TRANSFER AND CONTRIBUTION AGREEMENT
Exhibit 10.42
This Transfer and Contribution Agreement (the “Agreement”) is entered into as
of the ___day of November, 2009 by and among Archipelago Learning, Inc., a Delaware corporation
(“ALI”), those holders of Class A Shares of Archipelago Learning Holdings, LLC, a Delaware
limited liability company (the “Company”), (the “Class A Shares”) listed on Exhibit
A as the Class A Shareholders (the “Class A Shareholders”), those holders of Class A-2
Shares of the Company (the “Class A-2 Shares”) listed on Exhibit B as the Class A-2
Shareholders (the “Class A-2 Shareholders”), those holders of Class B Shares of the Company
granted on May 22, 2007 (the “2007 Class B Shares”) listed on Exhibit C as the 2007 Class B
Shareholders (the “2007 Class B Shareholders”), those holders of Class B Shares of the
Company granted on May 7, 2008 (the “2008 Class B Shares”) listed on Exhibit D as the 2008
Class B Shareholders (the “2008 Class B Shareholders”), those holders of Class B Shares of
the Company granted on January 8, 2009 a portion of which have vested as of the date hereof (the
“2009 Class B Shares”) listed on Exhibit E as the 2009 Class B Shareholders (the “2009
Class B Shareholders”), those holders of Class B Shares of the Company granted on January 8,
2009 none of which have vested as of the date hereof (the “2009U Class B Shares”, and
together with the 2007 Class B Shares, the 2008 Class B Shares and the 2009 Class B Shares, the
“Class B Shares”) listed on Exhibit F as the 2009U Class B Shareholders (the “2009U
Class B Shareholders”, and together with the 2007 Class B Shareholders, the 2008 Class B
Shareholders and the 2009 Class B Shareholders, the “Class B Shareholders”), those holders
of Class C Shares of the Company (the “Class C Shares” and together with the Class A Shares
and the Class B Shares, the “Company Interests”) listed on Exhibit G as the Class C
Shareholders (the “Class C Shareholders”) and those holders of Class C Shares listed on
Exhibit H as the Executive Class C Shareholders (the “Executive Class C Shareholders”, and
together with the Class A Shareholders, the Class B Shareholders and the Class C Shareholders, the
“Sellers”).
RECITALS
Whereas, ALI was formed pursuant to the Delaware General Corporation Law on August 4,
2009;
Whereas, the Sellers are the beneficial and record owners of the Company Interests,
and each Seller owns the Company Interests set forth in the Company’s records;
Whereas, the Class A Shareholders desire to contribute their respective Company
Interests to ALI in exchange for shares of common stock of ALI, par value $0.001 per share (the
“Common Stock”), and ALI desires to accept such Company Interests and issue the Common
Stock to the Class A Shareholders in consideration for their Company Interests;
Whereas, the Class A-2 Shareholders desire to contribute their respective Company
Interests to ALI in exchange for shares of Common Stock, and ALI desires to accept such Company
Interests and issue the Common Stock to the Class A-2 Shareholders in consideration for their
Company Interests;
Whereas, the Class B Shareholders desire to contribute their respective Company
Interests to ALI in exchange for, based upon the vesting of such Company Interests, shares of
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Common Stock and / or shares of restricted Common Stock, subject to time-based vesting (the
“Time Based Restricted Common Stock”) in accordance with the form of agreement attached as
Exhibit I, and ALI desires to accept such Company Interests and issue the Common Stock and / or
Time Based Restricted Common Stock to the Class B Shareholders in consideration for their Company
Interests;
Whereas, the Class C Shareholders desire to contribute their respective Company
Interests to ALI in exchange for shares of Common Stock, and ALI desires to accept such Company
Interests and issue the Common Stock to the Class C Shareholders in consideration for their Company
Interests;
Whereas, the Executive Class C Shareholders desire to contribute their respective
Company Interests to ALI in exchange for shares of restricted common stock subject to vesting based
on, among other things, the cash returns to Providence Equity Partners V, L.P. (“PEP V LP”)
and Providence Equity Partners V-A L.P. (“PEP V-A LP” and together with PEP V LP, the
“Providence Stockholders”) in respect of the Common Stock held by the Providence
