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EXHIBIT 10.15
THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
JULY 8, 1999
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TABLE OF CONTENTS
PAGE
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1.1 Certain Definitions..................................................... 2
1.2 Restrictions............................................................ 3
1.3 Restrictive Legend...................................................... 3
1.4 Notice of Proposed Transfers............................................ 4
1.8 Limitations on Subsequent Registration Rights........................... 8
1.9 Expenses of Registration................................................ 8
1.10 Registration Procedures................................................. 9
1.11 Indemnification.........................................................11
1.12 Information by Holder...................................................13
1.13 Rule 144 Reporting......................................................13
1.14 Transfer of Registration Rights.........................................13
1.15 Standoff Agreement......................................................14
1.16 Termination of Rights...................................................14
2.1 Right of First Offer....................................................14
2.2 Termination of Right of First Offer.....................................16
Affirmative Covenants of the Company............................................16
3.1 Financial Information...................................................16
3.2 Operating Plan and Budget...............................................17
3.3 Inspection..............................................................17
3.4 Assignment of Rights to Financial Information...........................17
3.5 Proprietary Information Agreement.......................................17
3.6 Board of Directors......................................................18
3.7 Restrictions on Employee Stock..........................................18
3.8 Termination of Covenants................................................19
3.9 Definition of Investor..................................................19
3.10 Qualified Small Business Stock..........................................19
3.11 Capital Stock of Subsidiaries...........................................19
3.12 Approval of Certain Actions.............................................19
3.13 Most Favored Nations Treatment..........................................19
Right of First Refusal..........................................................20
4.1 Restriction on Transfer.................................................20
4.2 Notice Requirement......................................................20
4.3 Option of Investors.....................................................20
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4.4 Special Provisions Regarding Exchanges..................................21
4.5 Option of Company.......................................................21
4.6 Transfer of Shares......................................................21
4.7 Effect of Notice........................................................22
4.8 Certain Transfers Exempt................................................22
4.9 Pledge of Stock.........................................................23
4.10 Termination.............................................................23
5.1 Assignment..............................................................23
5.2 Third Parties...........................................................23
5.3 Governing Law...........................................................23
5.4 Counterparts............................................................23
5.5 Notices.................................................................23
5.6 Severability............................................................23
5.7 Amendment and Waiver....................................................24
5.8 Effect of Amendment or Waiver...........................................24
5.9 Termination of Prior Agreement..........................................24
5.10 Rights of Holders.......................................................24
5.11 Delays or Omissions.....................................................24
EXHIBIT A - Schedule of Investors
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AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is
entered into as of the 8th day of July 1999, by and among The Lightspan
Partnership, Inc., a California corporation (the "Company"), and the persons set
forth on the Schedule of Investors attached hereto as Exhibit A (the
"Investors").
RECITALS
A. The Company sold and issued to certain of the Investors (the "Series
A Holders") 7,467,500 shares of the Series A Preferred Stock of the Company
pursuant to that certain Series A Preferred Stock Purchase Agreement between the
Company and the Series A Holders dated as of December 6, 1993 (the "Series A
Agreement"); the Company sold and issued to certain of the Investors (the
"Series B Holders") 11,666,664 shares of the Series B Preferred Stock of the
Company pursuant to that certain Series B Preferred Stock Purchase Agreement
between the Company and the Series B Holders dated as of February 7, 1995 (the
"Series B Agreement"); the Company sold and issued to certain of the Investors
(the "Series C Holders") 3,264,285 shares of the Series C Preferred Stock of the
Company pursuant to that certain Series C Preferred Stock Purchase Agreement
between the Company and the Series C Holders dated as of September 20, 1996 (the
"Series C Agreement"); and the Company sold and issued to certain of the
Investors (the "Series D Holders") 13,129,443 shares of the Series D Preferred
Stock of the Company pursuant to that certain Series D Preferred Stock Purchase
Agreement between the Company and the Series D Holders dated as of June 24, 1997
(the "Series D Agreement"). The Company (i) has issued a warrant to purchase
150,000 shares Series A Preferred Stock to Comdisco Ventures, (ii) has issued
warrants to purchase an aggregate of 150,000 shares of Series B Preferred Stock
to Comdisco Ventures, (iii) has issued warrants to purchase 70,000 and 26,625
shares of Series C Preferred Stock to Silicon Valley Bank and Comdisco Ventures,
respectively, and (iv) has issued warrants to purchase an aggregate of 3,636,876
shares of Series D Preferred Stock to certain investors; the aforementioned
parties are collectively referred to herein as "Warrant Holders," and the
Preferred Stock issuable upon exercise of the aforementioned warrants are
collectively referred to herein as "Warrant Shares." Pursuant to that certain
Investor Rights Agreement dated as of June 24, 1997 (the "Prior Agreement") the
Company granted to such Series A Holders, Series B Holders, Series C Holders,
Series D Holders and Warrant Holders certain rights.
B. Pursuant to that certain Series E Preferred Stock Purchase Agreement
of even date herewith (the "Series E Agreement"), the Company has agreed to sell
to certain of the Investors up to a total of 6,000,000 shares of Series E
Preferred Stock of the Company and, as an inducement for such Investors to
purchase such shares, the Company, the Series A Holders, the Series B Holders,
the Series C Holders, the Series D Holders and the Warrant Holders have agreed
to enter into this Agreement to supersede, amend and restate the rights granted
to the Series A Holders, the Series B Holders, the Series C Holders, the Series
D Holders and the Warrant Holders in the Prior Agreement and extend such rights,
as so superseded, amended and restated to the purchasers of Series E Preferred
Stock.
C. The Company has entered into that certain Agreement and Plan of
Reorganization with Academic Systems Corporation dated as of May 10, 1999,
pursuant to which the Company will
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issue to certain stockholders of Academic Systems Corporation (the
"Academic Preferred Holders") shares of its Series E Preferred Stock. The
Company and the Investors desire to extend the rights granted hereunder to the
Academic Preferred Holders. Upon receipt of the Series E Preferred Stock by the
Academic Preferred Holders, the Academic Preferred Holders shall be considered
as "Investors" hereunder.
D. The shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
held by the Investors are referred to collectively herein as the "Shares."
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
SECTION 1
RESTRICTIONS ON TRANSFERABILITY;
REGISTRATION RIGHTS
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Conversion Shares" means the Common Stock issued or issuable upon
conversion of the Shares.
"Holder" shall mean (i) any Investor or Warrant Holder holding
Registrable Securities and (ii) any person holding Registrable Securities to
whom the rights under this Agreement have been transferred in accordance with
Section 1.14 hereof.
"Initiating Holders" shall mean (i) any Investors, Warrant Holders
or transferees of Investors or Warrant Holders under Section 1.14 hereof who in
the aggregate are Holders of not less than thirty percent (30%) of the
Registrable Securities, or (ii) any Investors, Warrant Holders or transferees of
Investors or Warrant Holders under Section 1.14 hereof who propose to register
securities, the aggregate offering price of which, net of underwriting discounts
and commissions, exceeds $10,000,000.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 1.5, 1.6 and 1.7 hereof, including, without
limitation, all registration, qualification, listing and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, and the expense of any special audits incident
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to or required by any such registration (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company).
