S-3

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As filed with the Securities and Exchange Commission on February 18, 2002

Registration No. 333-        

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

SYLVAN LEARNING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of incorporation or organization) 52-1492296
(I.R.S. employer identification number)

1001 Fleet Street
Baltimore, Maryland 21202
(410) 843-8000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Douglas L. Becker
Chief Executive Officer
Sylvan Learning Systems, Inc.
1001 Fleet Street
Baltimore, Maryland 21202
(410) 843-8000
(Name, address, including zip code and telephone number, including area code of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

Richard C. Tilghman, Jr., Esquire
Piper Marbury Rudnick & Wolfe LLP
6225 Smith Avenue
Baltimore, Maryland 21209
(410) 580-3000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

      If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / /

      If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act") check the following box. /x/

      If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /              

      If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /              

      If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / /

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities To Be Registered	Amount To Be Registered	Proposed Maximum Offering Price Per Share (1)	Proposed Maximum Aggregate Offering Price (1)	Amount of Registration Fee
Common Stock, $.01 par value	143,609 Shares	$23.68	$3,400,661	$313

(1)

Estimated solely for purposes of determining registration fee pursuant to Rule 457(c) under the Securities Act and based upon the average of the high and low prices on the Nasdaq National Market on February 14, 2002.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

SUBJECT TO COMPLETION, DATED FEBRUARY 18, 2002

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the SEC is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

143,609 Shares

Sylvan Learning Systems, Inc.

Common Stock

        This prospectus relates to the offering from time to time of up to an aggregate of 143,609 shares by the selling stockholders named in this prospectus. The selling stockholders acquired these shares of our common stock in a private transaction.

        This offering is not being underwritten. The selling stockholders may offer the shares through public or private transactions at the prevailing market price for our common stock at the time of the sale, a price related to the prevailing market price, a negotiated price or such other prices as the selling stockholders determine from time to time. All of the net proceeds from the sale of these shares of common stock will go to the selling stockholders. We will not receive any proceeds from the sale of these shares.

        Our common stock is traded on the Nasdaq National Market under the symbol "SLVN." On February 15, 2002, the last reported bid price of our common stock on the Nasdaq National Market was $23.82 per share.

Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                        , 2002

TABLE OF CONTENTS

	Page
SYLVAN LEARNING SYSTEMS, INC.	1
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS	2
USE OF PROCEEDS	2
SELLING STOCKHOLDERS	3
PLAN OF DISTRIBUTION	4
LEGAL MATTERS	5
EXPERTS	5
WHERE YOU CAN FIND MORE INFORMATION	6
INCORPORATION BY REFERENCE	6

i

SYLVAN LEARNING SYSTEMS, INC.

Because this is a summary, it does not contain all the information you should consider before investing in our common stock. You should carefully read the more detailed information and the financial statements and related notes that are incorporated by reference in this prospectus.

        We are a leading international provider of educational services to families and schools. We seek to maintain our leadership position in the core K through 12 educational services market while dramatically expanding our post-secondary offerings and establishing a leadership role in the educational technology marketplace. We plan to achieve this leadership through focus on the following business concentrations:

•

K through 12. Providing consumer and institutionally focused education services for students ranging from the kindergarten through high school education levels. We provide services through Sylvan Learning Centers and Sylvan Education Solutions. This business focuses on proven grade level advancement of students through direct student-teacher interaction.



•

Post-Secondary. Providing educational services to students beyond the high school education level through a network of international universities, center-based adult English language instruction and accredited teacher training university courses and degree programs. We tailor our services to address the fast growing international marketplace for advanced education as well as the shortage of teaching professionals in the United States. We provide services through the five institutions that comprise Sylvan International Universities as well as Wall Street Institute, Canter and Associates and the Sylvan Teacher Institute.



•

Education Technology. Focusing on investment in companies employing emerging technology solutions in the education and training marketplace. Building on our brand recognition and industry-leading position in educational services, we seek to create stockholder value by capitalizing on an opportunity to establish a leadership position in the application of Internet and wireless technologies to the education marketplace though Sylvan Ventures.

        We provide lifelong educational services through five separate business segments. As of July 1, 2001, we realigned several of our business segments to emphasize our focus on increasing our presence in the post-secondary education and online education markets. Our new segments are K through 12 Education Services, Online Higher Education, Sylvan International Universities, English Language Instruction and Sylvan Ventures. The K through 12 Education Services segment includes the operations of Sylvan Learning Centers, which designs and delivers individualized tutorial programs to school age children through franchised and Sylvan-owned Learning Centers. This segment also includes the operations of Schulerhilfe, a major provider of tutoring services in Germany, and Sylvan Education Solutions, which principally provides educational programs to public and non-public school district students through contracts funded by Title 1 and state-based programs. The Online Higher Education segment provides professional development and graduate degree programs to teachers through Canter and Associates and the Sylvan Teacher Institute. The Sylvan International Universities segment owns or maintains controlling interests in five private, for-profit institutions located in Spain, Mexico, Switzerland, Chile and France. The English Language Instruction segment consists of the operations of Wall Street Institute, a European-based franchiser and operator of learning centers that teach the English language in the post-secondary market. Our Sylvan Ventures segment was established during the first quarter of 2000 to invest in and develop companies that are creating emerging technology solutions for the education and training marketplace.

        Our executive offices are located at 1001 Fleet Street, Baltimore, Maryland 21202, and our telephone number is (410) 843-8000. Information contained on our Web sites does not constitute a part of, nor is it incorporated by reference into, this prospectus. The terms "Sylvan," "we," "us" and "our" as used in this registration statement refer to Sylvan Learning Systems, Inc. and its subsidiaries as a combined entity, except where it is made clear that these terms mean only the parent company.

1

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

        This prospectus and the documents we incorporate by reference include forward-looking statements. Forward-looking statements include information we provide about our possible or assumed results of operations, business strategies, financing plans, competitive position and potential growth opportunities. Forward-looking statements include all statements that are not historical facts and are generally accompanied by words such as "may," "will," "intend," "anticipate," "believe," "estimate," "expect," "should" or similar expressions.

        Forward-looking statements involve various risks, uncertainties and assumptions. Our actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements. Also, you should not assume that we will update any of these forward-looking statements, whether as a result of new information, future events or otherwise, after we distribute this prospectus.

        You should understand that many important factors, in addition to those discussed in the documents we incorporate by reference, could cause our results to differ materially from those expressed in these forward-looking statements. These factors include:

•

our ability to continue to make acquisitions and to successfully integrate and operate acquired businesses;



•

the fluctuations in revenues from our business segments;



•

market acceptance of new service offerings by us or our competitors and our ability to predict and respond to changes in the markets for our educational services;



•

the development and expansion of our franchise system and the effect of new technology applications in educational services industry;



•

our ability to attract and retain key personnel in all segments of our business;



•

the effect of existing regulations governing our business or changes in those regulations;



•

our ability to effectively manage the growth of our business;



•

possible increased competition from other educational service providers;



•

the effect on our business and results of operations from fluctuations in the value of foreign currencies;



•

the many risks associated with our operation of an increasingly global business, including complex management, foreign currency, legal, tax and economic risks;



•

changes in the political, economic and business climate in the United States or the international markets where we operate; and



•

risks of downturns in general economic conditions, and in the educational services and education technology industries specifically.

USE OF PROCEEDS

        We will not receive any proceeds from the sale of the shares of common stock offered by the selling stockholders. We will pay all expenses of the registration and sale of the shares of common stock, other than selling commissions and fees and stock transfer taxes.

2

SELLING STOCKHOLDERS

        We issued the shares of common stock offered by this prospectus to the selling stockholders as part of the consideration for our acquisition of a number of Sylvan Learning Centers held by the selling stockholders in a transaction exempt from the registration requirements of the Securities Act. The selling stockholders, including their donees, pledgees, transferees or their successors, may from time to time offer and sell any or all of these shares. Our registration of the shares of common stock does not necessarily mean that the selling stockholders will sell all or any of the shares.

        The selling stockholders have represented to us that they purchased the shares of common stock for their own account for investment only and not with a view toward selling or distributing them, except through sales registered under the Securities Act or exemptions. We agreed with the selling stockholders to file this registration statement to register the resale of the shares of common stock. We agreed to prepare and file all necessary amendments and supplements to the registration statement to keep it effective until the date on which all the shares offered hereby are sold or are eligible to be sold without the volume or other restrictions imposed by Rule 144 under the Securities Act.

        The following table shows, as of February 8, 2002, the beneficial ownership of the shares of our common stock by each of the selling stockholders. The information in the table below with respect to each selling stockholder is based on information provided by or on behalf of that selling stockholder. None of the selling stockholders has, or within the past three years has had, any position, office or other material relationship with us, other than as a result of their ownership of our securities or as franchisee of one or more of our Sylvan Learning Centers. However, John A. Miller, one of our directors since October 2001, holds an indirect equity interest in each of the selling stockholders. Mr. Miller's investment was made in the first quarter of 1999.

        Because the selling stockholders may sell all or some of the shares of common stock beneficially owned by them, we cannot estimate the number of shares of our common stock that will be beneficially owned by the selling stockholders after this offering. Also, the selling stockholders may sell, transfer or otherwise dispose of, at any time or from time to time after the date on which they provided the information, all or a portion of the shares of our common stock beneficially owned by them in transactions exempt from registration under the Securities Act.

        Beneficial ownership is determined in accordance with Rule 13d-3(d) under the Securities Exchange Act of 1934, as amended. Unless otherwise noted, each person identified possesses sole voting and investment power with respect to shares of our common stock. None of the share amounts set forth below represents more than 1% of our outstanding stock as of February 8, 2002, adjusted as required by the SEC's rules.