Stockholders (the “Cash Return Based Restricted Common Stock”, and together with the Common
Stock and the Time Based Restricted Common Stock, the “ALI Interests”) in accordance with
the form of agreement attached as Exhibit J (such forms attached as Exhibit I and Exhibit J,
collectively, the “Restricted Grant Agreements”), and ALI desires to accept such Company
Interests and issue the Cash Return Based Restricted Common Stock to the Executive Class C
Shareholders in consideration for their Company Interests;
Whereas, concurrently with the execution of this Agreement, the interests in
Providence Equity Partners V-A Study Island L.P. (the “Carry Partnership”) will be
transferred to ALI by way of a contribution of the general partnership interest held by the general
partner of the Carry Partnership to ALI and a merger of Providence Equity Partners V-A Study Island
L.L.C. with and into ALI with ALI being the surviving corporation in which ALI will issue shares of
Common Stock to PEP V-A LP;
Whereas, in accordance with Section 16.1 of the Second Amended and Restated Limited
Liability Company Agreement of the Company (the “LLC Agreement”), the Board of Managers of
the Company has reviewed the exchange of the Company Interests for the ALI Interests and has
determined that such exchange of interests is in the best interest of the Company; and
Whereas, the parties intend that this Agreement and the transactions contemplated
hereby shall become effective as of immediately prior to the closing of the Company’s initial
public offering (the “IPO”).
Now, Therefore, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Exchange of the Company Interests for the ALI Interests.
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(a) Each of the Class A Shareholders hereby transfers and contributes all of their respective
Class A Shares to ALI, and in exchange for such contribution, ALI hereby issues to each such Seller
0.1822617 shares of Common Stock for each Class A Share so transferred and contributed.
(b) Each of the Class A-2 Shareholders hereby transfers and contributes all of their
respective Class A-2 Shares to ALI, and in exchange for such contribution, ALI hereby issues to
each such Seller 0.3176184 shares of Common Stock for each Class A-2 Share so transferred and
contributed.
(c) Each of the 2007 Class B Shareholders hereby transfers and contributes all of their
respective 2007 Class B Shares to ALI, and in exchange for such contribution, ALI hereby issues to
each such Seller 0.1575176 shares of ALI Interests for each 2007 Class B Share so transferred and
contributed, 40% of which shall be shares of Common Stock and 60% shall be shares of Time Based
Restricted Common Stock.
(d) Each of the 2008 Class B Shareholders hereby transfers and contributes all of their
respective 2008 Class B Shares to ALI, and in exchange for such contribution, ALI hereby issues to
each such Seller 0.1481129 shares of ALI Interests for each 2008 Class B Share so transferred and
contributed, 20% of which shall be shares of Common Stock and 80% shall be shares of Time Based
Restricted Common Stock.
(e) Each of the 2009 Class B Shareholders hereby transfers and contributes all of their
respective 2009 Class B Shares to ALI, and in exchange for such contribution, ALI hereby issues to
each such Seller 0.1206981 shares of ALI Interests for each 2009 Class B Shares so transferred and
contributed, 20% of which shall be shares of Common Stock and 80% shall be shares of Time Based
Restricted Common Stock.
(f) Each of the 2009U Class B Shareholders hereby transfers and contributes all of their
respective 2009U Class B Shares to ALI, and in exchange for such contribution, ALI hereby issues to
each such Seller 0.1206981 shares of ALI Interests for each 2009U Vesting Class B Shares so
transferred and contributed, 100% of which shall be shares of Time Based Restricted Common Stock.
(g) Each of the Class C Shareholders hereby transfers and contributes all of their respective
Class C Shares to ALI, and in exchange for such contribution, ALI hereby issues to each such Seller
0.1526937 shares of Common Stock for each Class C Share so transferred and contributed.
(h) Each of the Executive Class C Shareholders hereby transfers and contributes all of their
respective Class C Shares to ALI, and in exchange for such contribution, ALI hereby issues to each
such Seller 0.1526937 shares of Cash Return Based Restricted Common Stock for each Class C Share so
transferred and contributed.