"Registrable Securities" means (i) the Shares; (ii) the Conversion
Shares; (iii) any Common Stock of the Company issued or issuable in respect of
the Shares or Conversion Shares or other securities issued or issuable with
respect to the Shares or Conversion Shares upon any stock split, stock dividend,
recapitalization, or similar event, or any Common Stock otherwise issued or
issuable with respect to the Shares or Conversion Shares; and (iv) the Warrant
Shares and shares of Common Stock issuable upon conversion of the Warrant
Shares; provided, however, that shares of Common Stock or other securities shall
only be treated as Registrable Securities if and so long as they have not been
(A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the consummation of
such sale.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of counsel for the Holders (as
limited by Section 1.9).
1.2 Restrictions. The Shares and the Conversion Shares shall not be
sold, assigned, transferred or pledged except upon the conditions specified in
this Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act. Each Investor will cause any proposed
purchaser, assignee, transferee or pledgee of the Shares and the Conversion
Shares held by such Investor to agree to take and hold such securities subject
to the provisions and upon the conditions specified in this Agreement.
1.3 Restrictive Legend. Each certificate representing (i) the Shares,
(ii) the Conversion Shares, and (iii) any other securities issued in respect of
the securities referenced in clauses (i) and (ii) upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions of Section 1.4 below) be stamped
or otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE
COUNSEL FOR THE COMPANY) REASONABLY
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ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY."
Each Investor consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.
1.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall, be reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, or (iii) any other evidence
reasonably satisfactory to counsel to the Company, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. The Company will not require such a legal opinion or "no action" letter
(a) in any transaction in compliance with Rule 144, (b) in any transaction in
which an Investor which is a corporation distributes Restricted Securities after
six (6) months after the purchase thereof solely to its majority owned
subsidiaries or affiliates, or (c) in any transaction in which an Investor which
is a partnership or limited liability company distributes Restricted Securities
after six (6) months after the purchase thereof solely to partners or members
thereof; provided that each transferee agrees in writing to be subject to the
terms of this Section 1.4. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend set forth in Section
1.3 above, except that such certificate shall not bear such restrictive legend
if, in the opinion of counsel for such holder and the Company, such legend is
not required in order to establish compliance with any provisions of the
Securities Act.
1.5 Requested Registration
(a) Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any registration,
qualification or compliance with respect to the Registrable Securities, the
Company will:
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(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within thirty (30) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to take
any action to effect any such registration, qualification or compliance pursuant
to this Section 1.5:
(1) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act;
(2) Prior to the earlier of (i) three (3) months following the
effective date of the first public offering of the Common Stock of the Company
to the general public which is effected pursuant to a registration statement
filed with, and declared effective by, the Commission under the Securities Act
(the "Initial Public Offering") or (ii) July 8, 2004;
(3) During the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on the earlier of
(i) one (1) year from the date sixty (60) days prior to the Company's estimated
date of filing of, or (ii) the date six (6) months immediately following the
effective date of, any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective and that the Company's estimate of the date of
filing such registration statement is made in good faith;
(4) After the Company has effected three (3) such registrations
pursuant to this subparagraph 1.5(a), each such registration has been declared
or ordered effective and the securities offered pursuant to each such
registration have been sold; or
(5) If the Company shall furnish to such Holders a certificate,
signed by the President of the Company, stating that in the good faith judgment
of the Board of Directors it would be seriously detrimental to the Company or
its shareholders for a registration statement to be filed in the near future,
then the Company's obligation to use its best efforts to register, qualify or
comply under this Section 1.5 shall be deferred for a period not to exceed
ninety (90) days from the date of receipt of written request from the Initiating
Holders; provided, however, that the Company may not utilize this right more
than twice in any twelve (12) month period.
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Subject to the foregoing clauses (1) through (5), the Company shall file
a registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). The right of any Holder to registration pursuant to Section
1.5 shall be conditioned upon such Holder's participation in the underwriting
arrangements required by this Section 1.5 and the inclusion of such Holder's
Registrable Securities in the underwriting, to the extent requested, to the
extent provided herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into and perform its
obligations under an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by a majority in interest of the
Initiating Holders (which managing underwriter shall be reasonably acceptable to
the Company). Notwithstanding any other provision of this Section 1.5, if the
managing underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Company shall so advise all Holders of Registrable Securities and the number
of shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such Holders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder to the
nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to ninety (90) days after the
effective date of such registration.
1.6 Company Registration.
(a) Notice of Registration. If at any time or from time to time, the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests made within fifteen (15) days after receipt of such written notice from
the Company by any Holder, but only to the extent that such inclusion will not
diminish the number of securities included by the Company or by holders of the
Company's securities who have demanded such registration except as provided in
Section 1.6(b) below.
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(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into and perform its obligations under an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Company (or by the holders who have demanded such
registration). Notwithstanding any other provision of this Section 1.6, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
number of Registrable Securities to be included in the registration and
underwriting, on a pro rata basis based on the total number of securities
(including, without limitation, Registrable Securities) entitled to registration
pursuant to registration rights granted to the participating Holders by the
Company; provided, however, that if such offering is the initial public offering
of shares to the public, no such reduction may reduce the number of securities
being sold by the Company for its own account; and provided further that if such
offering is not the initial offering of shares to the public, no such reduction
may reduce the number of securities being sold by the Holders to less than
thirty percent (30%) of the shares being sold in such offering. To facilitate
the allocation of shares in accordance with the above provisions, the Company or
the underwriters may round the number of shares allocated to any Holder or other
holder to the nearest 100 shares. If any Holder or other holder disapproves of
the terms of any such underwriting, he or she may elect to withdraw therefrom by
written notice to the Company and the managing underwriter. Any securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public distribution prior to
ninety (90) days after the effective date of the registration statement relating
thereto.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
1.7 Registration on Form S-3.
(a) The Company shall use its best efforts to qualify for
registration on Form S-3 or any comparable or successor form. To that end the
Company shall register (whether or not required by law to do so) the Common
Stock under the Exchange Act in accordance with the provisions of the Exchange
Act following the effective date of the first registration of any securities of
the Company on Form S-1 or any comparable or successor form or form.
(b) If any Holder or Holders of not less than twenty percent (20%)
of the Registrable Securities requests that the Company file a registration
statement on Form S-3 (or any successor form to Form S-3) for a public offering
of shares of the Registrable Securities, the reasonably anticipated aggregate
price to the public of which, net of underwriting discounts and commissions,
would exceed $250,000, and the Company is a registrant entitled to use Form S-3
to register the Registrable Securities for such an offering, the Company shall
use its best efforts to cause such Registrable Securities to be registered for
the offering on such form. The Company will (i) promptly give written notice of
the proposed registration to all other Holders, and (ii) as soon as
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practicable, use its best efforts to effect such registration (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within thirty (30) days after receipt
of such written notice from the Company. The substantive provisions of Section
1.5(b) shall be applicable to each registration initiated under this Section
1.7.