Name		Shares of Common Stock Owned Prior to Offering	Shares of Common Stock Offered
Atlanta Learning Systems, LLC, Boston Learning Systems, LLC and Pittsburgh Learning Systems, LLC(1)		143,609	143,609
	Total	143,609	143,609
(1) All shares are held jointly and severally by the three selling stockholders.

3

PLAN OF DISTRIBUTION

        We are registering an aggregate of 143,609 shares of our common stock to permit public sales of the shares by the selling stockholders from time to time after the date of this prospectus.

        The shares may be sold by the selling stockholders in one or more transactions at the prevailing market price for our common stock at the time of the sale, a price related to the prevailing market price, a negotiated price or such other prices as the selling stockholders determine from time to time. As used in this prospectus, "selling stockholders" includes donees, pledgees, transferees and other successors in interest selling shares received from a selling stockholder after the date of this prospectus as a gift, pledge, partnership distribution, distribution to members or stockholders or other non-sale transfer. The selling stockholders may offer their shares in one or more of the following transactions:

•

in the over-the-counter market;



•

on any national securities exchange or quotation service on which the shares may be listed or quoted at the time of sale;



•

in transactions other than in the over-the-counter market or on an exchange or quotation service;



•

through the writing of options, whether listed on an options exchange or otherwise;



•

through the settlement of short sales;



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by pledge to secure debts and other obligations; or



•

through a combination of any of the above, which may involve crosses or block transactions.

        In connection with the sale of the shares of our common stock, the selling stockholders may engage in short sales and may enter into hedging transactions with broker-dealers or other financial institutions which may in turn engage in short sales of the shares and deliver these securities to close out such short positions, or loan or pledge the shares to broker-dealers that in turn may sell these securities.

        The aggregate proceeds to the selling stockholders from the sale of the shares will be the purchase price of the shares less any discounts and commissions. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of shares to be made directly or through agents.

        Our outstanding shares of common stock are listed for trading on the Nasdaq National Market under the symbol "SLVN."

        In order to comply with the securities laws of some states, if applicable, the shares may be sold in these jurisdictions only through registered or licensed broker-dealers. In addition, in some states the shares may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

        The shares of our common stock described in this prospectus may be sold from time to time directly by the selling stockholders. Alternatively, the selling stockholders may from time to time offer shares to or through underwriters, broker-dealers or agents. The selling stockholders and any underwriters, broker-dealers or agents that participate in the distribution of the shares may be deemed to be "underwriters" within the meaning of the Securities Act. Any discounts, commissions or profits on the resale of shares and any compensation received by any underwriter, broker-dealer or agent may be deemed to be underwriting discounts and commissions under the Securities Act.

        In addition, any securities covered by this prospectus that qualify for sale under Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than under this prospectus. The selling stockholders may decide not to sell all of the shares they hold. The selling stockholders may transfer, devise or gift such shares by other means not described in this prospectus.

4

        To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. An accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement of which this prospectus is a part, will disclose the names of the selling stockholders, the number of shares to be sold, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer.

        We have granted registration rights for the benefit of the selling stockholders under applicable federal and state securities laws. The selling stockholders will pay all of the expenses incurred because of the offering and sale of the shares. Each selling stockholder will be responsible for payment of any commissions, discounts or concessions of underwriters, broker-dealers or agents. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liability are imposed on it under the Securities Act.

LEGAL MATTERS

        The validity of the shares of common stock covered by this prospectus was passed upon for us by our counsel, Piper Marbury Rudnick & Wolfe LLP, Baltimore, Maryland.

EXPERTS

        Ernst & Young LLP, independent auditors, have audited our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2000, as set forth in their report. Ernst & Young LLP's report on our consolidated financial statements for the year ended December 31, 2000 is based in part on the report of Arthur Andersen LLP, independent auditors. We have incorporated our consolidated financial statements by reference into this prospectus and elsewhere in this registration statement in reliance upon the reports of Ernst & Young LLP and Arthur Andersen LLP, given on the authority of these firms as experts in accounting and auditing.

        Ernst & Young LLP, independent auditors, have audited the separate financial statements of Classwell Learning Group, Inc., Caliber Learning Network, Inc., HigherMarkets, Inc. and Mindsurf, Inc., respectively, included in our Annual Report on Form 10-K for the year ended December 31, 2000, as set forth in their reports, which are incorporated by reference in this prospectus and elsewhere in this registration statement. Ernst & Young LLP's reports on the financial statements of Classwell Learning Group, Inc., Caliber Learning Network, Inc. and HigherMarkets, Inc. contain explanatory paragraphs describing conditions that raise substantial doubt about the ability of each entity to continue as a going concern. The separate financial statements of Classwell Learning Group, Inc., Caliber Learning Network, Inc., HigherMarkets, Inc. and Mindsurf, Inc., respectively, are incorporated by reference in reliance on Ernst & Young LLP's reports, given on their authority as experts in accounting and auditing.

        Arthur Andersen LLP, independent auditors, have audited the consolidated financial statements of iLearning, Inc. included in our Annual Report on Form 10-K for the year ended December 31, 2000, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in this registration statement. The consolidated financial statements of iLearning, Inc. are incorporated by reference in reliance on Arthur Andersen LLP's report, given on their authority as experts in accounting and auditing.

        PricewaterhouseCoopers, LLP, independent auditors, have audited the financial statements of Chancery Software Ltd. included in our Annual Report on Form 10-K for the year ended December 31, 2000, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in this registration statement. The financial statements of Chancery Software Ltd. are incorporated by reference in reliance on PricewaterhouseCoopers, LLP's report, given on their authority as experts in accounting and auditing.

5

WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC under the Securities Act a registration statement on Form S-3. This prospectus does not contain all of the information contained in the registration statement, certain portions of which have been omitted under the rules of the SEC. We also file annual, quarterly and special reports, proxy statements and other information with the SEC under the Exchange Act. The Exchange Act file number for our SEC filings is 0-22844. You may read and copy the registration statement and any other document we file at the following SEC public reference rooms:

Judiciary Plaza
450 Fifth Street, N.W.
Rm. 1024
Washington, D.C. 20549 500 West Madison Street
14th Floor
Chicago, Illinois 60661

        You may obtain information on the public reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. We file information electronically with the SEC and these filings are available from the SEC's Internet site at http://www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically. Our common stock is listed on the Nasdaq National Market under the symbol "SLVN." You may read and copy our SEC filings and other information at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.

INCORPORATION BY REFERENCE

        The SEC allows us to "incorporate by reference" the documents we file under the Exchange Act. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, except for any information superseded by information contained directly in this prospectus or in later filed documents incorporated by reference in this prospectus. The information in documents that we file later with the SEC will automatically update and supersede information in this prospectus. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act:

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Annual Report on Form 10-K for the year ended December 31, 2000.



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Quarterly Reports on Form 10-Q for the three months ended March 31, June 30 and September 30, 2001.



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Current Reports on Form 8-K filed April 24, 2001.



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Description of our common stock contained in our registration statement on Form 8-A, filed with the Commission under the Exchange Act.



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Description of our preferred stock purchase rights, contained in our registration statement on Form 8-A filed with the Commission under the Exchange Act, including any amendments or reports filed for the purpose of updating such description.

        We will provide a copy of documents we incorporate by reference at no cost to any person who receives this prospectus. To request a copy of any or all of these documents, write or telephone us at: 1001 Fleet Street, Baltimore, Maryland 21202, (410) 843-8000, Attention: Chief Financial Officer.

6

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

14. Other Expenses of Issuance and Distribution

        The following table sets forth the various expenses to be incurred in connection with the registration of the securities being registered hereby, all of which will be borne by Sylvan Learning Systems, Inc. All of the amounts shown are estimated except the SEC registration fee.

Securities and Exchange Commission registration fee		$	313
Transfer agent's fees and expenses			5,000
Printing expenses			5,000
Legal fees and expenses			7,500
Accounting fees and expenses			15,000
Miscellaneous expenses			7,187
	Total	$	40,000

15. Indemnification of Officers and Directors

        Section 2-418 of the Maryland General Corporation Law permits indemnification of directors, officers, agents and controlling persons of a corporation under certain conditions and subject to certain limitations. Sylvan's Charter and Bylaws include provisions requiring that Sylvan indemnify its directors and officers to the fullest extent permitted by Maryland General Corporation Law, including circumstances in which indemnification is otherwise discretionary.

16. Exhibits

Exhibit No.	Description
2.1	Asset Purchase Agreement, effective as of January 1, 2002, by and among the registrant, Atlanta Learning Systems, LLC, Boston Learning Systems, LLC and Pittsburgh Learning Systems, LLC. Sylvan will furnish to the Securities and Exchange Commission a copy of any omitted schedule or exhibit upon request.*
3.1	Articles of Amendment and Restatement of the Charter.**
3.2	Amended and Restated By-Laws dated September 27, 1996.***
4.1	Specimen Stock Certificate.**
5.1	Opinion of Piper Marbury Rudnick & Wolfe as to the validity of the shares.*
23.1	Consent of Ernst & Young LLP with respect to reports of the financial statements of Sylvan Learning Systems, Inc., Classwell Learning Group, Inc., Caliber Learning Network, Inc., HigherMarkets, Inc. and Mindsurf, Inc.*
23.2	Consent of Arthur Andersen LLP with respect to consolidated financial statements of iLearning, Inc.*
23.3	Consent of PricewaterhouseCoopers, LLP with respect to financial statements of Chancery Software Ltd.*
23.4	Consent of Piper Marbury Rudnick & Wolfe LLP (contained in Exhibit 5.1).
24.1	Powers of Attorney (included on Page II-4).

