Exhibit 10.45
NOBEL LEARNING COMMUNITIES, INC.
(the "Company")
June 17, 2003
Camden Partners Strategic Fund II-A, L.P.
Camden Partners Strategic Fund II-B, L.P.
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
RE: Management Rights
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Ladies and Gentlemen:
This letter will confirm our agreement that in connection with your
purchase of 1,333,333 shares of the Company's Series E Convertible Preferred
Stock (the "Series E Stock), you shall be entitled to the following contractual
management rights, in addition to any rights to non-public financial
information, inspection rights, and other rights specifically provided to you in
the Series E Convertible Preferred Stock Purchase Agreement, dated the date
hereof (the "Purchase Agreement"), and the Registration Rights Agreement, dated
the date hereof, to which you are a party.
1. Each of you (the "Camden Group") shall be entitled to consult
with and advise management of the Company on significant business issues,
including management's proposed annual operating plans, and management will meet
with each of you regularly during each year at the Company's facilities at
mutually agreeable times for such consultation and advice and to review progress
in achieving said plans. In accordance with the time frames set forth in the
Purchase Agreement, and without limitation of the foregoing, the Company will
provide the Camden Group with an annual budget and operating plan for each
fiscal year.
2. Representatives of the Camden Group may examine the books and
records of the Company and inspect its facilities and may request information at
reasonable times and intervals concerning the general status of the Company's
financial condition and operations; provided, however, that the Company reserves
the right to prohibit access to certain materials if the Company believes upon
advice of counsel that such prohibition is reasonably necessary to preserve the
attorney-client privilege.
3. Within the time frames set forth in the Purchase Agreement, the
Company shall provide to the Camden Group (i) audited fiscal year-end financial
statements prepared in accordance with generally accepted accounting principles
consistently applied; (ii) monthly financial statements (including revenue and
gross profit information, year-to-date results, comparisons to previous year's
results, for such period and comparisons to budget), together with a brief
management executive summary report, and (iii) before each fiscal year-end, a
copy of the Company's monthly budget for the next fiscal year.
4. If the Camden Group is represented on the Company's Board of
Directors pursuant to rights granted in the Company's Certificate of
Designation, Preferences and Rights of Series E Convertible Preferred Stock or
by election or designation at any date hereafter, your representative Director
may bring a visitor who is not a Board member to all meetings of the Board,
Camden Partners Strategic Fund II-A, L.P.
Camden Partners Strategic Fund II-B, L.P.
June 17,2003
Page 2
except that the visitor may be excluded from access to any material or meeting
or portion thereof if the Company believes, upon advice of counsel, that such
exclusion is reasonably necessary to preserve the attorney-client privilege, to
protect highly confidential proprietary information, to discharge any respective
fiduciary duties or for other similar reasons. Such visitor shall attend
meetings of the Board in a non-voting, observer capacity. The Company shall
provide to the Camden Group all notices and materials delivered to members of
the Board in the same manner and at the same time as it shall send such notices
or materials to the Board. If your representative Director is unable to attend
for any reason, a substitute representative from the Camden Group may attend the
Board meeting as a visitor, and in a non-voting, observer capacity, and such
representative may address the Board of Directors with respect to your business
issues facing the Company, except that the visitor may be excluded from access
to any material or meeting or portion thereof if the Company believes, upon
advice of counsel, that such exclusion is reasonably necessary to preserve the
attorney-client privilege, to protect highly confidential proprietary
information, to discharge any respective fiduciary duties or for other similar
reasons.
5. If the Camden Group is not represented on the Company's Board of
Directors, the Company shall give a representative of the Camden Group copies of
all notices, minutes, consents and other material that the Company provides to
its directors and invite a representative of the Camden Group to attend all
Board meetings as a visitor, in a non-voting, observer capacity, at the
Company's reasonable expense, except that the representatives may be excluded
from access to any material or meeting or portion thereof if the Company
believes, upon advice of counsel, that such exclusion is reasonably necessary to
preserve the attorney-client privilege, to protect highly confidential
proprietary information, to discharge any respective fiduciary duties or for
other similar reasons. Such representatives may address the Board of Directors
with respect to the Camden Group's concerns regarding significant business
issues facing the Company. The Company shall provide to the Camden Group all
notices and materials delivered to members of the Board in the same manner and
at the same time as it shall send such notices or materials to the Board.
6. The Camden Group has agreed, and any representative the Camden
Group may appoint will agree, to hold in confidence and trust and not use or
disclose any confidential information provided to or learned by it in connection
with your rights under this letter.
7. The rights described herein shall terminate and be of no further
force or effect upon the earlier of (i) such time that the Camden Group no
longer owns any capital stock of the Company, (ii) the conversion of the Camden
Group's Series E Stock into Common Stock of the Company, (iii) the consummation
of the sale of the Company's securities pursuant to a registration statement
filed by the Company under the Securities Act of 1933 in connection with the
firm commitment underwritten offering of its securities to the general public
which results in the Company's preferred stock being converted into common
stock; (iv) the date of the closing of a sale, lease, or other disposition of
all or substantially all of the Company's assets or the Company's merger into or
consolidation with any other corporation or other entity, or any other corporate
reorganization, in which the holders of the Company's outstanding voting stock
immediately prior to such transaction own, immediately after such transaction,
securities
Camden Partners Strategic Fund II-A, L.P.
Camden Partners Strategic Fund II-B, L.P.
June 17,2003
Page 3
representing less than fifty percent (50%) of the voting power of the
corporation or other entity surviving such transaction, provided that this
provision shall not apply to a merger effected exclusively for the purpose of
changing the domicile of the Company.
Very truly yours,
NOBEL LEARNING COMMUNITIES, INC.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Vice Chairman