(c) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act; (ii) during the period
starting with the date sixty (60) days prior to the filing of, and ending on the
earlier of (x) one year from the date sixty (60) days prior to the Company's
date of filing of, or (y) a date six (6) months following the effective date of,
a registration statement (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(iii) if the Company shall furnish to such Holder a certificate signed by the
President of the Company stating that, in the good faith judgment of the Board
of Directors, it would be seriously detrimental to the Company or its
shareholders for registration statements to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed ninety (90) days from the
receipt of the request to file such registration by such Holder or Holders;
provided, however, that the Company may not utilize this right more than twice
in any twelve (12) month period.
1.8 Limitations on Subsequent Registration Rights. From and after the
date hereof, the Company shall not enter into any agreement granting any holder
or prospective holder of any securities of the Company registration rights with
respect to such securities unless (i) such new registration rights, including
standoff obligations, are on a pari passu basis with those rights of the Holders
hereunder; or (ii) such new registration rights, including standoff obligations,
are subordinate to the registration rights granted Holders hereunder.
1.9 Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Sections 1.5 and 1.6 and the
reasonable cost of one special legal counsel to represent all of the Holders
together in any such registration shall be borne by the Company, provided that
the Company shall not be required to pay the Registration Expenses of any
registration proceeding begun pursuant to Section 1.5, the request of which has
been subsequently withdrawn by the Initiating Holders. In such case, (i) the
Holders of Registrable Securities to have been registered shall bear all such
Registration Expenses pro rata on the basis of the number of shares to have been
registered, and (ii) the Company shall be deemed not to have effected a
registration pursuant to subparagraph 1.5(a) of this Agreement. Notwithstanding
the foregoing, however, if at the time of
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the withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said
Registration Expenses. In such case, the Company shall be deemed not to have
effected a registration pursuant to subparagraph 1.5(a) of this Agreement.
Unless otherwise stated, all other Selling Expenses relating to securities
registered on behalf of the Holders and all Registration Expenses incurred in
connection with any registration pursuant to Section 1.7 shall be borne by the
Holders of the registered securities included in such registration pro rata on
the basis of the number of shares so registered.
1.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed; provided, however, that in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that if Rule 415, or any successor
rule under the Securities Act, permits an offering on a continuous or delayed
basis, and provided further that if applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (y) includes any prospectus required by
Section 10(a)(3) of the Securities Act or (z) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of information
required to be included in (y) and (z) above shall be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the
registration statement;
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(c) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statements as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(d) Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any
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such seller, prepare and furnish to such seller a reasonable number of copies of
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchaser of such shares, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or incomplete in the light of the circumstances then existing;
(e) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(f) Cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;
(g) Provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration;
(h) Make available for inspection by any Holder participating in
such registration, any underwriter participating in any disposition pursuant to
such registration, and any attorney or accountant retained by any such Holder or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers and directors to
supply all information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such registration statement; provided,
however, that such Holder, underwriter, attorney or accountant shall agree to
hold in confidence and trust all information so provided;
(i) Furnish to each Holder participating in such registration
(i) in the case of an underwritten public offering, a copy of
any opinion of counsel for the Company provided to the underwriters
participating in such offering, dated the effective date of the
registration statement;
(ii) in the case of an underwritten public offering, a copy of
any "comfort" letters provided to the underwriters participating in
such offering and signed by the Company's independent public
accountants who have examined and reported on the Company's
financial statements included in the registration statement, to the
extent permitted by the standards of the AICPA or other relevant
authorities, and
(iii) a copy of all documents filed with and all correspondence
from or to the Commission in connection with any such offering other
than non-substantive cover letters and the like.
(j) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than
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eighteen months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
1.11 Indemnification.
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, each of its officers and
directors, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, as such expenses
are incurred, provided that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises out of
or is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of the officers and directors and each person
controlling such other Holders within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such other Holders, such directors, officers, persons, underwriters
or control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as such expenses are incurred, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in
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reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided that in no event shall any indemnity
under this subparagraph 1.11(b) exceed the net proceeds received by such Holder
in such registration.
(c) Each party entitled to indemnification under this Section 1.11
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, however, that an Indemnified Party (together with all
other Indemnified Parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees and
expenses to be paid by the Indemnifying Party, if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between such
Indemnified Party and any other party represented by such counsel in such
proceeding. The failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 1.11 unless the failure to give such notice is materially prejudicial to
an Indemnifying Party's ability to defend such action. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 1.11 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any claim, loss, damage, liability or action referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such claim, loss, damage, liability or action
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other in
connection with the actions that resulted in such claims, loss, damage,
liability or action, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
related to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section were based solely upon the
number of entities from whom contribution was requested or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section 1.11. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages and liabilities
referred to above in this Section 1.11 shall be deemed to include any legal or
other expenses reasonably incurred by such
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Indemnified Party in connection with investigating or defending any such action
or claim, subject to the provisions of Section 1.11 hereof. Notwithstanding the
provisions of this Section 1.11, no Holder shall be required to contribute any
amount or make any other payments under this Agreement which in the aggregate
exceed the net proceeds (after selling expenses) received by such Holder. No
person guilty of fraudulent misrepresentation (within the meaning of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
1.12 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.13 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as a Holder owns any Restricted Securities, to furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
1.14 Transfer of Registration Rights. The rights to cause the Company to
register securities granted to any party hereto under Sections 1.5, 1.6 and 1.7
may be assigned to a transferee or assignee reasonably acceptable to the Company
in connection with any transfer or assignment of Registrable Securities by such
party (together with any affiliate); provided that (a) such transfer may
otherwise be effected in accordance with applicable securities laws, (b) notice
of such assignment is given to the Company, and (c) such transferee or assignee
(i) is a wholly-owned subsidiary or constituent partner or limited liability
company member or an affiliate (including limited partners, retired partners,
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) of such party, or (ii) acquires
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from such party at least 100,000 shares of Registrable Securities (as
appropriately adjusted for stock splits and the like).
1.15 Standoff Agreement. Each Holder agrees in connection with any
registration of the Company's securities (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan) that, upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, pledge or otherwise hypothecate or encumber, grant any option for
the purchase of, or otherwise dispose of any Registrable Securities (other than
those included in the registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time (not
to exceed one hundred eighty (180) days from the effective date of such
registration in the case of a registration for the Company's initial public
offering and ninety (90) days from the effective date of such registration in
the case of other registrations) as may be requested by the Company or such
managing underwriters; provided, that the officers and directors of the Company
who own stock of the Company also agree to such restrictions.
1.16 Termination of Rights. The rights of any particular Holder to cause
the Company to register securities under Sections 1.5, 1.6 and 1.7 shall
terminate with respect to such Holder on the fifth year anniversary of the
effective date of the Company's Initial Public Offering.