*

Filed herewith.

**

Incorporated by reference to the exhibits to the registrant's registration statement on Form S-1 (File No. 33-69558).

***

Incorporated by reference to the registrant's annual report on Form 10-K for the year ended December 31, 1996.

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17. Undertakings

        (a)  The undersigned registrant hereby undertakes:

        (1)  To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

        (i)    To include any prospectus required by Section 10(a)(3) of the Securities Act;

        (ii)  To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price, set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

        (iii)  To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

provided, however, that paragraphs (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference into the registration statement.

        (2)  That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

        (3)  To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

        (b)  The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        (c)  Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-2

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Baltimore, Maryland, on this 18^th day of February, 2002.

SYLVAN LEARNING SYSTEMS, INC.
By:	/s/  DOUGLAS L. BECKER Douglas L. Becker Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated. Each person whose signature appears below in so signing also makes, constitutes and appoints Douglas L. Becker and Sean Creamer, and each of them acting alone, his or her true and lawful attorney-in-fact, with full power of substitution, for him or her in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement, with exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.

Name	Title	Date
/s/  DOUGLAS L. BECKER Douglas L. Becker	Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	February 18, 2002
/s/  PETER COHEN Peter Cohen	President and Chief Operating Officer	February 18, 2002
/s/  SEAN CREAMER Sean Creamer	Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	February 18, 2002
/s/  R. CHRISTOPHER HOEHN-SARIC R. Christopher Hoehn-Saric	Director	February 18, 2002
/s/  JOHN A. MILLER John A. Miller	Director	February 18, 2002

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/s/  R. WILLIAM POLLOCK R. William Pollock	Director	February 18, 2002
/s/  LAURENCE M. BERG Laurence M. Berg	Director	February 18, 2002
Michael S. Gross	Director
/s/  JAMES H. MCGUIRE James H. McGuire	Director	February 18, 2002
Richard W. Riley	Director
/s/  JUDITH D. MOORE Judith D. Moore	Director	February 18, 2002

II-4

Exhibit Index

Exhibit No.	Description
2.1	Asset Purchase Agreement, effective as of January 1, 2002, by and among the registrant, Atlanta Learning Systems, LLC, Boston Learning Systems, LLC and Pittsburgh Learning Systems, LLC. Sylvan will furnish to the Securities and Exchange Commission a copy of any omitted schedule or exhibit upon request.*
3.1	Articles of Amendment and Restatement of the Charter.**
3.2	Amended and Restated By-Laws dated September 27, 1996.***
4.1	Specimen Stock Certificate.**
5.1	Opinion of Piper Marbury Rudnick & Wolfe as to the validity of the shares.*
23.1	Consent of Ernst & Young LLP with the reports on the financial statements of Sylvan Learning Systems, Inc., Classwell Learning Group, Inc., Caliber Learning Network, Inc., HigherMarkets, Inc. and Mindsurf, Inc.*
23.2	Consent of Arthur Andersen LLP with respect to consolidated financial statements of iLearning, Inc.*
23.3	Consent of PricewaterhouseCoopers, LLP with respect to financial statements of Chancery Software Ltd.*
23.4	Consent of Piper Marbury Rudnick & Wolfe LLP (contained in Exhibit 5.1).
24.1	Powers of Attorney (included on Page II-4).

*

Filed herewith.

**

Incorporated by reference to the exhibits to the registrant's registration statement on Form S-1 (File No. 33-69558).

***

Incorporated by reference to the registrant's annual report on Form 10-K for the year ended December 31, 1996.

II-5

QuickLinks

TABLE OF CONTENTS
SYLVAN LEARNING SYSTEMS, INC.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
SELLING STOCKHOLDERS
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INCORPORATION BY REFERENCE
PART II INFORMATION NOT REQUIRED IN PROSPECTUS

14. Other Expenses of Issuance and Distribution
15. Indemnification of Officers and Directors
16. Exhibits
17. Undertakings

SIGNATURES

EX-2.1

                                                                    EXHIBIT 2.1

                            ASSET PURCHASE AGREEMENT
                     FOR THE PURCHASE OF ASSETS OF OPERATING
                             SYLVAN LEARNING CENTERS
                                      FROM
   ATLANTA LEARNING SYSTEMS, LLC, PITTSBURGH LEARNING SYSTEMS, LLC, AND BOSTON
                             LEARNING SYSTEMS, LLC

     THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is made and entered into this
28th day of January, 2002, but shall be effective at the commencement of
business on January 1, 2002 (the "EFFECTIVE DATE"), by and among:

               "SELLERS"             and                    "BUYER"

    Atlanta Learning Systems, LLC           Sylvan Learning Systems, Inc.
    Boston Learning Systems, LLC            1001 Fleet Street
    Pittsburgh Learning Systems, LLC        Baltimore, Maryland  21202
    c/o Sterling Capital, Ltd.              Attention: Robert Zentz, Esq.
    Attention: Tom D. Wippman, Esq.
    650 Dundee Road - Suite 370
    Northbrook, Illinois 60062

                                    RECITALS

     A. Each of the Sellers now operates Sylvan Learning Centers (hereinafter
collectively called "THE CENTERS") in the Territories ("TERRITORIES") and at the
locations set forth on EXHIBIT A, attached hereto, and desires to sell the
businesses located at the Centers to Buyer, together with all property and
assets necessary for the continued operation of the Centers as a going concern
(collectively, all of the Centers (with any new centers opened in the
Territories) and such assets are hereinafter called the "BUSINESS") on the terms
and conditions herein set forth. The term "Territories" shall not include those
areas on EXHIBIT A which are in italicized bold face and marked with an asterisk
(the "EXCLUDED TERRITORIES"), but only if Buyer's development of the Excluded
Territories does not interfere with or adversely effect the "Contribution
Margin" (defined below); otherwise, the Excluded Territories will be included
within the definition of Territories for the purpose of determining the
consideration to be delivered pursuant to SECTIONS 2.2(i) AND (ii) hereof.

     B. Buyer desires to purchase the Business, all on the terms and conditions
herein set forth.

     C. The parties entered into Option Agreements (the "OPTIONS"), as amended
from time to time, providing for certain of the terms and conditions under which
Buyer would buy the Business, but, conditioned upon, and concurrently with, the
consummation of the transactions contemplated hereby, the Options shall be
deemed void and of no further force and effect.

     In consideration of the covenants hereinafter set forth, the parties agree
as follows:

     1. SALE OF BUSINESS.

          1.1. SALE OF PURCHASED ASSETS. On the Closing Date (as defined in
     SECTION 8), each Seller shall sell, transfer, and deliver to Buyer and
     Buyer shall purchase, free and clear of all liens, pledges, or encumbrances
     of all kinds (except for those encumbrances pursuant to operating or
     capital leases), all of the assets of the Business, including but not
     limited to the Leases (defined below) (along with the lease and utility
     deposits in respect thereof) and related fixtures and improvements, all
     other leasehold interests, and all personal property, tangible and
     intangible, including but not limited to all furniture, fixtures,
     equipment, prepaid items, rights to any refunds on product liability
     insurance policies, cash, prepaids, accounts receivable excluding notes
     receivable from any of Sellers' members (or their affiliates), computer
     hardware and software, customer lists, inventory, trade names, trademarks,
     logos, supplies, sales material (including order forms, brochures,
     packaging materials and supplier lists), together with all files,



     records, documents and other written and recorded materials relating to the
     Business (provided that Sellers may retain copies or have access to such
     materials after Closing for tax and other purposes) (collectively such
     assets are the "PURCHASED ASSETS"). All of the Purchased Assets shall be
     inventoried, and a schedule of same prepared and agreed to by Sellers and
     Buyer prior to Closing. Each Seller agrees at Closing to execute and
     deliver to Buyer a bill of sale ("BILL OF SALE") in the form of EXHIBIT B,
     transferring title to all of the Purchased Assets. Said Bill of Sale shall
     only include each Seller's warranty of clear title and an inventoried list
     of the Purchased Assets.

          1.2. EXCLUDED ASSETS. Buyer is not purchasing the contracts described
     in attached EXHIBIT C2, the corporate records of Seller, notes receivable
     from any of Sellers' members (or their affiliates) any shares or other
     equity interests in eSylvan, Inc., Claude Guidroz's truck lease (and any
     obligations in respect thereof) or rights to refunds (tax, insurance or
     otherwise) (such assets are the "EXCLUDED ASSETS"). The eSylvan, Inc. stock
     may be distributed after the Closing to the direct and indirect equity
     holders of the Sellers.

