REGISTRATION RIGHTS AND EARNOUT STOCK AGREEMENT
Exhibit 10.1
This REGISTRATION RIGHTS AND EARNOUT STOCK AGREEMENT (this “Agreement”) is made on and
as of January ___, 2008, by and among the individuals listed on Exhibit A attached hereto
(each, a “Recipient”), and Blackboard Inc., a Delaware corporation (“Parent”).
RECITALS
A. Parent and The NTI Group, Inc., a Delaware corporation (the “Company”), are parties
to that certain Agreement and Plan of Merger dated as of January 11, 2008 (the “Merger
Agreement”), by and among Parent, the Company, a wholly-owned subsidiary of Parent, and Pace
Holdings, LLC, a Delaware limited liability company. This Agreement is an inducement to Parent and
the Company to enter into the Merger Agreement, and it is a condition precedent to Parent’s and the
Company’s obligations to effect the Merger thereunder that this Agreement shall have been entered
into. Capitalized terms used herein but not otherwise defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
B. Pursuant to Section 2.9 of the Merger Agreement, at the Effective Time (as defined in the
Merger Agreement), Parent is required to execute and deliver this Agreement, pursuant to which
Parent shall agree to issue to the Recipients shares of Parent Common Stock (as defined in the
Merger Agreement) (the “Earnout Stock”), as more specifically set forth on Exhibit
A attached hereto, at the time and on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Earnout Stock.
(a) On each of February 15, 2009 and February 15, 2010 (each, a “Payment Date”),
Parent shall issue, or shall cause to be issued, to each Recipient the number of shares of Earnout
Stock set forth opposite such Recipient’s name on Exhibit A attached hereto with respect to
the preceding fiscal year, such number of shares to be adjusted as provided on Exhibit A.
A Recipient need not be employed by or providing services to Parent or the Company or any of their
subsidiaries on the Payment Date in order to receive such shares. In the event that the attainment
of the Earnout Stock for a given fiscal year has not been finally agreed upon by February 1 of the
following year, then (i) any undisputed amounts shall be issued in accordance with the first
sentence of this section and (ii) any amount of the disputed portion subsequently determined to be
payable shall be issuable within 10 days of such determination, not to be later than April 30 of
such following year.
(b) The shares of Earnout Stock issued to the Recipients pursuant to Section 1(a) above shall
be fully vested and shall not be subject to any restrictions on transferability as of the date of
issuance.
(c) In the event that, on a Payment Date, the issuance of all or any portion of the Earnout
Stock to be issued to a Recipient on such Payment Date is prohibited for any reason,
Parent shall, in lieu of issuing such Earnout Stock, pay to such Recipient to whom such shares
are to be issued pursuant to Section 1(a) above an amount in cash equal to the Fair Market Value
(as defined below) of such Earnout Stock on the Payment Date. In the event that, on a Payment
Date, a Recipient is an Unaccredited Stockholder, Parent may, in its sole discretion and in lieu of
issuing such Earnout Stock, pay to such Recipient to whom such shares are to be issued pursuant to
Section 1(a) above an amount in cash equal to the Fair Market Value of such Earnout Stock on the
Payment Date. The aforementioned payments shall be made within ten (10) days following the Payment
Date. The Fair Market Value per share of Earnout Stock shall be an amount (adjusted to the nearest
whole cent) equal to the average closing price of the Parent Common Stock as publicly reported by
the Nasdaq Global Market over the twenty (20) Trading Days ending three (3) Trading Days prior to
the Payment Date (adjusted, as appropriate, for any stock split, stock dividend, reclassification,
recapitalization or similar event).
(d) [Reserved.]
(e) In the event of any (i) stock split, (ii) reverse stock split, (iii) stock dividend, (iv)
recapitalization, combination of shares, reclassification of shares, spin-off or other similar
change in capitalization or event, (v) any distribution to holders of Common Stock, (vi) merger or
consolidation, (viii) liquidation or dissolution, (ix) sale, transfer, exchange or other
disposition of all or substantially all of the assets of Parent, or (x) exchange of Parent Common
Stock or other securities of Parent, in each case that affects the Parent Common Stock payable
hereunder such that an adjustment is necessary or appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under this
Agreement, then the Board shall equitably adjust the number of shares of Parent Common Stock to be
issued to the Recipients hereunder and any such adjustment shall be reflected on Exhibit A
attached hereto, although the failure to so amend Exhibit A shall not affect the
validity of any such changes approved by the Board.