SECTION 2
RIGHT OF FIRST OFFER
2.1 Right of First Offer.
(a) Right of First Offer. Subject to the terms and conditions
contained in this Section 2.1, the Company hereby grants to each Investor the
right of first offer to purchase its Pro Rata Portion of any New Securities (as
defined in subsection 2.1(b)) which the Company may, from time to time, propose
to sell and issue. An Investor's "Pro Rata Portion" for purposes of this Section
2.1 is the ratio that (x) the sum of the number of shares of the Company's
Common Stock then held by such Investor and the number of shares of the
Company's Common Stock issuable upon conversion of the Preferred Stock then held
by such Investor bears to (y) the sum of the total number of shares of Company's
Common Stock then outstanding and the number of shares of the Company's Common
Stock issuable upon conversion of the then outstanding Preferred Stock. Each
Series B Holder shall have a right of overallotment such that if any Series B
Holder fails to exercise its right to purchase its total Pro Rata portion of New
Securities, the other Series B Holders may purchase the non-purchasing Series B
Holder's portion on a pro rata basis within fifteen (15) days from the date that
the Company provides written notice of such failure. Each Series C Holder shall
have a right of over-allotment such that if any Series C Holder fails to
exercise its right to purchase its total Pro Rata Portion of New Securities, the
other Series C Holders may purchase the non-purchasing Series C Holder's portion
on a pro rata basis within fifteen (15) days from the date that the Company
provides written notice of such failure. Each Series D Holder shall have a right
of over-allotment such that if any Series D Holder fails to exercise its right
to purchase its total Pro Rata Portion of New Securities, the other Series D
Holders may purchase the non-purchasing Series D Holder's portion on a pro rata
basis within fifteen (15) days from the date that the Company provides written
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notice of such failure. Each Series E Holder shall have a right of
over-allotment such that if any Series E Holder fails to exercise its right to
purchase its total Pro Rata Portion of New Securities, the other Series E
Holders may purchase the non-purchasing Series E Holder's portion on a pro rata
basis within fifteen (15) days from the date that the Company provides written
notice of such failure.
(b) Definition of New Securities. Except as set forth below, "New
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether authorized or not, and rights, options
or warrants to purchase said shares of Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
shares of Common Stock or Preferred Stock. Notwithstanding the foregoing, "New
Securities" does not include (i) the Shares or the Conversion Shares, (ii)
securities offered to the public generally pursuant to a registration statement
under the Securities Act, (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all of
the assets or shares, or other consolidation, merger or reorganization whereby
the Company or its shareholders own not less than a majority of the voting power
of the surviving or successor corporation (or other corporation which is the
issuer of the capital stock into which the capital stock of the Company is
converted or exchanged in such consolidation, merger or reorganization), (iv)
shares of the Company's Common Stock or related options convertible into or
exercisable for such Common Stock issued to employees, officers and directors
of, and consultants, customers, and vendors to, the Company, pursuant to any
arrangement approved by the Board of Directors of the Company, (v) shares of the
Company's Common Stock or related options convertible into or exercisable for
such Common Stock issued to any bank, equipment lessor or other similar
financial institution if and to the extent that the transaction in which such
sale or grant is to be made is approved by the Company's Board of Directors with
at least seventy-five percent (75%) of the members of the Board of Directors
voting in favor of such sale or grant, (vi) stock issued pursuant to any rights
or agreements, including, without limitation, convertible securities, options
and warrants, provided that the Company shall have complied with the right of
first offer established by this Section 2.1 with respect to the initial sale or
grant by the Company of such rights or agreements, or (vii) stock issued in
connection with any stock split, stock dividend or recapitalization by the
Company.
(c) Notice of Right. In the event the Company proposes to undertake
an issuance of New Securities, it shall give each Investor written notice of its
intention, describing the type of New Securities and the price and terms upon
which the Company proposes to issue the same. The Holders shall have fifteen
(15) days from the date of receipt of any such notice to agree to purchase
shares of such New Securities (up to the amount referred to in subsection
2.1(a)), for the price and upon the terms specified in the notice, by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased.
(d) Exercise of Right. If any Investor exercises its right of first
offer hereunder, the closing of the purchase of the New Securities with respect
to which such right has been exercised shall take place within ninety (90)
calendar days after the Investor gives notice of such exercise, which period of
time shall be extended in order to comply with applicable laws and regulations.
Upon exercise of such right of first offer, the Company and the Investor shall
be legally obligated to consummate the purchase contemplated thereby and shall
use their best efforts to secure any approvals required in connection therewith.
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(e) Lapse and Reinstatement of Right. In the event an Investor fails
to exercise the right of first offer provided in this Section 2.1 within said
fifteen (15) day period and after expiration of the fifteen (15) day period for
the over-allotment provisions of this Section 2.1, the Company shall have ninety
(90) days thereafter to sell or enter into an agreement (pursuant to which the
sale of New Securities covered thereby shall be closed, if at all, within sixty
(60) days from the date of said agreement) to sell the New Securities not
elected to be purchased by such Investor at the price and upon the terms no more
favorable to the purchasers of such securities than specified in the Company's
notice. In the event the Company has not sold the New Securities or entered into
an agreement to sell the New Securities within said ninety (90) day period (or
sold and issued New Securities in accordance with the foregoing within sixty
(60) days from the date of said agreement), the Company shall not thereafter
issue or sell any New Securities without first offering such securities to the
Investors in the manner provided above.
(f) Assignment. The right of the Investors to purchase any part of
the New Securities may be assigned in whole or in part to any partner, member,
subsidiary, affiliate or shareholder of an Investor, or other persons or
organizations who acquire from an Investor at least 100,000 shares of Restricted
Securities (as adjusted for stock splits and the like).
2.2 Termination of Right of First Offer. The right of first offer
granted under Sections 2.1 of this Agreement shall terminate on and be of no
further force or effect upon the closing of a firmly underwritten public
offering of Common Stock at a price per share of at least $10.00 (subject to
adjustments for stock splits, stock dividends, combinations and
recapitalizations) and resulting in aggregate gross proceeds to the Company of
at least $20,000,000 (a "Qualifying Public Offering").
SECTION 3
Affirmative Covenants of the Company
The Company hereby covenants and agrees as follows:
3.1 Financial Information. So long as an Investor is a holder of 100,000
Shares and/or shares of Common Stock issued upon the conversion thereof (as
adjusted for any stock splits, consolidations and the like), the Company will
furnish to such Investor the following reports:
(a) As soon as practicable after the end of each fiscal year, and in
any event within ninety (90) days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and cash flows of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants of national standing selected by the
Company; and
(b) As soon as practicable, but in any event within forty-five (45)
days after the end of each of the first three (3) quarters of each fiscal year
of the Company, an unaudited profit or loss statement, schedule as to the
sources and application of funds for such fiscal quarter and an
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unaudited balance sheet and a statement of shareholder's equity as of the end of
such fiscal quarter and a statement showing the number of shares of each class
and series of capital stock and securities convertible into or exercisable for
shares of capital stock outstanding at the end of the period, the number of
common shares issuable upon conversion or exercise of any outstanding securities
convertible or exercisable for common shares and the exchange ratio or exercise
price applicable thereto, all in sufficient detail as to permit the Holder to
calculate its percentage equity ownership in the Company.
