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FIRST AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This First Amended and Restated Stockholders Agreement (the
"Agreement") is made as of August 5, 1999, by and among SkillSoft Corporation, a
Delaware corporation (the "Company"), Warburg, Xxxxxx Ventures, L.P., a Delaware
limited partnership ("Warburg"), SI Venture Fund, L.L.C., a Delaware limited
liability company ("Gartner") and the additional investors listed on the
signature pages hereto (the "Additional Investors") (Warburg, Gartner and the
Additional Investors are sometimes referred to herein as "Investors") and the
additional stockholders of the Company listed on the signature pages hereto (the
"Existing Stockholders"). The Investors and the Existing Stockholders are
sometimes referred to herein as "Stockholders."
RECITALS
A. Warburg, Gartner, the Additional Investors and the Company are
parties to that certain Second Amended and Restated Preferred Stock Purchase
Agreement dated as of August , 1999 (the "Purchase Agreement").
B. It is a condition precedent to the Investors' obligation to
make an investment pursuant to the Purchase Agreement that the Investors execute
and deliver this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for the other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. All terms defined in the Purchase Agreement and
not otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement.
(a) "Stock" shall mean shares of the Company's Common
Stock and/or Preferred Stock now owned or subsequently acquired by a
Stockholder.
(b) "Class A Common Stock" shall mean those shares of
Class A Common Stock authorized in the Company's Amended and Restated
Certificate of Incorporation.
(c) "Common Stock" shall mean the Company's issued and
outstanding Common Stock and Class A Common Stock and shares of Common Stock
issued or issuable upon conversion of the Company's outstanding Preferred Stock.
(d) "Common Stock Equivalents" shall mean Common Stock
outstanding and Common Stock issuable upon conversion of Preferred Stock.
(e) "Initial Public Offering" shall mean the Company's
sale of its Common Stock in a bona fide, firm commitment underwriting pursuant
to a registration statement filed pursuant to the Securities Act of 1933, as
amended, the public offering price of which is not less than $6.30 per share
(adjusted to reflect subsequent stock dividends, stock splits, combinations or
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other recapitalizations) and the proceeds thereof (net of underwriting
commissions and offering expenses) equal or exceed $20,000,000.
2. RIGHTS OF FIRST REFUSAL
(a) If a Stockholder (the "Transferring Stockholder")
proposes to sell or transfer any shares of Stock (other than in an Excluded
Transfer as defined in Section 2(e) hereof) whether or not for consideration,
then such Transferring Stockholder shall give written notice (the "Notice") to
the Company and the other Stockholders (the "Non-transferring Stockholders") at
least 60 days prior to the closing of such sale or transfer. Any person to whom
a sale or transfer is to be made must agree to subject the Stock to be
transferred to the provisions of this Agreement, and the Notice must so state.
The Notice shall describe in reasonable detail the proposed sale or transfer
including, without limitation, the number of shares of Stock to be sold or
transferred, the nature of such sale or transfer, the consideration to be paid,
the name and address of each prospective purchaser or transferee, and shall
include a copy of any purchase agreement or similar document entered into or to
be entered into. If the proposed transfer involves receipt of consideration
other than cash, the Notice shall include an appraisal of the fair market value
of the consideration to be received by an appraiser approved in writing by the
Company's Board of Directors, which approval shall not be unreasonably withheld.
(b) The Company shall have the right, exercisable upon
written notice to the Transferring Stockholder within 25 days after the
Transferring Stockholder gave Notice, to acquire on the same terms and
conditions as set forth in the Notice, all or any part of that number of shares
of Stock proposed to be sold. If the Notice specifies consideration other than
cash, the Company may elect to pay for any Stock so purchased in cash in an
amount equal to the total value of the consideration specified in the appraisal
equal to the fraction of the Stock included in the Notice which the Company
elects to purchase.
(c) If the Company fails to exercise in full its right of
first refusal pursuant to Section 2(b) above, the Transferring Stockholder shall
give prompt notice of such failure to the Non-transferring Stockholders. Each
Non-transferring Stockholder shall have ten (10) days from the date such notice
was given by the Transferring Stockholder to agree in writing to acquire such
Non-transferring Stockholder's pro rata share of the unclaimed unsold portion.
For purposes of this section, a Non-transferring Stockholder's pro rata share
shall be the ratio of (i) the number of Common Stock Equivalents held by such
Non-transferring Stockholder to (ii) the total number of Common Stock
Equivalents held by all Non-transferring Stockholders at the date of the Notice.