          1.3. ASSUMED LIABILITIES. For purposes of this Agreement, the term
     "ASSUMED LIABILITIES" shall mean and include only (i) those outstanding
     liabilities and obligations of Sellers which are specifically referred to
     or reflected in either the Seller Financial Statements (defined below), the
     notes and attachments thereto (including SCHEDULE 5.2(a), and the Leases,
     including items referred to as "Deferred Revenue,", or "Prepaid Revenue" or
     "Prepaid Tuition", (ii) those trade payables and any other normally
     recurring operating expenses which arose in the ordinary course of Sellers'
     business, consistent with past practices, including refunds occurring in
     the ordinary course of business, (iii) those liabilities and obligations of
     Sellers for the payment of salary, commissions, fees, bonuses or other
     compensation, or for business expense reimbursement, to employees, agents,
     representatives or independent contractors of Sellers, which arose in the
     ordinary course of Sellers' business, consistent with past practices, and
     (iv) those performance obligations of each Seller arising after the Closing
     Date pursuant to the express provisions of the contracts to which any
     Seller is a party which was entered into by a Seller in the ordinary course
     of such Seller's business, consistent with past practices. The term
     "ASSUMED LIABILITIES" shall not include any liability of any Seller of any
     nature to Bank of America, or any other indebtedness listed on EXHIBIT C1,
     attached hereto (the "FUNDED DEBT"), or any obligation or liability related
     to the contracts described on EXHIBIT C2. Buyer shall sign all assumption
     documents deemed necessary or appropriate by landlords to evidence Buyer's
     assumption of any of the Leases. Any liability or obligation which is or
     should be accrued as of the Closing and which is paid by Buyer shall be
     used in the calculation of "NNWC" (as defined below), except every dollar
     of "Deferred Revenue,", or "Prepaid Revenue" or "Prepaid Tuition" shall
     only be counted as $0.50 for purposes of determining the NNWC; such amount
     shall not include an obligation under an assumed contract or lease which
     accrues after the Closing Date; provided, however that if Buyer desires (or
     gets a demand) to pay a liability not disclosed pursuant to this Agreement,
     Buyer shall give Sellers notice of such desire or demand, and shall give
     Sellers the opportunity to contest such payment in good faith. Between the
     Closing and December 31, 2002, Buyer will provide Sellers with a monthly
     status report on the amount of the NNWC, and thereafter until the NNWC has
     been reimbursed, will provide such reports on a quarterly basis. For
     refunds for people who are included in "Unearned Revenues", only 50% of the
     amount refunded will be added to NNWC, and for those people who are not
     included in "Unearned Revenues", none of the amount refunded will be added
     to the NNWC.

     2. CONSIDERATION AND ALLOCATION. In consideration of the sale of the
Business, Buyer agrees to pay a purchase price ("PURCHASE PRICE") as follows:

          2.1. AT CLOSING. At Closing, Buyer shall deliver the following:

               (i) Eleven Million Dollars ($11,000,000.00) in cash by wire
          transfer ("CASH"); Sellers shall use all or a portion of the Cash to
          extinguish all of the Funded Debt in accordance with the payment terms
          on EXHIBIT C1, and then the balance to fund a portion of the NNWC; AND

               (ii) Buyer shall assume and pay, perform and discharge the
          Assumed Liabilities, provided, however that if and to the extent that
          the liabilities and accruals of Sellers (including accruals for
          employee bonuses earned prior to Closing and not to be paid until
          after Closing) as of the Closing Date exceed the value of any working
          capital assets (such as cash, accounts receivables, prepaids and
          deposits) transferred hereunder (the "NNWC"), such amount shall be
          deducted ("DEDUCTIONS") from the Contingent Annual Payments and Final
          Contingent Payment until Buyer is reimbursed; AND


                                      - 2 -



               (iii) Within ten (10) days after Closing, Buyer shall deliver to
          Sellers a certificate for that number of shares of Buyer's common
          stock, $0.01 par value (collectively, the "SLS STOCK") equal to $3.0
          million divided by the "Average Market Value", where "Average Market
          Value" means the arithmetic average (rounded to the nearest fifth
          decimal place) of the closing price per share of SLS Stock, as
          reported on the Nasdaq National Market, for the thirty (30)
          consecutive trading days ending on the Effective Date. The SLS Stock
          shall be treated as set forth in SECTION 2.3 hereof.

          2.2. CONTINGENT CONSIDERATION. After the Closing Date, and subject to
     the limitation set forth in Section 2.2(v), and for the relevant periods
     as discussed below, Buyer will deliver contingent consideration to
     Sellers, as follows:

               (i) CONTINGENT ANNUAL PAYMENT. Subject to the proviso in SECTION
          2.1(II), for each of the four twelve month periods ended December 31,
          2002, 2003, 2004 and 2005 (each, a "YEAR" and together the "YEARS"),
          Buyer shall pay (each, a "CONTINGENT ANNUAL PAYMENT") the aggregate
          "Contribution Margin" (defined below) generated by Buyer in the
          Territories during each Year. Each Contingent Annual Payment shall be
          due and payable on or before March 15 of the Year immediately
          following the Year for which Contribution Margin is being measured
          (I.E., the Contingent Annual Payment for the twelve month period ended
          December 31, 2002 shall be due and payable on or before March 15,
          2003, the Contingent Annual Payment for the twelve month period ended
          December 31, 2003 shall be due and payable on or before March 15,
          2004, the Contingent Annual Payment for the twelve month period ended
          December 31, 2004 shall be due and payable on or before March 15,
          2005, and the Contingent Annual Payment for the twelve month period
          ended December 31, 2005 shall be due and payable on or before March
          15, 2006). For purposes hereof, each Year shall be measured
          independently of all other Years (I.E., one Year shall not be netted
          against another Year).

                    (a) "CONTRIBUTION MARGIN" shall mean, for the twelve months
               ended on December 31 of each Year, the aggregate "contribution
               margin" (as identified in Buyer's current form of profit and loss
               statements of its corporate owned centers, a sample ("SAMPLE") of
               which is attached hereto as SCHEDULE 2.2(i)(a)) of Buyer in the
               Territories, after deducting 8% of gross revenues for what would
               have been royalties paid to Buyer had Sellers continued to own
               the Business, but before (I.E., after adding back) the following:
               (w) interest, (x) income taxes, (y) any allocation of Buyer's
               corporate overhead (except for a reasonable allocation of
               corporate operations' department overhead as identified in the
               Sample, and treated consistently across all corporate owned
               centers), and, (z) only to the extent such items are included in
               the calculation of Contribution Margin, Corporate Expenses (as
               defined below), all as presented in accordance with U.S.
               generally accepted accounting principles, consistently applied.
               For purposes of calculating only the Final Contingent Payment, if
               the Contribution Margin in any Territory is less than $0.00 for
               the twelve months to end December 31, 2005, the Contribution
               Margin from such Territory shall be deemed to be $0.00. All
               reports (including balance sheets, profit and loss statements and
               cash flow statements), whether in the form of the Sample or
               otherwise, regarding the Territories, the Centers and the
               Contribution Margin in respect thereof which are prepared by
               Buyer shall be delivered to Sellers. Buyer shall prepare and
               deliver such reports no less frequently than quarterly.

                    (b) "CORPORATE EXPENSES" shall mean the sum of all of the
               following: any and all expenses, costs, fees (including, but not
               limited to legal, accounting, brokerage or consulting), salaries,
               benefits, bonuses, reimbursements, non-recurring charges, taxes
               and other charges arising out of (i) Buyer's (or its affiliates')
               corporate or oversight responsibilities, (ii) Buyer's fees and
               expenses for any employees, or the contracting of any services
               (including but not limited to, management fees, lawyers,
               accountants or otherwise) to Buyer or their replacements,
               successors, counterparts and assistants, and (iii) the
               transactions contemplated by this Agreement or any other
               acquisition of any other center or territory by Buyer, whether
               through the acquisition of assets, stock, equity interest, or any
               stake in any center or any business owning any center or by which
               Buyer purchases or is granted any right to open any center
               (including but not limited to non-compete,

                                      - 3 -


               franchising or licensing (or otherwise) payments, goodwill,
               intangibles, signing bonuses, extraordinary compensation, consent
               or approval fees, any non-cash amortization charges, or any
               similar items), or cost of grants to any third party in respect
               of the right to own, operate or manage any center.

                    (c) In the event of a "Change of Control" (defined below),
               Sellers shall have the option of "putting" the right to receive
               all of the Annual Contingent Payments and the Final Contingent
               Payment in exchange for a lump sum payment from Buyer equal to
               the total invested capital in Sellers, plus a compounded 10% per
               annum rate of interest, accruing from the date such capital was
               initially invested. In calculating such invested amount, (i) the
               SLS Stock shall be valued at $3 million, (ii) no benefit shall be
               given for tax benefits or tax distributions, if any, received
               from those persons or entities investing in Sellers, and (iii)
               credit shall be given to Buyer for any prior Annual Contingent
               Payments actually received by Sellers.

                    (d) From the Closing Date until no later than December 31,
               2005, Buyer shall operate the Business in the Territories only in
               the ordinary course and shall use its best commercial efforts to
               advance the best interests of the business in the Territories. In
               furtherance of the foregoing, without limitation, from (y) July
               1, 2004 until December 31, 2005, Buyer shall need Sellers'
               consent (which consent shall not be unreasonably withheld) in
               order to either open any new centers in the Territories, or close
               any centers in the Territories, or (z) January 1, 2005 until
               December 31, 2005, spend (as a percentage of revenues) more money
               on capital/equipment items or advertising then the average per
               Year spent during the other Years on such items.

               (ii) FINAL CONTINGENT PAYMENT.

                    (a) On or before March 15, 2006, Buyer will determine the
               aggregate Contribution Margin generated in the Territories for
               the Year ended December 31, 2005 (the "2005 CONTRIBUTION
               MARGIN"), and shall make a payment to Sellers (the "FINAL
               CONTINGENT PAYMENT") equal to the amount by which seven times the
               2005 Contribution Margin is greater than $14 million.

                    (b) In the event of a Change of Control, Sellers shall have
               the rights set forth in SECTION 2.2(i)(c) hereof.