(c) As soon as practicable after the end of each calendar month, and
in any event within 30 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of each calendar month, and
consolidated statements of income and cash flow for such period and for the
current fiscal year to date, together with a comparison of such statements to
the Company's operating plan then in effect.
3.2 Operating Plan and Budget. So long as an Investor holds at least
100,000 Shares and/or shares of Common Stock issued upon conversion thereof (as
adjusted for any stock splits, consolidations and the like), as soon as
practicable upon approval or adoption by the Company's Board of Directors, the
Company will furnish such Investor with the Company's budget and operating plan
(including projected balance sheets and profit and loss and cash flow
statements) for such fiscal year.
3.3 Inspection. The Company shall permit each Investor, at such
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 3.3 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.
3.4 Assignment of Rights to Financial Information. The rights granted
pursuant to Sections 3.1 and 3.2 may be assigned by an Investor to a third party
who acquires at least 100,000 Shares and/or shares of Common Stock issued upon
conversion thereof (as adjusted for any stock splits, consolidations and the
like) from such Investor and who is not a Competitor of the Company, provided
that the Company receives notice twenty (20) days prior to such assignment.
"Competitor" shall mean any Person whose primary business is the development and
marketing of educational programs and software. "Person" shall mean an
individual, a partnership, a joint venture, a corporation, a trust, a
joint-stock company, a union, a business association, a firm, an unincorporated
organization, a government or any department or agency thereof, or other entity.
3.5 Proprietary Information Agreement. The Company shall require each
person employed by the Company who shall, in the ordinary course of their
employment, have access to the Company's confidential and proprietary
information, to execute a proprietary information agreement.
3.6 Board of Directors. The Company will hold meetings of its Board of
Directors not less frequently than once every quarter.
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3.7 Restrictions on Employee Stock. The Company shall not sell stock to
employees or consultants, except as provided in this Section 3.7.
(a) Employee Stock Vesting. The Company may sell shares of Common
Stock, or grant options to purchase Common Stock, provided that such shares or
options shall be subject to vesting at the rate of one-quarter at the end of the
first year of full time employment, and monthly thereafter in thirty-six (36)
equal monthly installments. Vesting of stock issued to consultants shall be
determined by the Company's Board of Directors on a case by case basis.
(b) Unvested Shares. Unvested shares shall be purchasable by the
Company or its assignee at cost upon termination of employment for any reason.
Unvested shares shall be nontransferable.
(c) Company's Right of First Refusal.
(i) Prior to making any sale or transfer of vested shares of
Common Stock, a holder of such vested shares (the "Common Stock Holder") shall
give the Company the opportunity to purchase such vested shares in accordance
with this Section 3.7(c).
(ii) Notice of Right. The Common Stock Holder shall give notice
(the "Transfer Notice") to the Company in writing of such intention, specifying
the amount of vested shares proposed to be sold or transferred, the proposed
price per share therefor (the "Transfer Price") and the other material terms
upon which such disposition is proposed to be made. The Company shall have
fifteen (15) days from the date of receipt of the Transfer Notice to agree to
purchase such shares at the Transfer Price and upon the terms specified in the
Transfer Notice by giving written notice to the Common Stock Holder and stating
therein the quantity of shares to be purchased.
(iii) Exercise of Right. If the Company exercises its right of
first refusal hereunder, the closing of the purchase of the shares with respect
to which such right has been exercised shall take place within ninety (90)
calendar days after the Company gives notice of such exercise, which period of
time shall be extended in order to comply with applicable laws and regulations.
Upon exercise of its right of first refusal, the Company and the Common Stock
Holder shall be legally obligated to consummate the purchase contemplated
thereby and shall use their best efforts to secure any approvals required in
connection therewith.
(iv) Lapse and Reinstatement of Right. In the event the Company
fails to exercise the right of first refusal within said fifteen (15) day
period, the Common Stock Holder shall have ninety (90) days thereafter to sell
or enter into an agreement (pursuant to which the sale of shares covered thereby
shall be closed, if at all, within sixty (60) days from the date of said
agreement) to sell the shares not elected to be purchased by the Company at the
price and upon the terms no more favorable to the purchasers of such securities
than specified in the Transfer Notice. In the event the Common Stock Holder has
not sold the shares or entered into an agreement to sell the shares within said
ninety (90) day period (or sold the shares in accordance with the foregoing
within sixty (60) days from the date of said agreement), the Common Stock Holder
shall not thereafter sell or transfer any vested shares without first offering
such securities to the Company in the manner provided above.
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(v) Assignment. The right of Company to purchase any part of the
vested shares may be assigned in whole or in part to any shareholder or
shareholders of the Company or other persons or organizations.
(vi) Termination of Right of First Refusal. The right of first
refusal granted under this Section 3.7(c) shall terminate on and be of no
further force or effect upon the closing of a Qualifying Public Offering.
3.8 Termination of Covenants. The covenants set forth in Sections 3.1
through 3.7 shall terminate on, and be of no further force or effect after, the
date on which the Company is required to file reports with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
3.9 Definition of Investor. For purposes of determining the amount of
shares held by an Investor, all Investors affiliated with any Investor shall be
treated as a single Investor.
3.10 Qualified Small Business Stock. The Company covenants that so long
as Registrable Securities or Shares are held by an Investor (or a transferee in
whose hands the Registrable Securities or shares are eligible to qualify as
Qualified Small Business Stock as defined in Section 1202(c) of the Internal
Revenue Code of 1986, as amended), it will use its reasonable efforts to cause
the Registrable Securities or Shares to qualify as Qualified Small Business
Stock.
3.11 Capital Stock of Subsidiaries. The Company covenants that it will
not allow to be issued any shares of capital stock of any subsidiary without the
unanimous approval of the Company's Board of Directors.
3.12 Approval of Certain Actions.
(a) Notwithstanding any provision in the Company's Amended and
Restated Articles of Incorporation (the "Restated Articles"), the Company agrees
that it will not (i) take any of the actions set forth in Article THIRD,
Sections 7(b)(i), 7(b)(ii), 7(b)(v), 7(b)(vi) and 7(b)(vii) of the Restated
Articles or (ii) redeem any shares of Series C Preferred Stock pursuant to
Article THIRD, Section 5 of the Restated Articles, without first obtaining the
approval (by vote or consent as provided by law) of at least three Corporate
Investors (as defined below).
(b) For purposes of this Section 3.12, a "Corporate Investor" shall
mean each of COMCAST Programming Holdings, Inc., Microsoft Corporation, TCI ETC
Holdings, Inc., and Tribune Company, or any affiliate of any Corporate Investor
which receives such Corporate Investor's interests in the Company.