The Transferring Stockholder shall promptly, in writing, inform each
Non-transferring Stockholder which purchases all of such stockholder's pro rata
share (each a "Fully Exercising Stockholder") of any other Non-transferring
Stockholder's (each a "Non-fully Exercising Stockholder") failure to do
likewise. During the ten-day period after receipt of such information, each
Fully Exercising Stockholder shall be entitled to obtain that portion of the
aggregate of the pro rata shares not subscribed for by any Non-fully Exercising
Stockholder (the "Unsubscribed Shares") which is equal to proportion that the
pro rata share of such Fully Exercising Stockholder bears to the Unsubscribed
Shares.
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(d) The exercise or non-exercise by a Stockholder of a
right of first refusal shall not adversely affect such Stockholder's rights to
exercise rights of first refusal with respect to subsequent sales or transfers
of Stock pursuant to this Section 2.
(e) The following transfers are Excluded Transfers, if
(but only if) the prospective purchaser or transferee becomes a party to and
agrees to be bound by the terms of this Agreement:
(i) bona fide gifts to a member of a
Stockholder's immediate family or a trustee for a member of a
Stockholder's immediate family's trust;
(ii) transfers by will upon the death of a
Stockholder; and
(iii) transfers by a Stockholder to a Permitted
Transferee (as defined below) of such Stockholder or any
stockholder or partner of such a Permitted Transferee. A
"Permitted Transferee" shall mean (a) an "affiliate" as
defined under Rule 144(a) of the Rules and Regulations
promulgated under the Securities Act of 1933, as amended (an
"Affiliate"), (b) any other entity that is a parent or a
subsidiary of a Stockholder or a subsidiary of a Stockholder's
parent, and (c) any constituent partners of a Stockholder.
Transfers pursuant to a divorce or dissolution of the marriage of a
Stockholder shall be subject to the right of first refusal set forth in Sections
2(b) and 2(c) hereof, provided that the consideration to be received for the
purpose of Section 2(a) hereof shall be deemed to be the fair market value of
the securities to be transferred, determined by an appraiser selected in
accordance with Section 2(a).
A transferee receiving securities pursuant to subsection 2(e) shall be
deemed to be an "Existing Stockholder" if the transferor was an Existing
Stockholder or an "Investor" if the transferor was Warburg or an Investor, and
their securities shall be deemed to be owned by an Existing Stockholder or an
Investor, as the case may be, for all purposes of this Agreement.
3. CO-SALE RIGHTS.
(a) If a Transferring Stockholder proposes to sell or
transfer greater than 50% of the Common Stock Equivalents it holds to a third
party that is not an Affiliate, such Transferring Stockholder shall give written
notice (the "Notice") to the Company and the other Stockholders (the
"Nontransferring Stockholders") at least 60 days prior to the closing of such
sale or transfer. Any person to whom a sale or transfer is to be made must agree
to subject the Stock to be transferred to the provisions of this Agreement, and
the Notice must so state. The Notice shall describe in reasonable detail the
proposed sale or transfer including, without limitation, the number of shares of
Stock to be sold or transferred, the nature of such sale or transfer, the
consideration to be paid, the name and address of each prospective purchaser or
transferee, and shall include a copy of any purchase agreement or similar
document entered into or to be entered into. If the proposed transfer involves
receipt of consideration other than cash, the Notice shall include an appraisal
of the fair market value of the consideration to be received
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by an appraiser approved in writing by the Company's Board of Directors, which
approval shall not be unreasonably withheld.
(b) Each Existing Stockholder shall have the right,
exercisable upon written notice to the Transferring Stockholder within 25 days
after such Transferring Stockholder gave Notice pursuant to Section 3(a), to
participate in such sale or transfer of Stock on the same terms and conditions
as those offered to a Transferring Stockholder. To the extent that one or more
of the Existing Stockholders exercises such right of participation in accordance
with the terms and conditions set forth below, the number of shares of Stock
that a Transferring Stockholder may sell or transfer in the transaction shall be
correspondingly reduced. Existing Stockholders who exercise their right to
participate in a sale or transfer pursuant to this Section 3 are referred to
herein as "Participants."
(c) Each Participant may sell or transfer all or any part
of that number of shares of Common Stock Equivalents equal to the product
obtained by multiplying (i) the aggregate number of shares of Common Stock
Equivalents indicated in the Notice by (ii) a fraction, the numerator of which
is the number of Common Stock Equivalents owned by such Participant at the date
of the Notice and the denominator of which is the total number of Common Stock
Equivalents owned by the Stockholders at the date of the Notice.
(d) Each Participant shall effect such Participant's
participation in the sale or transfer by promptly delivering to the Transferring
Stockholder for transfer to the prospective purchaser or transferee one or more
certificates, properly endorsed for transfer, which represent:
(i) the number of shares of Common Stock which
such Participant elects to sell or transfer; or
(ii) the number of shares of Preferred Stock
which is at such time convertible into the number of shares of Common
Stock which such Participant elects to sell or transfer; provided,
however, that if the prospective purchaser or transferee objects to the
delivery of Preferred Stock in lieu of Common Stock, such Participant
shall convert such Preferred Stock into Common Stock and deliver Common
Stock as provided above. The Company agrees to make any such conversion
concurrent with the actual sale or transfer of such shares to the
purchaser or transferee.