               (iii) "Change of Control" shall mean any of (i) a sale of more
          than 25% of Buyer's stock or assets to an acquiring company, or the
          "spin-off" or "spin-out" or divestiture or similar transaction of
          Buyer's learning center business, except where such sale is the taking
          public of a division such as Sylvan Ventures, Sylvan International
          University, or OHE, (ii) a merger transaction in which Buyer is not
          the surviving corporation, or where Buyer survives but is managed or
          controlled by the management team of the other party to the merger or
          an affiliate thereof, (iii) neither Douglas Becker nor R. Christopher
          Hoehn-Saric is then serving in a position of responsibility over Buyer
          or Buyer's learning center business, for whatever reason or (iv) a
          single transaction or occurrence (or series of related transactions or
          occurrences) in which at least fifty percent (50%) of the members of
          Buyer's Board of Directors resign, are removed or are replaced (or
          have their votes diluted by the addition of more Board members).

               (iv) INTEREST. Each Annual Contingent Payment and the Final
          Contingent Payment shall not bear interest from the end of each Year
          and for 75 days after the end of each Year, and thereafter shall bear
          interest at the prime rate of interest (as reported in the Midwest
          Edition of the Wall Street Journal, the "PRIME RATE"), plus 5%. Buyer
          shall make all records used in the calculation of Contribution Margin
          available to Sellers for inspection.

               (v) LIMITATION ON CONTINGENT PAYMENTS. Notwithstanding anything
          to the contrary contained herein, the sum of all of the Contingent
          Annual Payments and the Final Contingent Payment shall in no event
          exceed $8 million, plus interest (the "CAP"), less any amounts of the
          NNWC not reimbursed. For purposes hereof, the amount of any Deductions
          (to the extent reimbursed) shall not be included in determining the
          Cap

                                      - 4 -


          or credits against the Cap. Only by way of example, if the NNWC is
          $1,200,000, and the Contribution Margin for 2002 is $500,000 and the
          Contribution Margin for 2003 is $1,000,000, then: (1) the Deduction
          equals $1,200,000; (2) the Annual Contingent Payment for 2002 is $0;
          (3) the Annual Contingent Payment for 2003 is $300,000; and, (3) the
          Cap is $8,000,000, NOT $6.8 million.

          2.3. SLS STOCK ISSUES.

               (i) No fractional shares of SLS Stock, and no cash in lieu
          thereof, shall be issued or delivered in connection with the
          transactions contemplated by this Agreement. When issued, the SLS
          Stock will be fully paid and non-assessable.

               (ii) Buyer will:

                    (a) within 15 days after the Closing Date, prepare and file
               with the United States Securities and Exchange Commission
               ("COMMISSION") a registration statement ("REGISTRATION
               STATEMENT"), covering the sale of all the SLS Stock by Sellers
               (or Sellers' direct and indirect members) from time to time on
               the Nasdaq National Market or in privately-negotiated
               transactions and provide a copy to Sellers, and Sellers' counsel,
               of any correspondence between Buyer and the Commission relating
               to the Registration Statement;

                    (b) use its best efforts to cause the Registration Statement
               to become effective as soon as practicable and to maintain its
               effectiveness until the earlier of (y) such time as all of the
               SLS Stock has been sold pursuant thereto and (z) such time as the
               SLS Stock is eligible for transfer without restriction pursuant
               to Rule 144(k) under the Securities Act of 1933, as amended (the
               "1933 ACT") as if not held by an affiliate of Buyer;

                    (c) prepare and file with the Commission such amendments and
               supplements to the Registration Statement and the prospectus used
               in connection therewith as may be necessary to keep the
               Registration Statement effective until the date on which the SLS
               Stock is no longer required to be registered for the sale thereof
               by Sellers (or Sellers' direct and indirect members) in any
               transaction;

                    (d) furnish to Sellers with respect to the SLS Stock so
               registered under the Registration Statement such number of copies
               of prospectuses and preliminary prospectuses in conformity with
               the requirements of the 1933 Act and such other documents as
               Sellers may reasonably request in order to facilitate the public
               sale or other disposition of all or any of the SLS Stock by
               Sellers;

                    (e) file documents required of Buyer to register or qualify
               under the securities or blue sky laws for Sellers (or Sellers'
               direct and indirect members) to offer and sell the SLS Stock in
               all states reasonably requested, provided, however, that Buyer
               shall not be required to qualify to do business or consent to
               service of process in any jurisdiction in which it is not now so
               qualified or has not so consented;

                    (f) promptly notify Sellers of the happening of any event of
               which Buyer has knowledge which results in the prospectus
               included in the Registration Statement, if any, containing an
               untrue statement of a material fact or omitting to state a
               material fact required to be stated therein or necessary to make
               the statements therein, in the light of the circumstances under
               which they were made, not misleading, and Buyer will prepare a
               supplement or amendment to the Registration Statement to correct
               such untrue statement or omission, and deliver a number of copies
               of such supplement or amendment to Sellers as may be reasonably
               requested;

                    (g) notify Sellers of the issuance by the Securities and
               Exchange Commission ("SEC") of any stop order or other suspension
               of effectiveness of the Registration Statement at the

                                      - 5 -

               earliest possible time, and do all things reasonably necessary
               remove the condition or event giving rise to such stop order or
               suspension;

                    (h) Buyer will permit Sellers' counsel to review the
               registration statement and all amendments and supplements
               thereto, at Sellers' cost, for a reasonable period of time prior
               to Buyer's filing with the SEC; and

                    (i) Buyer represents and warrants to Sellers and its
               affiliates that it is eligible to file the Registration Statement
               on Form S-3, and will pay all Registration Expenses (as defined
               below) over $15,000 if not so eligible.

               (iii) Sellers shall bear the expenses ("REGISTRATION EXPENSES")
          described below in connection with the obligations described in this
          Section and the registration of the SLS Stock pursuant to the
          Registration Statement; PROVIDED, HOWEVER, that if and to the extent
          that Buyer or another person participates in the offering made
          pursuant to the Registration Statement, then Buyer shall pay a share
          of the Registration Expenses pro rata based upon the relative amount
          of proceeds to be received from the Registration Statement, and
          provided further however, that each party to the Registration
          Statement shall bear its own brokerage commissions incurred upon the
          sale of any of the SLS Stock. For purposes hereof, Registration
          Expenses shall include only registration, listing and filing fees, and
          reasonable attorneys' fees only as the same directly applies to the
          registration contemplated by this Section.

               (iv) At all times that any of the SLS Stock remains outstanding,
          Buyer shall comply with the requirements of Rule 144 under the 1933
          Act regarding the availability of current public information to the
          extent required to enable any holder of SLS Stock to sell such shares
          without registration under the 1933 Act pursuant to Rule 144.

               (v) Notwithstanding anything to the contrary contained herein,
          and subject to SECTION 2.3(iv) hereof, 100% of the SLS Stock shall be
          immediately distributed or loaned by Sellers to Superior Learning
          Systems, LLC, the majority equity holder of each of the Sellers
          ("SUPERIOR"), and shall be pledged by Superior to Buyer and held by
          Buyer solely as security for Superior's guaranty of the debt evidenced
          by the amended and restated promissory notes ("NOTES") issued to Buyer
          by each of Sterling Learning Systems (U.K.) Limited ($1 million
          principal), and France Learning Systems, S.A.R.L. ($2.5 million
          principal). The Notes are attached hereto as EXHIBIT D1, and the
          Pledge Agreement ("PLEDGE") pursuant to which the SLS Stock shall be
          pledged to Buyer is attached as EXHIBIT D2. The SLS Stock shall not be
          delivered to Sellers until and unless all of the equity holders of
          Sellers have consented to the distribution/loan and pledge as set
          forth in this SECTION 2.3(V). If the SLS Stock is to be foreclosed
          upon because of a default under the Notes, the SLS Stock shall be
          valued using the arithmetic average (rounded to the nearest fifth
          decimal place) of the closing price per share of SLS Stock, as
          reported on the Nasdaq National Market, for the thirty (30)
          consecutive trading days ending on the foreclosure date. Immediately
          after the Notes have been satisfied, all SLS Stock then held by Buyer
          shall be immediately delivered to Sellers.

               (vi) All shares of SLS Stock and proceeds thereof shall be deemed
          to be owned by the Sellers, and Sellers shall be entitled to vote the
          same and to receive all dividends declared thereon; provided, however,
          that there shall also be deposited with Buyer, subject to the terms of
          this SECTION 2.3, all shares of SLS Stock issuable to Sellers as a
          result of any stock dividend or split with respect to the shares of
          SLS Stock then on deposit with Buyer.

               (vii) Sellers may instruct Buyer to sell all or any portion of
          the shares of SLS Stock held by Buyer as security and cause the
          proceeds thereof to be substituted for such shares at any time. Such
          proceeds shall be held in an interest bearing account or accounts with
          a bank or other financial institution. In addition, Sellers need only
          deposit with Buyer that amount of shares of SLS Stock (or proceeds)
          equal to $3 million. Therefore, at any time and from time to time
          while the SLS Stock (or proceeds) exceeds $3 million, Sellers may
          provide Buyer with notice to deliver ("DELIVERY NOTICE") that amount
          of shares (or proceeds) equal to such excess, and Buyer shall make
          such delivery to Sellers within five (5) days after the receipt of the

                                      - 6 -



          Delivery Notice, PROVIDED HOWEVER THAT, if shares of SLS Stock are to
          be delivered pursuant to the Delivery Notice, then simultaneously with
          providing to Buyer the Delivery Notice, Sellers shall pay to Buyer an
          amount in cash equal to (y) the number of shares of SLS Stock to be
          delivered pursuant to the Delivery Notice TIMES (z) the Average Market
          Value (as defined in SECTION 2.1(iii) above).