3.13 Most Favored Nations Treatment. The Company covenants that in the
event that, at any time an Investor holds Registrable Securities or Shares, the
Company modifies, amends or otherwise supplements any provision of this
Agreement or the Preferred Stock Purchase Agreement between the Company and any
Investor pursuant to which Shares or Registrable Securities were acquired, or
otherwise enters into any other agreement or arrangement with any Investor
(other than by an amendment of this Agreement or any Preferred Stock Purchase
Agreement pursuant to which
-19-
23
any Investor acquired Shares or Registrable Securities that is effected in
accordance with the amendment provisions herein or therein) the effect of which,
in any such case, is to increase or enhance the rights and privileges of such
Investor in respect of its Registrable Securities or Shares over the rights and
privileges applicable to the interests of other Investors in Registrable
Securities or Shares, the Company shall promptly give written notice to all such
other Investors of such increase or enhancement of rights and, if so requested
by any such other Investor, shall take all necessary action consistent with the
terms of this Agreement to ensure that the rights and privileges of such other
Investor making such request are increased or enhanced to an equal or greater
extent.
SECTION 4
Right of First Refusal
4.1 Restriction on Transfer. No Investor shall transfer, assign,
hypothecate, encumber, pledge or otherwise alienate (hereinafter "transfer") any
Shares (or any shares of Common Stock issued upon conversion thereof) unless
such Investor previously complied with all provisions of this Section 4. Any
transfer not made in accordance with this Section 4 shall be voidable by the
Company, and the Company shall not be obligated to treat the transferee in such
transaction as a shareholder for any purpose.
4.2 Notice Requirement. If an Investor seeks to transfer any Shares or
any shares of Common Stock issuable upon conversion thereof, whether voluntarily
or involuntarily, such Investor (the "Offering Shareholder") shall first give
written notice of such intention ("Notice of Transfer") to all other Investors
and to the Secretary of the Company. The Notice of Transfer shall specify the
number of Shares or shares of Common Stock to be transferred (the "Offered
Shares"), and state the price and all other terms of the proposed transaction.
The Notice of Transfer shall constitute an irrevocable offer to sell the Offered
Shares during the periods described below.
4.3 Option of Investors.
(a) For thirty (30) days following the deemed receipt of a Notice of
Transfer (the "Option Period"), the First Option Holders (as defined below)
shall have an irrevocable right to purchase the Offered Shares in accordance
with the terms stated in the Notice of Transfer. For purposes of this Section
4.3, "First Option Holders" shall mean (i) in the case of a proposed transfer of
Common Stock, the Investors holding Common Stock and (ii) in the case of a
proposed transfer of Preferred Stock, the Investors holding Shares of the same
series as the Offered Shares. Each First Option Holder shall have the option to
purchase (i) in the case of a proposed transfer of Common Stock, that proportion
of the shares available for purchase as the number of shares of Common Stock
held by such First Option Holder bears to the total number of shares of Common
Stock held by all First Option Holders, or (ii) in the case of a proposed
transfer of shares of a series of Preferred Stock, that proportion of the shares
available for purchase as the number of shares of such series held by such First
Option Holder bears to the total number of shares of such series held by all
First Option Holders. The right may be exercised by a written notice, signed by
each First Option Holder who chooses to exercise such right, stating that the
First Option Holder desires to purchase such First Option Holder's portion of
the Offered Shares and tendering the purchase price therefor. Such notice
-20-
24
shall be delivered to the Offering Shareholder before expiration of the Option
Period. Failure to respond in writing within the Option Period to the Notice of
Transfer shall be deemed an irrevocable waiver by such First Option Holder of
such First Option Holder's right to acquire its portion of the Offered Shares.
Each First Option Holder shall have a right of over-allotment such that if any
First Option Holder fails to exercise its right to purchase its portion of the
Offered Shares, the other First Option Holders may purchase the non-purchasing
First Option Holder's portion on a pro rata basis within fifteen (15) days from
the date that the Offering Shareholder provides written notice of such failure.
(b) To the extent that the First Option Holders do not elect to
acquire all of the Offered Shares, the remaining Investors shall have an
irrevocable right, for thirty (30) days following expiration of the Option
Period (or the additional 15-day period provided for over-allotments) (the
"Second Option Period") to purchase any Offered Shares not purchased by the
First Option Holders. Each such Investor shall have the option to purchase that
proportion of the remaining shares available for purchase as the number of
shares of Common Stock owned by, or issuable upon conversion of the Shares owned
by, such Investor bears to the total number of shares of Common Stock owned by,
or issuable upon conversion of the Shares owned by, the remaining Investors. The
right may be exercised by a written notice, signed by each Investor who chooses
to exercise such right, stating that the Investor desires to purchase such
Investor's portion of the Offered Shares and tendering the purchase price
therefor. Such notice shall be delivered to the Offering Shareholder before
expiration of the Second Option Period. Failure to respond in writing within the
Second Option Period to the Notice of Transfer shall be deemed an irrevocable
waiver by such Investor of such Investor's right to acquire a proportionate part
of the shares of the Offered Shares.
4.4 Special Provisions Regarding Exchanges. If the Notice of Transfer
specifies consideration other than cash, then the Offered Shares may be
purchased in cash for the net fair market value of such property, as determined
in good faith by an independent appraiser. All expenses for such independent
appraiser shall be borne by the Offering Shareholder.
4.5 Option of Company. To the extent that the Investors do not elect to
acquire all of the Offered Shares, the Company shall have an irrevocable right,
for thirty (30) days following expiration of the Second Option Period (the
"Third Option Period") to purchase any Offered Shares not purchased by the
Investors in accordance with the terms stated in the Notice of Transfer. The
right may be exercised by a written notice, signed by the President of the
Company, stating that the Company desires to purchase such Offered Shares and
tendering the purchase price therefor. Such notice shall be delivered to the
Offering Shareholder before expiration of the Third Option Period.
4.6 Transfer of Shares. If the Offered Shares are not purchased and paid
for by the Investors within the Option Period or the Second Option Period or by
the Company or its assignee(s) within the Third Option Period, said Offered
Shares may be transferred, at any time within one hundred twenty (120) days
after delivery of the Notice of Transfer, in strict accordance with the terms
specified in the Notice of Transfer. Any transferee shall receive and hold said
Offered Shares subject to the right of first refusal set forth in this Section
4. If such transfer is not made within said one hundred twenty (120) day period
in strict accordance with the terms specified in the Notice of
-21-
25
Transfer, the Offered Shares shall not be transferred except in accordance with
the restrictions of this Section 4.
4.7 Effect of Notice. The purchase price for Offered Shares shall be
deemed tendered, and said Offered Shares shall be deemed purchased, at such time
as the Offering Shareholder receives written notice enclosing a cashier's check
for the purchase price or stating that the purchase price has been delivered to
a third party (such as counsel to the Company) with instructions to deliver such
amount to the Offering Shareholder upon surrender of certificates representing
the Offered Shares, duly endorsed with signatures guaranteed. All rights
accorded the Offering Shareholder with respect to the Offered Shares, other than
the right to payment therefor, shall cease at that time. If payment is tendered
directly to the Offering Shareholder, the Offering Shareholder shall promptly
cause to be delivered certificates representing the Offered Shares, duly
endorsed with signatures guaranteed, to the Company's transfer agent for
cancellation or transfer.