2. Registration Rights.
(a) Prior to each Payment Date, Parent shall have filed or caused to be filed with the
Securities and Exchange Commission (the “SEC”) a registration statement (a
“Registration Statement”) on any appropriate form under the Securities Act of 1933, as
amended (the “Securities Act”), with respect to the offering and sale or other disposition
by the Recipients of no less than one hundred percent (100%) of the Earnout Stock to be issued to
the Recipients (the “Registrable Securities”) on such Payment Date and such Registration
Statement shall have been declared effective under the Securities Act. Each Recipient agrees to
cooperate with and provide assistance to Parent, as Parent may reasonably request, in connection
with any registration and sale of the Registrable Securities.
(b) Parent agrees that it will (i) keep each Registration Statement continuously effective
until the earlier of (A) two years from the relevant Payment Date, (B) the date on which all of the
Registrable Securities have been sold or (C) the date on which all such shares may be continuously
sold by each Recipient named therein without any volume limitations in reliance on Rule 144 of the
Securities Act or any rule of similar effect and prepare and file with the SEC any amendments or
supplements to the Registration Statement or prospectus which may be necessary to comply with the
provisions of the Securities Act with respect to the offer of the Registrable Securities covered by
such Registration Statement; (ii) prepare and promptly file with the SEC and promptly notify the
Recipients of the filing of such amendment or supplement to such Registration Statement or
prospectus as may be necessary to correct any statement therein or
omission therefrom if, at any time when a prospectus relating to the Registrable Securities is
required to be delivered under the Securities Act, any event with respect to Parent shall have
occurred as a result of which any prospectus would include an untrue statement of material fact or
omit to state any material fact necessary to make the statements therein not misleading; (iii) in
case the Recipients are required to deliver a prospectus, prepare promptly such amendment or
amendments to such Registration Statement and such prospectus or prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Securities Act; (iv) advise
the Recipients promptly after Parent shall receive notice or obtain knowledge of the issuance of
any stop order by the SEC suspending the effectiveness of the Registration Statement or amendment
thereto or of the initiation or threatening of any proceedings for that purpose, and promptly use
commercially reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; (v) use commercially reasonable efforts to qualify
such Registrable Securities for sale under the securities or “blue sky” laws of such states within
the United States as the Recipients may reasonably designate, except that Parent shall not be
required in connection therewith or as a condition thereto to qualify to do business in any such
state or to take any action which would subject it to general service of process in any such
jurisdiction where it is not then so subject; and (vi) furnish to the Recipients, as soon as
available, copies of any such Registration Statement and each preliminary and final prospectus, or
supplement or amendment required to be prepared with respect thereto, all in such quantities as
they may from time to time reasonably request.
(c) Parent shall pay all expenses incident to the performance of or compliance with this
Section 2, including, without limitation, all registration, filing and Financial Industry
Regulatory Authority (formerly the “NASD”) fees, all fees and expenses of complying with securities
or blue sky laws of any jurisdiction pursuant to clause 2(b)(v), all word processing, duplicating
and printing expenses, messenger and delivery expenses, the fees and disbursements of counsel for
Parent and one counsel for the Recipients as a group (as selected by a majority in interest of the
Recipients who participate in the registration), and expenses for any audits incident to or
required by any such registration. Each Recipient shall pay the underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of such Recipient’s Registrable
Securities.
(d) Each Recipient included in any Registration Statement will furnish to Parent such
information regarding such Recipient and the distribution proposed by such Recipient as Parent may
reasonably request.
(e) Parent shall use commercially reasonable efforts to cause the shares of Earnout Stock
issued pursuant to this Agreement to be listed for trading on any securities exchange on which
Parent Common Stock is at the time listed for trading.
(f) Indemnification.