          2.4. ALLOCATION. The Consideration shall be allocated for Federal
     Income Tax purposes among the Sellers in accordance with EXHIBIT E, and
     each party agrees that, to the extent permitted by law, it shall account
     for the sale of the Purchased Assets in a manner consistent with such
     allocation.

          2.5. DISPUTES. In the event of any dispute between Buyer and Sellers
     with respect to the calculation of Contribution Margin with respect to any
     period, either party may submit such dispute for resolution to the Atlanta
     office of Ernst and Young. The cost of such arbitration shall be shared
     equally between Buyer and Sellers.

          2.6. NO DEFAULT UNDER NOTES. BUYER ACKNOWLEDGES AND AGREES THAT NO
     PART OF THE PURCHASE PRICE OR ANY OTHER CONSIDERATION PAID OR DELIVERED TO
     SELLERS UNDER THIS AGREEMENT SHALL BE PAID OVER OR DELIVERED TO BUYER IN
     ORDER TO SATISFY ANY OBLIGATION UNDER THE NOTES OR OTHERWISE, AND THAT SUCH
     NON-PAYMENT AND/OR NON-DELIVERY SHALL NOT CONSTITUTE A DEFAULT OR BREACH
     UNDER THE PLEDGE, THE NOTES OR ANY OTHER DOCUMENT AND/OR INSTRUMENT
     DELIVERED IN CONNECTION HEREWITH OR THEREWITH. THE NOTES WILL BE AMENDED
     AND RESTATED AS SET FORTH ON EXHIBIT D1 TO REFLECT THE FOREGOING.

          2.7. FINAL SETTLEMENT OF NNWC. If, after calculation of the Contingent
     Annual Payments and the Final Contingent Payment, there remains an
     un-reimbursed NNWC amount, Buyer may sell such shares of the SLS Stock so
     as to collect such un-reimbursed amount.

          2.8. POST-EFFECTIVE DATE, PRE-CLOSING FINANCIAL CONSIDERATIONS. The
     parties agree and acknowledge that all benefits and burdens of running the
     Business are transferred as of the Effective Date, and before Closing all
     decisions of a material nature shall be made by Sellers only after
     conferring with Buyer. In furtherance of the foregoing, all profits (if
     any) of the Business shall accrue to the benefit of Buyer, and likewise,
     Buyer shall bear the burden of all losses (if any) of the Business, as well
     as be responsible for any interest on Funded Debt accruing after the
     Effective Date.

          2.9. POST-CLOSING CASH ISSUES. Buyer will cover checks written on or
     before the Effective Date which have not cleared on or before the Closing,
     and to the extent that such checks were not accounted for before the
     Closing, the amount of such checks will be added to the NNWC.

     3. INSTRUMENTS OF TRANSFER. At the Closing, each Seller will execute and
deliver to Buyer the Bill of Sale. From and after the date of this Agreement,
each Seller shall give to Buyer, and its agents and employees, full access
during normal business hours to all books, records, and other documents
concerning the Business that Buyer reasonably may request. From time to time
after the Closing, on Buyer's request, each Seller will execute and deliver at
Buyer's sole expense such instruments of conveyance and transfer as may be
required in conformity with this Agreement for the adequate assignment, grant,
or transfer to Buyer of any property, leases, or other assets being sold to
Buyer hereunder.

     4. PREMISES LEASES. At Closing and thereafter, each Seller shall use all
reasonable efforts to assign, all right, title and interest under the leases
("LEASES") to the Centers; provided, that the consents to the assignments of the
various Leases will not be procured, the procurement of such consents will not
be a condition to Closing, and the fact that Sellers shall not have procured
such consents shall not be a breach of any of the Sellers' obligations
hereunder, and Buyer agrees to take the Leases with full knowledge that consents
to the assignments were required, and Buyer will indemnify and hold Sellers
harmless from any damages in connection with not receiving such consents. If
consent to any assignment is not procured by Closing, Buyer shall simply occupy
such space and hold each Seller harmless from any and all costs which may arise
out of the failure to procure such consent, and all costs and expenses arising
after the Closing from such Leases. Each Seller has provided Buyer with a copy
of the Leases.

                                      - 7 -


All rents and other charges accruing as of the Closing shall have been paid or
accrued by Sellers in full. All rents and other charges accruing after Closing
shall be the sole responsibility of Buyer. Notwithstanding the foregoing, should
a landlord start eviction proceedings against Buyer, solely due to the parties'
failure to procure a consent to the assignment pursuant hereto, then the costs
of moving such center shall be deducted from Contribution Margin for the Year in
which such moving costs are incurred.

     5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS. Each Seller hereby
represents and warrants to Buyer as follows:

          5.1. ORGANIZATION. Each Seller is a limited liability company duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware, and is qualified to do business in the state of their
     respective business operations, and each has the power and authority to
     carry on the Business as it is now being conducted and to own or hold under
     lease the properties or assets it now owns or holds under lease and to
     perform the actions contemplated hereby.

          5.2. FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 5.2 is
     unaudited partial balance sheets for each Seller for purposes of
     calculating the NNWC, including a schedule of all liabilities, debt, and
     obligations of the Business as of December 31, 2001 to be discharged by
     Buyer (with SCHEDULE 5.2(a) thereto, the "SELLER FINANCIAL STATEMENTS").
     Other than the Funded Debt (which will be discharged at Closing), there are
     no material liabilities or obligations of any Seller or the Business,
     whether contingent or absolute, as of the date of such statement, including
     liability for taxes of any type, which are not shown or provided for in the
     Seller Financial Statements, and which if fixed, would materially and
     adversely affect the value of the goodwill and reputation of Buyer.

          5.3. TAXES. Other than those shown on the Seller Financial Statements,
     no Seller has any liability for any federal, state, county, local or other
     taxes, fees or assessments, or interest or penalties thereon (collectively,
     "TAXES") whatsoever that arose or otherwise was incurred with respect to
     the Business on or before the date of this Agreement, and no Seller has
     knowledge that any Taxes are due or owing.

          5.4. LEGAL PROCEEDINGS, ETC. There are no legal, administrative,
     arbitration, or other proceedings or governmental investigations pending
     or, to Sellers' knowledge, threatened against any Seller, the Business or
     the assets of Sellers.

          5.5. COMPLIANCE; LICENSES. Each Seller has at all times in the past
     operated the Business and used its assets in material compliance with, and
     currently is not in violation in any material respect of, and has obtained
     all material licenses and permits required by, any law, rule or regulation.

          5.6. EMPLOYEE MATTERS. No Seller maintains, sponsors or contributes to
     any plans in effect for pension, profit-sharing, deferred compensation,
     severance pay (except as described on SCHEDULE 5.2(a)), bonuses, stock
     options, stock purchases, or any other retirement or deferred benefit, or
     for any health, accident or other welfare plan, or any other employee or
     retired employee benefits or incentive plan, program, contract,
     understanding or arrangement in which any employee, former employee,
     retired employee, or beneficiary of any of these, of the Business is
     entitled to participate, except as has been provided to Buyer. All
     employees of the Business are "at will" employees, and no employee of the
     Business has or is a party to any written employment or other agreement
     with any Seller. Buyer shall have no responsibility to hire any employees
     of any Seller, and Buyer is not assuming any back pay, vacation pay, sick
     pay or employee benefits of any kind of any Seller, unless disclosed on the
     Seller Financial Statements.

          5.7. NO CONFLICT WITH OTHER DOCUMENTS. Except for those issues where
     consents have been procured, neither the execution and delivery of this
     Agreement, nor the carrying out of any of the transactions contemplated
     hereby, will result in any violation, termination or modification of, or be
     in conflict with, any Seller's charter instruments, any terms of any
     material contract (except for the Leases under which Sellers operate the
     Centers), instrument or other agreement to which any Seller is a party or
     by which it or the Business or any of its properties is bound, or any law,
     rule, regulation, license, permit, judgment, decree or order applicable to
     any Seller, the Business or by which any of its properties or assets are
     bound.

                                      - 8 -


          5.8. BROKERS AND ADVISORS. No Seller has taken an action which would
     give rise to a valid claim against any party hereto for a brokerage
     commission, finder's fee, counseling or advisory fee, or like payment.

          5.9. AUTHORITY. The execution, delivery and performance of this
     Agreement by Sellers have been duly authorized by Sellers, and this
     Agreement is a valid and legally binding and enforceable obligation of
     Sellers.

          5.10. TITLE TO ASSETS. Each Seller has good and indefeasible title to
     all of its properties, lease agreements and assets to be transferred and
     assumed hereunder. Except for the claims of any secured creditors shown in
     the Seller Financial Statements, such properties and assets which are owned
     by Sellers will be delivered to Buyer free and clear of all mortgages,
     liens, and encumbrances. Sellers' accounts receivable arose, and all
     accounts receivable that will be outstanding as of the Closing Date shall
     have arisen, from bona fide transactions in the ordinary course of business
     and will be collectible by Buyer in full in the ordinary course of business
     within one hundred twenty (120) days of the Closing Date, and there are no
     offsets or claims related to such accounts receivable.

          5.11. INSURANCE. All property and assets owned by Sellers are and will
     continue to be insured only through the Closing Date with the same amount
     of insurance as currently in place, and Buyer shall be responsible for
     securing replacement policies in Buyer's name to be effective only upon
     Closing.

          5.12. CONSENTS. Each Seller agrees to take all reasonable action and
     to use its best efforts to obtain all consents and approvals required for
     consummation of the transactions contemplated by this Agreement, except as
     to the Leases; Buyer acknowledges that consents to the assignments of the
     various Leases will not be procured. The parties agree that no third party
     consents are required to consummate the transactions contemplated by this
     Agreement.

