not grant to any third
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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.
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(a) Remedies. In the event of a breach by the Company or by a Holder
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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,
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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
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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
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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
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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
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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
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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
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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
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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.
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Term Page
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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.
By: /s/ Xxxxxxx Xxxx
---------------------------------------
Name: Xxxxxxx Xxxx
Title: President and Chief Executive Officer
Address: XXXXX
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx Xxxx
With a copy to: Xxxx & Xxxx, P.C.
0000 Xxxx Xxxxxx'x Xxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxx, Esq.
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PURCHASERS:
CAMDEN PARTNERS STRATEGIC FUND II-A, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Managing Member
Address: Camden Partners
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxxxx
Fax: (000) 000-0000
CAMDEN PARTNERS STRATEGIC FUND II-B, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
Address: Camden Partners
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxxxx
Fax: (000) 000-0000
SCHEDULE A
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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.