4.8 Certain Transfers Exempt. Notwithstanding anything else contained in
this Section 4 to the contrary, an Investor shall be permitted to make transfers
of shares held by such Investor without complying with the provisions of this
Section 4 in the circumstances set forth below in this Section 4.8. An Investor
may make a gift of shares of the Company to his or her spouse, issue, other
members of his or her immediate family, or to a trust for the benefit of such
Investor, spouse, issue or other members, without complying with the provisions
of this Section 4. Except as set forth below, an Investor other than a natural
person may distribute for no additional consideration (but not sell or exchange)
shares of the Company to its partners (general or limited), members,
stockholders, wholly-owned subsidiaries or affiliates in accordance with their
beneficial interest in the shares of the Company without complying with the
provisions of this Section 4. Such transferees shall hold such shares of the
Company subject to the right of first refusal set forth in this Section 4 and
shall be required to confirm same in writing prior to receipt of such shares. An
Investor may transfer his or its shares for value to a parent, subsidiary or
other affiliated company without complying with the provisions of this Section
4. The provisions of this Section 4 shall not apply to any transfer of Shares by
an Investor in connection with an acquisition of the stock or assets of the
Company (regardless of the form of such acquisition); provided, however, that,
if less than all of the Shares are acquired in any such acquisition, each
Investor is permitted to sell the same proportion of its or his shares. The
provisions of this Section 4 shall not apply to any transfer of Shares by an
Investor in connection with the acquisition of such Investor (regardless of the
form of such acquisition) except that if more than 25% of the total assets of an
Investor (determined on a consolidated, fair market value basis in good faith by
such Investor) consists of shares of the Company, a transfer of shares or other
equity interests (hereinafter "shares") of such investor (or a transfer of
shares of any parent of such Investor as to which more than 25% of the total
assets of such parent (so determined on a consolidated, fair market value basis)
consists of the interest of such parent in shares of the Company) constituting
voting control of such Investor (or parent) shall be deemed to be a transfer of
shares of the Company subject to Section 4 unless such transfer is a transfer to
a partner, shareholder, parent, subsidiary or affiliate otherwise excepted from
compliance with Section 4 by the foregoing provisions of this Section 4.8. If a
transfer of shares of the Company is deemed to result from the transfer of
shares of an Investor (or parent) by virtue of the except clause of the
foregoing sentence, the Notice of Transfer shall state, in addition to the
offering price of the Offered Shares as contemplated by Section 4.2, the
equivalent offering price at which the shares of the Investor (or parent) would
be transferred pursuant to Section 4.6 and the basis for the determination
thereof and
-22-
26
the relationship between the two prices, which relationship shall be determined
in good faith by such Investor taking into account relative fair market values
of the assets involved.
4.9 Pledge of Stock. Subject to Section 1.15 above, an Investor may
pledge Shares or Common Stock of the Company to the Company or a bank or other
financial institution, provided that the pledge or security agreement under
which such shares are pledged specifies that (i) the pledgee shall not sell or
transfer such shares (other than to the Investor upon termination of the pledge)
without first offering the same to the Investors and the Company pursuant to the
provisions of this Section 4 and (ii) that the pledgee agrees to be bound by all
other terms and conditions of this Agreement if such pledgee becomes the
Investor with respect to such shares.
4.10 Termination. The restrictions imposed by this Section 4 shall
terminate immediately prior to the closing of a Qualifying Public Offering.
Securities received pursuant to any stock dividend, stock split,
recapitalization, or exercise of a conversion right shall be subject to this
Section 4 to the same extent as the shares of the Company with respect to which
they were issued.
SECTION 5
Miscellaneous
5.1 Assignment. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto.
5.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
5.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California in the United States of America.
5.4 Counterparts. This Agreement may be executed in two or more
counterparts and signature pages may be delivered by facsimile, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
5.5 Notices. Any notice required or permitted by this Agreement shall be
in writing and shall be sent by prepaid registered or certified mail, return
receipt requested, addressed to the other party at the address shown below or at
such other address for which such party gives notice hereunder. Such notice
shall be deemed to have been given three (3) days after deposit in the mail.
5.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
-23-
27
5.7 Amendment and Waiver. Any provision of this Agreement may be amended
with the written consent of the Company and the Holders of at least fifty
percent (50%) of the outstanding shares of the Registrable Securities provided
that (i) no such amendment shall be effective unless it shall have been approved
by at least three Corporate Investors, (ii) no such amendment shall impose or
increase any liability or obligation on a Holder without the consent of such
Holder and (iii) no such amendment having an adverse effect on any Holder in
relation to the other Holders may be made without consent of such Holder. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each Holder of Registrable Securities and the Company. In addition, the
Company may waive performance of any obligation owing to it, as to some or all
of the Holders of Registrable Securities, or agree to accept alternatives to
such performance, without obtaining the consent of any Holder of Registrable
Securities. In the event that an underwriting agreement is entered into between
the Company and any Holder, and such underwriting agreement contains terms
differing from Section 1.11 of this Agreement with respect to indemnification
made available to underwriters, as to any such Holder the terms of such
underwriting agreement shall govern.
5.8 Effect of Amendment or Waiver. The Investors and their successors
and assigns acknowledge that by the operation of Section 5.7 hereof the Holders
of a majority of the outstanding Registrable Securities, acting in conjunction
with the Company, will have the right and power to diminish or eliminate any or
all rights pursuant to this Agreement.
5.9 Termination of Prior Agreement. Upon execution of this Agreement by
the Company and the Investors, the Investor Rights Agreement dated June 24, 1997
among the Company and certain of the Investors shall terminate, be of no further
force and effect and shall, in all respects, be superseded by the provisions of
this Agreement.
5.10 Rights of Holders. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
5.11 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
-24-
28
[THIS SPACE LEFT BLANK INTENTIONALLY]
-25-
29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE LIGHTSPAN PARTNERSHIP, INC.
By: ________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Operating Officer
SZ INVESTMENTS LLC
By: ▇▇▇▇ General Partnership, Inc.
Its: Managing Member
By: ________________________________________
Title: _____________________________________
STATE TREASURER OF THE STATE OF MICHIGAN,
Custodian of the Michigan Public School
Employees' Retirement System, State
Employees' Retirement System, Michigan
State Police Retirement System, and
Michigan Judges' Retirement System
By: ________________________________________
▇▇▇▇▇ ▇▇▇▇, Acting Administrator
COMCAST PROGRAMMING HOLDINGS,
INC.
By: ________________________________________
Title: _____________________________________
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
30
TCI ETC HOLDING, INC.