          5.13. EMPLOYMENT CONTRACTS. Sellers will assist Buyer in seeking to
     secure employment contracts and/or non-competition and non-solicitation
     agreements with Sellers' existing employees; but such employment and/or
     non-compete agreements shall not be a condition precedent to the
     consummation of the transactions contemplated hereby.

          5.14. CAUSE CONDITIONS TO BE SATISFIED. Each Seller will use its best
     efforts to cause all of the conditions described in SECTION 6 of this
     Agreement to be satisfied by the Closing Date.

          5.15. TRUE AND CORRECT AT CLOSING. All of the foregoing
     representations, warranties and covenants will be true and correct as of
     the Closing Date and shall survive for one (1) year following the Closing
     Date.

     6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligations of Buyer
under this Agreement are subject to fulfillment of each of the following
conditions prior to or at the Closing Date:

          6.1. The Bill of Sale shall be valid in accordance with its terms, and
     shall effectively vest in Buyer good and indefeasible title to the
     Purchased Assets (except as to leaseholds) as contemplated by this
     Agreement, free and clear of any liabilities, obligations, or encumbrances.

          6.2. There shall not have been any material breach of representations
     or warranties of Sellers contained in this Agreement, and such
     representations and warranties shall be correct in all material respects on
     the actual Closing Date, except as affected by transactions contemplated
     herein and changes occurring in the ordinary course of business. Buyer
     acknowledges that the CONSENTS TO ASSIGNMENTS OF THE LEASES WILL NOT BE
     PROCURED BY SELLERS, IT BEING UNDERSTOOD THAT SUCH CONSENTS ARE NOT A
     CONDITION TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.

     7. PRORATIONS/REIMBURSEMENTS/ADJUSTMENTS/ASSUMED OBLIGATIONS. There shall
be prorated, reimbursed, or the purchase price adjusted, as the case may be, in
the manner indicated below, between Sellers and Buyer, as of the Effective Date,
as follows: for property/ad valorem taxes for the year in which the Effective
Date resides and assessed against any property transferred hereunder will be
prorated through Closing with

                                      - 9 -


the amount paid by Buyer but supposed to be paid by Sellers (if any) in
accordance with this provision being added to the NNWC amount, and the amount
already paid by Sellers but supposed to be paid by Buyer in accordance with this
provision to be credited against the NNWC amount.

     8. CLOSING DATE. The closing ("CLOSING") with respect to the transactions
contemplated by this Agreement shall be held no later than January 31, 2002 (the
"CLOSING DATE") at the offices of Buyer's counsel, but shall be effective as of
the Effective Date.

     9. INDEMNIFICATION.

          9.1 INDEMNIFICATION BY SELLERS. Subject to the terms and conditions of
     SECTION 10 hereof, Sellers hereby covenant and agree to jointly and
     severally indemnify and hold harmless Buyer and its respective successors
     and assigns, at all times from and after the Closing Date against and in
     respect of the following:

               (i) any claim, demand, expense, cost, damage or loss
          (collectively, "CLAIM") resulting from any misrepresentation, breach
          of representation or warranty or breach or non-fulfillment of any
          agreement or covenant on the part of Sellers under this Agreement, or
          from any inaccuracy or misrepresentation in or omission from any
          certificate or other instrument or document furnished or to be
          furnished by Sellers hereunder; and

               (ii) any Claim which arises out of any liabilities or obligations
          of Sellers, included but not limited to federal, state or local income
          taxes, FICA, withholding, excise, unemployment, sales or franchise
          taxes, arising from operations of Sellers prior to the Effective Date;
          and

               (iii) any Claim of Sellers and the Business which accrues or
          arises prior to the Effective Date, other than any debt, obligation or
          liability expressly assumed hereunder by Buyer; and

               (iv) all Claims, actions, suits, proceedings, demands,
          assessments, judgments, costs, reasonable attorneys' fees and expenses
          of any nature incident to any of the matters indemnified against
          pursuant to this SECTION 9.1, including, without limitation, all such
          costs and expenses incurred in the defense thereof or in the
          enforcement of any rights of Buyer hereunder.

     Buyer shall notify Sellers of any asserted liability, damage, loss or
expense claimed to give rise to indemnification hereunder. Thereafter, Sellers
shall have, at their election, the right to compromise or defend any such matter
at Sellers' sole cost and expense through counsel chosen by Sellers and
reasonably acceptable to Buyer. If Sellers fail to settle and compromise the
claim, or establish a cash escrow with Buyer and defend the claim, Buyer may pay
such claim at Sellers' expense.

          9.2. INDEMNIFICATION BY BUYER. Subject to the terms and conditions of
     SECTION 10 hereof, Buyer hereby covenants and agrees to indemnify and hold
     harmless Sellers against and in respect of the following:

               (i) any Claim resulting from any misrepresentation, breach of
          warranty or non-fulfillment of any agreement or covenant on the part
          of Buyer under this Agreement, or from any misrepresentation in or
          omission from any certificate or other instrument or document
          furnished or to be furnished by Buyer hereunder; and

               (ii) any Claim which arises out of any liabilities or obligations
          of Buyer, included but not limited to federal, state or local income
          taxes, FICA, withholding, excise, unemployment, sales or franchise
          taxes, arising from operations of Buyer; and

               (iii) all Claims, actions, suits, proceedings, demands,
          assessments, judgments, costs, reasonable attorneys' fees and expenses
          of any nature incident to any of the matters indemnified against
          pursuant to this SECTION 9.2, including without limitation, all such
          costs and expenses incurred in the defense thereof or in the
          enforcement of any rights of Sellers hereunder; and

                                      - 10 -



               (iv) any Claim related to the Business which accrues or arises
          after the Effective Date, other than any debt, obligation or liability
          expressly assumed hereunder by Buyer

     Sellers shall notify Buyer of any asserted liability, damage, loss or
expense claimed to give rise to indemnification hereunder and thereafter Buyer
shall have the right to defend, compromise and settle such matter provided that
Sellers are fully protected from any cost or expense in connection therewith. If
Buyer fails to compromise or defend on the claim, or to establish a cash escrow
with Sellers and defend the claim, Sellers may defend or compromise the claim at
Buyer's sole cost and expense.

     10. GENERAL RULES REGARDING INDEMNIFICATION. The obligations and
liabilities of each indemnifying party hereunder with respect to claims
resulting from the assertion of liability by the other party or indemnified
third parties shall be subject to the following terms and conditions:

          10.1. The indemnified party shall give prompt written notice (which in
     no event shall exceed ten (10) days from the date on which the indemnified
     party first became aware of such claim or assertion) to the indemnifying
     party of any claim which might give rise to a claim by the indemnified
     party against the indemnifying party based on the indemnity agreements
     contained in SECTION 9 hereof, stating the nature and basis of said claims
     and the amounts thereof, to the extent known;

          10.2. If any action, suit or proceeding is brought against the
     indemnified party with respect to which the indemnifying party may have
     liability under the indemnity agreements contained in SECTION 9 hereof, the
     action, suit or proceeding shall, upon the written acknowledgment by the
     indemnifying party that it is obligated to indemnify under such indemnity
     agreement, be defended (including all proceedings on appeal or for review
     which counsel for the indemnified party shall deem appropriate) by the
     indemnifying party. The indemnified party shall have the right to employ
     its own counsel in any such case, but the fees and expenses of such counsel
     shall be at the indemnified party's own expense unless (a) the employment
     of such counsel and the payment of such fees and expenses both shall have
     been specifically authorized in writing by the indemnifying party in
     connection with the defense of such action, suit or proceeding, or (b)
     counsel to such indemnified party shall have reasonably concluded and
     specifically notified the indemnifying party that there may be specific
     defenses available to it which are different from those available to the
     indemnifying party, in any of which events the indemnifying party, to the
     extent made necessary by such defenses, shall not have the right to direct
     the defense of such action, suit or proceeding on behalf of the indemnified
     party. In the latter such case only that portion of such fees and expenses
     of the indemnified party's separate counsel reasonably related to matters
     covered by the indemnity agreements contained in SECTION 9 hereof shall be
     borne by the indemnifying party. The indemnified party shall be kept fully
     informed of such action, suit or proceeding at all stages thereof whether
     or not it is represented by separate counsel.

          10.3. The indemnified party shall make available, upon reasonable
     notice, to the indemnifying party and its attorneys and accountants all
     books and records of the indemnified party relating to such proceedings or
     litigation and the parties hereto agree to render to each other such
     assistance as they may reasonably require of each other in order to ensure
     the proper and adequate defense of any such action, suit or proceeding.

          10.4. The indemnified party shall not make any settlement of any
     claims without the written consent of the indemnifying party, which consent
     shall not be unreasonably withheld or delayed.

          10.5. If any claims are made by an indemnified party for which an
     indemnifying party would be liable, and it appears likely that such claims
     might also be covered by the indemnified party's insurance policies, the
     indemnified party shall make a timely claim under such policies and to the
     extent that such party obtains any recovery from such insurance, such
     recovery shall be offset against any sums due from an indemnifying party
     (or shall be repaid to the indemnifying party by the indemnified party to
     the extent that an indemnifying party has already paid any such amounts).
     In addition, any claim for indemnity hereunder shall reduced by any tax
     benefit reasonably expected by Buyer to be received or actually received by
     Buyer, viewing such claim without being affected by any of Buyer's other
     activities.