(i) Parent’s Indemnification of Recipients. To the extent permitted by law, the
Parent will indemnify each Recipient with respect to which registration, qualification or
compliance of Registrable Securities has been effected pursuant to this Section 2, and each
underwriter, if any, and each person who controls any underwriter, against all claims, losses,
damages or liabilities (or actions in respect thereof) arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact contained in any Registration Statement,
prospectus, offering circular, or other document incident to any such registration, qualification
or compliance, 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, or
any violation by the Parent of any rule or regulation promulgated under the Securities Act or
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or state or federal law
applicable to the Parent and relating to action or inaction required of the Parent in connection
with any such registration, qualification or compliance; and the Parent will reimburse each such
person for any legal and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, however, that the indemnity
contained in this Section 2(f)(i) shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent of the Parent
(which consent shall not unreasonably be withheld); and provided, further, that the Parent 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 upon (A) any untrue statement or omission based upon written information
furnished to the Parent by such Recipient, underwriter, or controlling person and stated to be for
use in connection with the offering of securities of the Parent, (B) any violation by such
Recipient of any rule or regulation promulgated under the Securities Act or Exchange Act or state
or federal law applicable to such Recipient or (C) such Recipient’s willful misconduct or fraud.
(ii) Recipient’s Indemnification of Parent. To the extent permitted by law, each
Recipient will, if Registrable Securities held by such Recipient are included in the securities as
to which such registration, qualification or compliance is being effected pursuant to this Section
2, indemnify the Parent, each of its directors and officers, each underwriter, if any, of the
Parent’s securities covered by such a Registration Statement, each person who controls the Parent
or such underwriter within the meaning of the Securities Act, and each other such Recipient,
against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of
or based upon any untrue statement (or alleged untrue statement) of a material fact about such
Recipient or about the sale by such Recipient of such Recipient’s Registrable Securities that may
be contained in any such Registration Statement, prospectus, offering circular or other document
incident to such registration, qualification or compliance, or any omission (or alleged omission)
to state therein a material fact about such Recipient or about the sale by such Recipient of such
Recipient’s Registrable Securities that may be required to be stated therein or necessary to make
the statements therein not misleading but only, in the case of statements, to the extent that such
untrue statement is contained in any information or affidavit furnished in writing by such
Recipient to the Parent with authorization by such Recipient to use such information or affidavit
in connection with such Registration Statement, prospectus, offering circular or other document, as
the case may be, any violation by such Recipient of any rule or regulation promulgated under the
Securities Act or Exchange Act or state or federal law applicable to such Recipient and relating to
action or inaction required of such Recipient in connection with any such registration,
qualification or compliance or such Recipient’s willful misconduct or fraud; and will reimburse
each such person for any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action; provided, however,
that the indemnity contained in this Section 2(f)(ii) shall not apply to amounts paid in settlement
of any such claim, loss, damage, liability or action if settlement is effected without the consent
of such Recipient (which consent shall not unreasonably be withheld); and provided, further, that
each Recipient’s liability under this Section 2(f)(ii) shall be several, and not joint with other
Recipients or holders, and shall not exceed such Recipient’s net proceeds from the offering of
securities made in connection with such registration.
(iii) Indemnification Procedure. Promptly after receipt by an indemnified party of
notice of the commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 2(f), notify the
indemnifying party in writing of the commencement thereof and generally summarize such action. The
indemnifying party shall have the right to participate in and to assume the defense of such action
and to select counsel for the defense of such action with the approval of any parties entitled to
indemnification, which approval shall not be unreasonably withheld; provided, however, that if
either party reasonably determines that there may be a conflict between the position of the
indemnifying party and the indemnified party in conducting the defense of such action by reason of
recognized claims for indemnity under this Section 2(f), then counsel for such party shall be
entitled to conduct the defense to the extent reasonably determined by such counsel to be necessary
to protect the interest of such party. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to the ability of the indemnifying party to defend
such action, shall relieve such indemnifying party, to the extent so prejudiced, of any liability
to the indemnified party under this Section 2(f).
(iv) Contribution. If the indemnification provided for in this Section 2(f) is held
by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any
loss, liability, claim, damage or expense referred to herein, 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 loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements, actions or
omissions that resulted in such loss, liability, claim, damage or expense as well as any other
relevant equitable considerations; provided that, in no event shall any contribution by a Recipient
under this Section 2(f) exceed the net proceeds from the relevant offering received by such
Recipient. The relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether an untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates 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.
3. Notices. All notices, requests, demands, claims and other communications required
or permitted hereunder shall be duly given only if made in writing and personally delivered, mailed
by first class, certified or registered mail, postage prepaid, sent by a major national delivery
service, or sent by telecopier (if confirmation of successful transmission is obtained). Any such
communications shall be effective (i) upon receipt, if personally delivered, (ii) on the fifth day
following the date of mailing, postage prepaid, if mailed, (iii) on the day of delivery if sent by
major national delivery service, or (iv) at the time transmission to the recipient’s telecopier is
completed (as shown by such confirmation of transmission), if sent by telecopier. Any such
communication shall be addressed to the parties at the following addresses (or at such other
address for a party as such party shall specify by like notice):
(a) if to Parent:
(b) if to a Recipient, as set forth on such Recipient’s signature
page hereto.