(i) All other existing agreements regarding the Company Interests are hereby terminated.
2. Limited Representations and Warranties; Waiver.
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(a) ALI hereby represents, to and for the benefit of the Sellers that:
(i) ALI is a corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
(ii) ALI has all requisite corporate power and authority to execute and deliver this Agreement
and the Restricted Grant Agreements, issue the ALI Interests and otherwise perform its obligations
hereunder. This Agreement and the Restricted Grant Agreements have been duly and validly executed
and delivered by ALI and (assuming the due authorization, execution and delivery by each Seller)
this Agreement and the Restricted Grant Agreements constitute the legal, valid and binding
obligation of ALI, enforceable against it in accordance with their terms.
(iii) None of the execution and delivery by ALI of this Agreement, the Restricted Grant
Agreements, the consummation by ALI of the transactions contemplated hereby, or compliance by ALI
with any of the provisions hereof does or will conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under: (i) any provision of the
certificate of incorporation or bylaws of ALI; (ii) any contract to which ALI is a party or by
which any of the properties or assets of ALI are bound; (iii) any order of any governmental
authority applicable to ALI or by which any of the properties or assets of ALI are bound; or (iv)
any applicable law.
(iv) No consent, waiver, approval, order, permit or authorization of, or declaration or filing
with, or notification to, any person or governmental authority is required on the part of ALI in
connection with the execution, delivery or performance by ALI of this Agreement, the Restricted
Grant Agreements, or the consummation by ALI of the transactions contemplated hereby.
(v) The ALI Interests, when issued in accordance with this Agreement, will be duly authorized
and validly issued, fully paid and non-assessable and will not have been issued in violation of any
purchase or call option, right of first refusal, subscription right, preemptive right or any
similar rights.
(b) Each Seller hereby represents, to and for the benefit of ALI, that:
(i) Such Seller is the record and beneficial owner of the Company Interests being contributed
and transferred hereunder, free and clear of (commensurate with the effectiveness of Section 1(f)
hereof) any liens, encumbrances, taxes, security interests, equities, claims or demands or any
restrictions on transfer.
(ii) Such Seller understands that the ALI Interests have not been, and will not be, registered
under the Securities Act or any state securities laws and are instead being offered, and will be
issued to such Seller, in reliance on an exemption from such registration requirements based on
representations made by such Seller to ALI herein. Such Seller is acquiring the ALI Interests for
its own account and not with a view to or for sale in connection with any public distribution of
ALI Interests. Such Seller understands that the certificate representing the ALI Interests will
contain appropriate legends reflecting the requirement that the
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ALI Interests not be resold by such Seller without registration under such laws or the
availability of an exemption from such registration.
(iii) Such Seller understands that the ALI Interests shall be subject to restrictions on
transfer imposed by (a) state and federal securities laws, (b) the Restricted Grant Agreements and
(c) the Stockholders Agreement dated as of the date hereof among the Company and certain Sellers,
as applicable. Such Seller further understands that the certificates representing the ALI
Interests will contain appropriate legends reflecting the foregoing applicable restrictions.
(iv) Such Seller is an “accredited investor” as that term is defined in Rule 501 of Regulation
D under the Securities Act.
(v) Such Seller has all requisite power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. This Agreement has been duly and validly executed and
delivered by such Seller and (assuming the due authorization, execution and delivery by ALI)
constitutes the legal, valid and binding obligation of such Seller, enforceable against him in
accordance with its terms.
(vi) None of the execution and delivery by such Seller of this Agreement, the consummation by
such Seller of the transactions contemplated hereby, or compliance by such Seller with any of the
provisions hereof does or will conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under: (a) any contract to which such Seller is a party
or by which any of the properties or assets of such Seller are bound; (b) any order of any
governmental authority applicable to such Seller or by which any of the properties or assets of
such Seller are bound; or (c) any applicable law.
(vii) No consent, waiver, approval, order, permit or authorization of, or declaration or
filing with, or notification to, any person or governmental authority is required on the part of
such Seller in connection with the execution, delivery or performance by Seller of this Agreement,
or the consummation by such Seller of the transactions contemplated hereby.