                                      - 11 -



          10.6. The indemnified party shall not make any claim unless and until
     it has incurred indemnified losses, damages and expenses in the cumulative
     aggregate amount of $75,000.00, and then only in respect of the excess over
     such $75,000.00 minimum. All claims for indemnification and liability
     pursuant thereto shall not, in any event, exceed 20% of the Purchase Price.

          10.7 Buyer and Sellers acknowledge and agree that the foregoing
     indemnification provisions in SECTIONS 9 AND 10 hereof shall be the sole
     and exclusive remedies for breaches or defaults of any representation,
     warranty, covenant or agreement contained herein or in any other document
     or instrument delivered in connection herewith, except in the case of
     fraud.

     11. DUE DILIGENCE. Buyer's intention to consummate the proposed purchase is
based upon certain assumptions about Sellers' Business. From the date of this
Agreement to Closing, Buyer may, through its agents, accountants, attorneys and
others, make such investigations of Sellers as Buyer may deem necessary or
advisable.

     12. CONDUCT PENDING CLOSING. Until Closing or January 15, 2002, Sellers
will:

          12.1. Continue to operate its business in the ordinary course in a
     manner consistent with the normal course of business practices, without
     substantial change, and will maintain and not deplete its assets;

          12.2. Take such steps as are necessary and appropriate to preserve its
     existing relationships with customers, suppliers and key employees;

          12.3. Neither negotiate for nor consummate the sale, lease, transfer
     or conveyance in any way of its assets or any rights thereto to any party
     other than Buyer, it being understood by the parties that Buyer
     contemplates the expenditure of substantial sums of time and money in
     connection with legal, accounting, financing and due diligence work to be
     performed in conjunction with the proposed transactions prior to Closing.
     Sellers further agree to not directly or indirectly (i) solicit or initiate
     (including by way of furnishing any information) discussions with or (ii)
     enter into negotiations or agreements with, or furnish any information to,
     any corporation, partnership, person or other entity or group (other than
     Buyer or its authorized representatives pursuant to this Agreement)
     concerning any proposal for a merger, sale of substantial assets, sale of
     shares of stock or securities or other takeover or business combination
     transaction (the "ACQUISITION TRANSACTION") involving Sellers, and Sellers
     will instruct their officers, directors, advisors and other financial and
     legal representatives and consultants not to take any action contrary to
     the foregoing provisions of this clause (including specifically instructing
     its broker not to actively market the Purchased Assets as long as this
     Agreement is in effect); and

          12.4. Inform Buyer promptly of the occurrence of any event which may
     result in a material adverse change to the Business or its financial
     condition, or operations or to the condition of the Centers.

     13. COSTS AND EXPENSES. All costs and expenses incurred in conducting the
purchase and sale described in this Agreement and in the manner prescribed by
this Agreement shall be borne by Buyer and Sellers in the following manner:

          13.1. Buyer and Sellers shall be solely responsible for their
     respectively incurred legal fees, accounting fees, and consulting fees, if
     any, incurred in the negotiation of this Agreement and related documents,
     reviewing and preparing documents required by the transaction and the
     Closing.

          13.2. Buyer shall pay all sales, income, transfer and documentary
     taxes, if any, arising because of the sale pursuant to this Agreement.

          13.3. Sellers shall be responsible for payment of the fees and
     expenses of Sellers' broker.

     14. MISCELLANEOUS.

          14.1. This Agreement, including the exhibits and schedules, if any,
     referred to herein, contains the

                                      - 12 -


     entire agreement between the parties with respect to the transaction
     contemplated herein. It may be executed in any number of counterparts, each
     and all of which shall be deemed for all purposes to be one agreement.

          14.2. This Agreement shall be binding on and inure to the benefit of
     the successors and assigns of the parties hereto. Notwithstanding the
     foregoing, neither Buyer nor Sellers shall have the right to assign its
     rights and interest in this Agreement.

          14.3. This Agreement shall be governed by and construed in accordance
     with the laws of Maryland.

          14.4. If any one or more of the provisions contained in this Agreement
     for any reason are held to be invalid, illegal or unenforceable in any
     respect, such invalidity, illegality or unenforceability shall not affect
     any of the other provisions hereof and this Agreement shall be construed as
     if such invalid, illegal or unenforceable provision had never been
     contained herein.

          14.5. Whenever the context shall so require, all words herein in the
     male gender shall be deemed to include the female or neuter gender, and all
     singular words shall include the plural and the plural words shall include
     the singular.

          14.6. This Agreement may be terminated by the mutual consent of Buyer
     and Sellers, or by either Buyer or Sellers, if the terminating party is not
     then in material breach of its obligations hereunder, upon written notice
     to the other upon the occurrence of any of the following: (a) by the
     terminating party, if the other party is in material breach of its
     obligations hereunder and such breach has not been cured by the other party
     within 10 days of written notice of such breach; or, (b) if the Closing has
     not occurred on or before January 15, 2002.

          14.7. If any action at law or in equity is necessary to enforce or
     interpret the terms of this Agreement, the prevailing party shall be
     entitled to reasonable attorney's fees, costs, and necessary disbursements
     in addition to any other relief to which such party may be entitled.

          14.8. The headings of the paragraphs and subparagraphs are inserted
     solely for the convenience of reference and shall not constitute a part of
     this Agreement, nor limit, define or describe the scope or intent of this
     Agreement.

          14.9. This Agreement may not be altered, changed, or amended except by
     the written agreement of Sellers and Buyer.

          14.10. All notices to be given hereunder shall be given in writing and
     shall be delivered personally or by registered or certified mail, postage
     prepaid, to Buyer and Sellers at the addresses shown on Page 1 hereof.

          14.11. The Recitals to this Agreement are incorporated herein.


                                      - 13 -




     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date set forth above.

BUYER:

SYLVAN LEARNING SYSTEMS, INC.



By /S/ PETER COHEN
   --------------------------------
   Peter Cohen, President

SELLERS:

ATLANTA LEARNING SYSTEMS, LLC
 By ALS Manager, LLC


By /S/ STEVEN M. TASLITZ
   --------------------------------
   Steven M. Taslitz, Manager

BOSTON LEARNING SYSTEMS, LLC
 By BLS Manager, LLC


By /S/ STEVEN M. TASLITZ
   --------------------------------
   Steven M. Taslitz, Manager

PITTSBURGH LEARNING SYSTEMS, LLC
 By PLS Manager, LLC


By /S/ STEVEN M. TASLITZ
   --------------------------------
   Steven M. Taslitz, Manager

EX-5.1

6225 Smith Avenue
Baltimore, Maryland 21209-3600
www.piperrudnick.com

MAIN     PHONE (410) 580-3000                                        EXHIBIT 5.1
         FAX   (410) 580-3001

                                                     February 15, 2002


Sylvan Learning Systems, Inc.
1001 Fleet Street
Baltimore, Maryland  21202

         Re:      Registration Statement on Form S-3

Ladies and Gentlemen:

     We have acted as counsel to Sylvan Learning Systems, Inc., a Maryland
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-3 (the "Registration Statement") filed on the date hereof
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to 143,609 shares of the Company's common stock, par value $.01 per
share (the "Shares").

     In this capacity, we have examined the Company's Charter and By-Laws, the
proceedings of the Board of Directors of the Company relating to the issuance of
the Shares and such other documents, instruments and matters of law as we have
deemed necessary to the rendering of this opinion. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, and the conformity with originals of all documents
submitted to us as copies.

     Based upon the foregoing, we are of the opinion and advise you that each of
the Shares described in the Registration Statement has been validly issued and
is fully paid and non-assessable.

     We consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving our consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the
Rules and Regulations of the Commission thereunder.

                                          Very truly yours,

                                          /s/ Piper Marbury Rudnick & Wolfe LLP

EX-23.1

                                  EXHIBIT 23.1

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-______) and related Prospectus of
Sylvan Learning Systems, Inc. for the registration of 143,609 shares of its
common stock and to the incorporation by reference therein of our report dated
February 22, 2001, with respect to the consolidated financial statements of
Sylvan Learning Systems, Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 2000, filed with the Securities and Exchange Commission.

We also consent to the incorporation by reference in the Registration Statement
and related Prospectus of our reports on the financial statements of certain
affiliates of Sylvan Learning Systems, Inc. included as an exhibit to the Annual
Report (Form 10-K) for the year ended December 31, 2000, filed with the
Securities and Exchange Commission, and summarized as follows:


Date of Report                             Name of Entity
- --------------------------------------------------------------------------------
March 5, 2001                              HigherMarkets, Inc.
February 22, 2001                          Mindsurf, Inc.
March 16, 2001                             Classwell Learning Group, Inc.
February 14, 2001                          Caliber Learning Network, Inc.
  except for Note 16, as to which the
  date is March 26, 2001


                                                 /s/ Ernst & Young LLP


Baltimore, Maryland
February 11, 2002

EX-23.2

                                                                    EXHIBIT 23.2



CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS



As independent public accountants, we hereby consent to the use of our report
dated March 27, 2001 (and all references to our Firm), included in or made a
part of this registration statement.



/s/ Arthur Andersen LLP

Baltimore, Maryland
February 13, 2002

EX-23.3

                                                                    EXHIBIT 23.3




                         CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated November 10, 2000 (except for note 12
which is as of December 15, 2000), with respect to the consolidated financial
statements of Chancery Software Ltd. included in the Annual Report (Form 10-K)
of Sylvan Learning Systems, Inc. for the year ended December 31, 2000. We also
consent to the reference to us under the caption "Experts" in such Registration
Statement.



"PricewaterhouseCoopers LLP"
Chartered Accountants
Vancouver, Canada
February 15, 2002