By: ________________________________________
Title: _____________________________________
MICROSOFT CORPORATION
By: ________________________________________
Title: _____________________________________
TRIBUNE COMPANY
By: ________________________________________
Title: _____________________________________
ACCEL IV L.P.
By: Accel IV Associates L.P.
Its General Partner
By: ________________________________________
General Partner
ACCEL INVESTORS '93 L.P.
By: ________________________________________
General Partner
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
31
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ PARTNERS
By: ________________________________________
General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.
Its General Partner
By: ________________________________________
PROSPER PARTNERS
By: ________________________________________
Attorney-In-Fact
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VI
By: Its General Partner:
KPCB VI Associates
By: ________________________________________
Its General Partner
KPCB VI FOUNDERS FUND
By: Its General Partner:
KPCB VI Associates
By: ________________________________________
Its General Partner
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
32
INSTITUTIONAL VENTURE PARTNERS V
By: ________________________________________
General Partner
INSTITUTIONAL VENTURE MANAGEMENT V
By: ________________________________________
General Partner
"INVESTOR:"
____________________________________________
By: ________________________________________
Title: _____________________________________
"INVESTOR:"
____________________________________________
By: ________________________________________
Title: _____________________________________
"INVESTOR:"
____________________________________________
By: ________________________________________
Title: _____________________________________
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
33
U.S. INFORMATION TECHNOLOGY INVESTMENT
ENTERPRISE PARTNERSHIP
By: ________________________________________
Title: _____________________________________
U.S. INFORMATION TECHNOLOGY NO.2
INVESTMENT ENTERPRISE PARTNERSHIP
By: ________________________________________
Title: _____________________________________
JAFCO G-7(B) INVESTMENT ENTERPRISE
PARTNERSHIP
By: ________________________________________
Title: _____________________________________
JAFCO G-7(A) INVESTMENT ENTERPRISE
PARTNERSHIP
By: ________________________________________
Title: _____________________________________
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
34
JAFCO R-2 INVESTMENT ENTERPRISE
PARTNERSHIP
By: ________________________________________
Title: _____________________________________
JAFCO JS-2 INVESTMENT ENTERPRISE
PARTNERSHIP
By: ________________________________________
Title: _____________________________________
JAPAN ASSOCIATED FINANCE CO. LTD.
By: ________________________________________
Title: _____________________________________
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
35
TECHNO VII-A LIMITED PARTNERSHIP
By: ________________________________________
Title: _____________________________________
TECHNO VII-B LIMITED PARTNERSHIP
By: ________________________________________
Title: _____________________________________
TECHNO VIII LIMITED PARTNERSHIP
By: ________________________________________
Title: _____________________________________
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
36
NASSAU CAPITAL LLC
By: ________________________________________
Title: _____________________________________
KECALP, INC.
By: ________________________________________
Title: _____________________________________
▇▇▇▇▇ FAMILY INVESTMENT LIMITED
PARTNERSHIP
By: ________________________________________
Title: _____________________________________
____________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
____________________________________________
▇▇▇▇▇▇ ▇▇▇▇
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
37
NAS PARTNERS I L.L.C.
By: ________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Member
NASSAU CAPITAL PARTNERS II L.P.
By: Nassau Capital L.L.C.,
its General Partner
By: ________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Member
▇▇▇▇▇▇▇ ▇▇▇▇▇ KECALP L.P. 1997
By: KECALP, Inc.
its General Partner
By: ________________________________________
Title: _____________________________________
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
38
▇▇▇▇▇ CAPITAL PARTNERS LLC
By: ________________________________________
Title: _____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ROLLOVER
ACCOUNT #DG7901-68
By: ________________________________________
Title: _____________________________________
____________________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
39
LIBERTY MEDIA CORPORATION
By: ________________________________________
Title: _____________________________________
SONY CORPORATION OF AMERICA
By: ________________________________________
Title: _____________________________________
IGNITE VENTURES I, L.P.
By: ________________________________________
Nobuo Mii
Title: _____________________________________
____________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇
____________________________________________
▇▇▇▇▇ ▇▇▇▇
____________________________________________
▇▇▇▇ ▇▇▇▇
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
40
COMCAST INTERACTIVE INVESTMENTS, INC.
By: ________________________________________
Title: _____________________________________
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
41
DHM ARCADIA PARTNERS
By: ________________________________________
Title: _____________________________________
[SIGNATURE PAGE TO THE LIGHTSPAN PARTNERSHIP, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
42
EXHIBIT A
SZ Investments, LLC State Treasurer of the State of Michigan
Two North Riverside Plaza, Suite 600 Alternate Investments Division
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Treasury Building
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
U.S. Information Technology Investment Enterprise U.S. Information Technology No. 2 Investment
Partnership Enterprise Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
JAFCO G-7(A) Investment Enterprise Partnership JAFCO G-7(B) Investment Enterprise Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
JAFCO R-2 Investment Enterprise Partnership JAFCO JS-2 Investment Enterprise Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Japan Associated Finance Co., Ltd. Tribune Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇ ▇▇▇▇▇
COMCAST Programming Holdings, Inc. Microsoft Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
TCI ETC Holdings, Inc. Accel IV L.P.
▇▇▇ ▇▇▇▇ ▇▇., ▇.▇., ▇▇▇▇▇ ▇▇▇▇▇ c/▇ ▇▇▇▇▇▇ Sednaoui
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Accel Partners
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
43
Accel Investors '93 ▇.▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Partners
c/▇ ▇▇▇▇▇▇ Sednaoui c/▇ ▇▇▇▇▇▇ Sednaoui
Accel Partners Accel Partners
One ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Accel Keiretsu L.P. Prosper Partners
c/▇ ▇▇▇▇▇▇ Sednaoui c/▇ ▇▇▇▇▇▇ Sednaoui
Accel Partners Accel Partners
One ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VI KPCB VI Founders Fund
Four Embarcadero Center, Suite 3520 Four Embarcadero Center, Suite 3520
San Francisco, CA 94111 ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇
Institutional Venture Partners V Institutional Venture Management V
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ Attn: Attn: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Lightspan Partners Techno VII-A Limited Partnership
c/▇ ▇▇▇▇▇▇▇▇ Enterprises LLC c/o Techno Venture Co., Ltd.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇-▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Chiyoda-Ku
Attn: ▇▇▇▇▇ ▇▇▇▇ Tokyo 102 Japan
Attn: ▇▇▇▇ ▇▇▇▇
Techno VII-B Limited Partnership Techno VIII Limited Partnership
c/o Techno Venture Co., Ltd. c/o Techno Venture Co., Ltd.
▇▇-▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇-▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇ ▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇
Nassau Capital Partners II L.P. KECALP Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
44
NAS Partners I LLC ▇▇▇▇▇▇▇ ▇▇▇▇▇ KECALP L.P. 1997
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ Capital Partners LLC ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o Heron Investments ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Rollover ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ #▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Liberty Media Corporation Sony Corporation of America
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ignite Ventures I, ▇.▇. ▇▇▇▇▇▇▇ Boxer
The Ignite Group ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ Comcast Interactive Investments, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ c/o Comcast Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