4. DRAG-ALONG RIGHT.
If Warburg agrees to the bona fide sale of all Company securities it
holds (provided that such securities constitute at least 75% of the total number
of shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock that Warburg has purchased as of the date of such agreement) to
a third party that is not an Affiliate of Warburg and such sale is pursuant to a
transaction approved by the Board of Directors, each other Stockholder agrees
(i) to vote all shares held by it in favor of such sale and any transactions
related thereto; (ii) to sell pursuant to such transaction all Company
securities held by it, provided, however that, subject to compliance by the
Company with any applicable liquidation preferences in the Company's then
effective Articles of Incorporation, the consideration received by each other
Stockholder per Common
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Stock Equivalent held thereby is the same as the consideration received by
Warburg per Common Stock Equivalent held thereby, and the other terms of such
sale by each other Stockholder are substantially the same as the terms of the
sale by Warburg; and (iii) to take any such other actions, including the timely
delivery documents and instruments, as may be required to effect such sales. The
provisions of this Section 4 shall not be binding on a Stockholder unless either
(i) the price per share of Company Common Stock Equivalent to be sold by Warburg
pursuant to the transaction is the same as the price per share of the Company
Common Stock to be sold by the Stockholders (ii) the agreement by Warburg is
made not earlier than December 31, 1999; or (iii) the price per share of
Preferred Stock to be sold by Warburg is less than 50% of the original cost per
share to Warburg.
5. PROHIBITED TRANSFERS.
Any attempt by a Stockholder to transfer Stock in violation of Sections
2 or 3 hereof shall be void and the Company agrees it will not effect such a
transfer nor will it treat any alleged transferee as the holder of such Stock.
6. LEGENDS.
(a) Each certificate representing shares of Stock now or
hereafter owned by the Stockholders or issued to any person in connection with a
transfer pursuant to Section 2 or 3 hereof shall be endorsed with the following
legend:
"THE SALE, PLEDGE, HYPOTHECATION, TRANSFER OR VOTING OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN STOCKHOLDERS AGREEMENT DATED AS OF AUGUST , 1999 BY AND
BETWEEN THE CORPORATION, THE STOCKHOLDER, AND CERTAIN OTHER HOLDERS OF
STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
(b) The Stockholders agree that the Company may instruct
its transfer agent to impose transfer restrictions on the shares represented by
certificates bearing the legend referred to in Section 6(a) above to enforce the
provisions of this Agreement and the Company agrees to do so promptly. Such
legend shall be removed upon termination of this Agreement.
7. LOCK-UP AGREEMENT. In connection with the initial public
offering of the Company's securities, each Stockholder agrees, 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, grant any
option for the purchase of, or otherwise dispose of or hedge its ownership risks
of any securities of the Company (other than those included in the registration
or acquired in the public market after the initial public offering) 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 as may be requested by the underwriters,
provided that all officers and directors of the Company who own stock of or hold
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options to purchase stock of the Company also agree to such restrictions. Each
Stockholder agrees that the Company may instruct its transfer agent to place
stop-transfer notations in its records to enforce the provisions of this Section
7. Each Stockholder agrees to execute a reasonable and customary agreement
reflecting the foregoing as may be requested by the managing underwriters at the
time of the Company's initial underwritten public offering.
8. BOARD REPRESENTATION.
Each Stockholder shall vote all of the Common Stock
Equivalents over which such person has voting control (the "Voting Securities")
and shall take all other necessary and desirable actions within his or its
control (whether in his capacity as a stockholder, director, member of a board
committee or officer of the Company or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purpose of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary or desirable actions within its control
(including, without limitation, nominating candidates for election, calling
special board and stockholder meetings) so that:
(a) the following persons shall be elected to the Board
at each election of directors: (i) prior to the Company's Initial Public
Offering for so long as Warburg and its Affiliates (the "Warburg Entities")
together continue to own a majority of the Company's outstanding Series A
Preferred Stock (appropriately adjusted for any stock splits, consolidations and
the like) and (ii) following the Company's Initial Public Offering for so long
as the Warburg Entities hold at least 5% of the oustanding Common Stock of the
Company:
(i) two candidates designated by the Warburg
Entities provided, however, that the Warburg Entities shall have the
right to designate only one candidate if the number of directors
comprising the Board of Directors is set at less than four.
(b) the following persons shall be elected to the Board
at each election of directors from and after the date hereof and until the
closing of the Company's Initial Public Offering:
(i) Two candidates designated by the Existing
Stockholders.