4. Survival of Terms. This Agreement shall apply to and bind each Recipient and
Parent and their respective permitted assignees and transferees, heirs, legatees, executors,
administrators and legal successors.
5. Tax Matters. Each Recipient represents that he or she has reviewed with his or her
own tax advisors the federal, state, local and foreign tax consequences of the transactions
contemplated by the Merger Agreement and this Agreement and any receipt of amounts hereunder and
thereunder. Each Recipient is relying solely on such advisors and not on any statements or
representations of Parent or any of its agents. Each Recipient understands that he or she (and not
Parent) shall be responsible for his or her own tax liability that may arise as a result of the
transactions contemplated by the Merger Agreement and this Agreement and any receipt of funds
hereunder and thereunder.
6. Withholding. Notwithstanding anything to the contrary in this Agreement, Parent
shall be entitled to require (and may compel) payment to Parent or any of its subsidiaries in cash,
by deduction from other compensation payable to a Recipient, or by reduction of reduction of
Earnout Stock issuable to a Recipient (valued at the Fair Market Value), of any sums required by
federal, state or local tax law to be withheld with respect to the execution of this Agreement or
the issuance of the Earnout Stock. Parent shall not be obligated to deliver any certificate
representing shares of Earnout Stock issuable to a Recipient unless and until such Recipient shall
have paid or otherwise satisfied in full the amount of all federal, state and local taxes
applicable to the taxable income of the Recipient resulting from the issuance of the Earnout Stock.
7. Amendments. Any term of this Agreement may be amended only with the written
consent of the Parent and Recipients holding ninety percent (90%) in interest of Earnout Stock
issuable hereunder. Any amendment or waiver effected in accordance with this Section 7 shall be
binding upon each Recipient and the Company.
8. [Reserved.]
9. Severability. In the event that any one or more of the terms or provisions
contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect any other term or
provision of this Agreement, and the parties to this Agreement shall use their commercially
reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into
this Agreement which, insofar as practicable, implement the purposes and intent of this Agreement.
Any term or provision of this Agreement held invalid or unenforceable only in part, degree or
within certain jurisdictions shall remain in full force and effect to the extent not held invalid
or unenforceable to the extent consistent with the intent of the parties as reflected by this
Agreement.
10. Entire Agreement. This Agreement and the Merger Agreement constitute the
entire agreement, and supersede all prior representations, warranties, agreements and
understandings, both written and oral, among the parties with respect to the subject matter hereof
and thereof.
11. Counterparts. This Agreement may be executed in one or more counterparts, all of
which constitute a single agreement, and shall become effective when one or more counterparts has
been signed by each of the parties and delivered to the other parties.
12. Rules of Construction. The parties hereto agree that they have been represented
by counsel during the negotiation and execution of this Agreement and therefore waive the
application of any law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such agreement or
document.
13. RECIPIENT REVIEW. EACH RECIPIENT REPRESENTS THAT HE OR SHE HAS READ THIS
AGREEMENT, HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THE PREPARATION OF THIS AGREEMENT,
AND IS FAMILIAR WITH ITS TERMS AND PROVISIONS. EACH RECIPIENT FURTHER REPRESENTS THAT HE OR SHE
HAS RECEIVED AND HAD A REASONABLE OPPORTUNITY TO REVIEW CERTAIN OF THE PARENT’S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION AND CERTAIN OTHER MATERIALS FURNISHED BY PARENT TO THE
RECIPIENT, INCLUDING, WITHOUT LIMITATION, PARENT’S MOST RECENT ANNUAL REPORT ON FORM 10-K.
14. Assignment. A Recipient’s rights under this Agreement shall not be assignable by
such Recipient, other than by will or the laws of descent and distribution, and shall not be
subject to attachment, lien, levy, or other creditors’ rights under state or Federal law.