(c) The parties have made no representations of fact or law, and no warranty of any nature
whatsoever, in connection with the execution and delivery of this Agreement or any aspect of the
subject matter of this Agreement, except as expressly set forth in this Agreement.
(d) Each Seller hereby waives any rights such Seller has with respect to the Transfer of
Shares under Sections 9.7 and 9.8 of the LLC Agreement.
3. Miscellaneous.
(a) This Agreement constitutes the entire agreement of the parties with respect to the subject
matter thereof. All prior discussions, negotiations, and agreements (if any) are hereby expressly
merged herein.
(b) This Agreement may be amended or modified only by an instrument in writing duly executed
by the parties hereto.
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(c) 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.
(d) This Agreement and any claim, dispute, controversy or other matter arising out of or
related to this Agreement or the subject matter hereof shall be interpreted in accordance with, and
governed by, the laws of the State of Delaware without reference to the choice of law rules in
effect at any time in the State of Delaware.
[Signature pages follow]
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In Witness Whereof, the parties hereto have executed this Agreement as of the date
first above written.
| ARCHIPELAGO LEARNING, INC. | ||||
| By: | ||||
| Name: | Xxx XxXxxx | |||
| Title: | Chief Executive Officer | |||
| PROVIDENCE EQUITY PARTNERS V L.P. | ||||
| By: Providence Equity GP V L.P., Its General Partner |
||||
| By: Providence Equity Partners V L.L.C., Its General Partner |
||||
| By: | ||||
| Name: | Xxxx X. Xxxxx | |||
| Title: | Senior Managing Director | |||
| MHT-SI, L.P. | ||||
| By: MHT-SI GP, LLC, Its General Partner |
||||
| By: | ||||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Manager | |||
Signature Pages to Archipelago Learning, Inc. Transfer and Contribution Agreement
Signature Pages to Archipelago Learning, Inc. Transfer and Contribution Agreement
Signature Pages to Archipelago Learning, Inc. Transfer and Contribution Agreement
EXHIBIT A
CLASS A SHAREHOLDERS
Providence Equity Partners V, L.P.
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
MHT-SI, L.P.
Xxxxxx Xxxxxx
EXHIBIT B
CLASS A-2 SHAREHOLDERS
Xxxxxx Xxxxxx
EXHIBIT C
2007 CLASS B SHAREHOLDERS
XxXxxx, Xxx
Xxxxx, Xxxx
Xxxxxxxx, Cam
Xxxxxxx, Xxxxx
Xxxxxxx, Xxxx
Xxxxxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxxxxx, Xxxx
Xxxxxxxx, Xxxxx
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxxx
Xxxxxxx, Xxxxx
Xxxxxxxx, X X
EXHIBIT D
2008 CLASS B SHAREHOLDERS
Xxxxxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxxxxxx, Xxxxx
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxx
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx
Xxxxxx, Xxx
EXHIBIT E
2009 CLASS B SHAREHOLDERS
Xxxxxx, Xxx
EXHIBIT F
2009U CLASS B SHAREHOLDERS
Xxxxxx, Xxxxx
Xxxxxxx, Xxxxx
EXHIBIT G
CLASS C SHAREHOLDERS
Xxxxxxx, Xxxx
Xxxxxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxxxxx, Xxxx
Xxxxxxxx, Xxxxx
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxxx
Xxxxxxx, Xxxxx
Xxxxxxxx, X X
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx
Xxxxxx, Xxx
Xxxxxx, Xxxxx
Xxxxxxx, Xxxxx
EXHIBIT H
EXECUTIVE CLASS C SHAREHOLDERS
XxXxxx, Xxx
Xxxxx, Xxxx
Xxxxxxxx, Cam
Xxxxxxx, Xxxxx
Xxxxxx, Xxx
EXHIBIT I
TIME BASED RESTRICTED COMMON STOCK GRANT AGREEMENT
EXHIBIT J
CASH RETURN BASED RESTRICTED COMMON STOCK GRANT AGREEMENT