(ii) For so long as the Warburg Entities together
continue to hold a majority of the Company's outstanding Series A
Preferred Stock (appropriately adjusted for any stock splits,
consolidations and the like), two candidates who are satisfactory to
the Warburg Entities and the Company.
(c) In the case of any vacancy in the office of a
director elected pursuant to this Section 8, a successor shall be elected to
hold office for the unexpired term of such director by the affirmative vote of
the holders of the shares entitled to vote for such director pursuant to this
Section 8, voting at a special meeting of such stockholders duly called for that
purpose or by the majority written consent of such shareholders.
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(d) The Company agrees to provide to each member of its
Board of Directors and to each individual having contractual observer rights on
the Board of Directors, in each case together with the investor with which such
member or observer is affiliated, customary indemnification for liabilities to
which such parties and affiliates may be subject by virtue of their status as a
director or alleged controlling person of the Company.
9. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by
and construed under the laws of the State of Delaware.
(b) AMENDMENT. Any provision may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only by the written consent of (i)
as to the Company, only by the Company, (ii) as to the Existing Stockholders, by
persons holding two thirds (2/3) or more in interest of the aggregate Common
Stock Equivalents held by the Existing Stockholders or their successors and
assignees, and (iii) as to the Warburg or its successors and assignees, by
persons holding two thirds (2/3) or more in interest of the Common Stock
Equivalents held by the Warburg or its successors and assignees; provided that
any Stockholder may waive any of its rights hereunder without obtaining the
consent of any other Stockholder. Any amendments or waivers effected in
accordance with clauses (i), (ii) or (iii) of this Subsection shall be binding
upon the Company, the Existing Stockholders, their successors and assigns, and
the Investor, its successors and assigns, respectively.
(c) ASSIGNMENT OF RIGHTS. This Agreement and the rights
and obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
The rights of the Stockholders hereunder are only assignable (i) by each
Stockholder to any other Stockholder, (ii) to a Permitted Transferee of a
Stockholder, or (iii) to an assignee or transferee who acquires at least 100,000
shares of Common Stock Equivalents held by a Stockholder.
(d) TERM. The rights of first refusal set forth in
Sections 2(b) and 2(c) hereof shall terminate upon the earlier of (i) the
closing of the Company's first bona fide firm commitment underwriting pursuant
to a registration statement filed pursuant to the Securities Act of 1933, the
public offering price of which is not less than $6.30 per share (as adjusted to
reflect stock splits and dividends, combinations, or other recapitalizations)
and the net Company proceeds is not less than $20,000,000 or (ii) the fifth
anniversary of the First Series A Closing.
(e) NOTICES. All notices, requests, consents and other
communications required or provided for herein to any party shall be deemed to
be sufficient if contained in a written instrument, and shall be deemed to be
given when: (1) delivered in person; (2) delivered by overnight receipted
courier service; or (3) sent by facsimile transmission with delivery confirmed
and followed by delivery pursuant to Subsection (2) hereof, which notice is
addressed to the party to be notified as set forth on the signature page hereof
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties hereto.
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(f) SEVERABILITY. In the event one or more of the
provisions of this Agreement should, for any reason, be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be enforceable to the maximum extent permitted by law.
(g) ATTORNEY FEES. In the event that any dispute among
the parties to this Agreement should result in litigation, the prevailing party
in such dispute shall be entitled to recover from the losing party all fees,
costs and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, the reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
(h) COUNTERPARTS; FACSIMILES. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Delivery
of an executed counterpart by confirmed facsimile transmission shall be
effective as delivery of an original.
(i) SPECIFIC PERFORMANCE. Each party to this Agreement
agrees and understands that an award damages are not an adequate remedy for
breach of this Agreement, and that an injunction (including a temporary or a
preliminary injunction) or judgment of specific performance constitutes
appropriate relief for breach of this Agreement.
(j) AMENDMENT AND RESTATEMENT OF STOCKHOLDERS AGREEMENT.
This Agreement hereby amends and restates in its entirety the Stockholders
Agreement dated January 8, 1998 between the Company, Warburg, Xxxxxx Ventures,
L.P. and SI Venture Fund, L.L.C.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
SKILLSOFT CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: Chief Executive Officer
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INVESTORS:
WARBURG, XXXXXX VENTURES L.P.
By: Warburg, Xxxxxx & Co.
Its: General Partner
By: Xxxxxxx Xxxxx
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Title: Partner
SI VENTURE FUND, L.L.C.
By: /s/ [Illegible]
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Name:
---------------------------------
Title: Manager
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/s/ Xxxxxxx X. Xxxxxxx III
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Xxxxxxx X. Xxxxxxx III
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxx Xxx
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Xxxxx Xxxx Yau
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EXISTING STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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