15. Beneficiary Designation. Each Recipient may designate on a form satisfactory to
Parent one or more beneficiaries to receive any payments which may become payable hereunder in the
event of the Recipient’s death (“Beneficiary Designation”). A Beneficiary Designation may
be changed by a Recipient at any time upon written notice to Parent. If a Recipient shall have
made more than one Beneficiary Designation, the Beneficiary Designation most recently filed with
Parent prior to the time of the Recipient’s death shall govern. If any amounts under this
Agreement become payable following a Recipient’s death at a time when no Beneficiary Designation is
applicable, such payments shall be made in a lump sum:
(a) to the Recipient’s then living spouse, if any;
(b) if none, then to such person or persons, including the Recipient’s estate, as the
Recipient may designate under his or her last will, making specific reference hereto; or
(c) if the Recipient is not survived by a spouse or shall fail to so designate such person or
persons by will, then such payments shall be made to the then living children of the Recipient, if
any, in equal shares; and
(d) if none, then in one lump sum to the Recipient’s estate.
16. Governing Law. To the extent not superseded by the laws of the United States,
this Agreement will be governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws. Each party to this Agreement
irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising
out of this Agreement shall be brought in any state court of general jurisdiction located in New
York, New York (or, if no such court has jurisdiction or accepts jurisdiction, in any United States
District Court located in New York, New York); (ii) consents to the jurisdiction of any such court
in any such suit, action or proceeding; and (iii) waives any objection that such party may have to
the laying of venue of any such suit, action or proceeding in any such court. Each of the parties
to this Agreement hereby agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each party to this Agreement hereby irrevocably consents to service of
process in the manner provided for notices in Section 3. Nothing in this Agreement shall affect
the right of any party to this Agreement to serve process in any other manner permitted by
applicable law. A party prevailing in any suit, action or other legal proceeding arising out of
this Agreement shall have such party’s reasonable attorneys fees and other legal fees paid by the
non-prevailing party or parties, as the case may be. The prevailing party shall be reimbursed for
such fees within forty-five (45) days following any such award, but in no event later than the last
day of the prevailing party’s taxable year following the taxable year in which the fees were
incurred. The parties’ obligations pursuant to the two preceding sentences of this Section 16
shall terminate on the tenth (10th) anniversary of the date hereof.
17. ERISA. To the extent this Agreement is subject to ERISA, this Agreement is
intended to be unfunded and maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA. This Agreement shall be administered and interpreted to
the extent possible in a manner consistent with that intent.
18. Funding. No provision of this Agreement shall require Parent, for purposes of
satisfying any obligations under this Agreement, to purchase assets or place any assets in a trust
or other entity to which contributions are made or otherwise to segregate any assets, nor shall
Parent maintain separate bank accounts, books, records or other evidence of the existence of a
segregated or separately maintained or administered fund for such purposes. Recipients shall have
no rights under this Agreement other than as unsecured general creditors of Parent or its
successors.
19. Section 409A; No Right to Continued Employment.
(a) Section 409A of the Code. This Agreement shall be interpreted, construed and
administered in a manner that satisfies the requirements of Section 409A of the Code.
Notwithstanding anything to the contrary in this Agreement, the parties acknowledge and agree that
any payment to be made to a Recipient pursuant to this Agreement shall be delayed to the extent
necessary for this Agreement and such payment or benefit to comply with Section 409A of the Code.
Neither the time nor form of payments under this Agreement may be changed, including, without
limitation, any acceleration of such payments, except as may be permitted by the Board of Directors
of Parent (the “Board”) in accordance with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and the Treasury Regulations and Internal Revenue Service
guidance thereunder.
(b) No Right to Continued Employment. The provisions of this Section 19(b) shall
apply only to Recipients who are employees of Parent, the Company, or any subsidiary of Parent or
the Company. Subject to the terms of any employment agreement that may exist
between Parent, the Company, or any of their respective subsidiaries, on the one hand, and a
Recipient, on the other hand, Parent, the Company, each such subsidiary, and each Recipient each
have an absolute and unrestricted right to terminate such Recipient’s employment with Parent, the
Company, or such subsidiary at any time for any reason whatsoever, with or without cause, and
nothing in this Agreement shall entitle a Recipient to any continued employment with Parent, the
Company, or such subsidiary.
20. Effectiveness. This Agreement shall be effective as of the Closing.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereby execute and
deliver this Registration Rights and Earnout Stock Agreement, on and as of the date first set forth
above.
| BLACKBOARD INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| RECIPIENTS: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Address: | ||||
| Phone: | ||||
| Amount of Earnout Stock: | ||||
