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EXHIBIT 10.17
NETLIBRARY, INC.
AMENDMENT TO SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS AMENDMENT TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT (this "Agreement") is entered into as of January 18, 2000, by and
among NETLIBRARY, INC., a Delaware corporation (the "Company"), the purchasers
of the Company's Series A Preferred Stock, $.001 par value per share ("Series A
Stock"), the purchasers of the Company's Series B Preferred Stock, $.001 par
value per share ("Series B Stock"), the purchasers of the Company's Series C
Preferred Stock, $.001 par value per share ("Series C Stock") and the Purchasers
of the Company's Series D Preferred Stock, $.001 par value per share ("Series D
Stock") set forth on Exhibit A hereto, as it may be amended from time to time.
The purchasers of the Series A Stock, Series B Stock, Series C Stock and Series
D Stock and (as applicable) their permitted transferees shall be referred to
hereinafter as the "Investors" and each individually as an "Investor."
RECITALS
WHEREAS, the Company and the purchasers of the Series A Stock, the
Series B Stock and the Series C Stock are parties to the Second Amended and
Restated Investors' Rights Agreement dated as of October 8, 1999 (the
"Agreement"), setting forth certain agreements concerning registration rights,
information rights and other matters; and
WHEREAS, the Company and certain persons have entered into the Series D
Preferred Stock Purchase Agreement dated as of January 18, 2000 (the "Series D
Purchase Agreement") pursuant to which the Company has agreed to sell shares of
its Series D Stock (the "Series D Financing"); and
WHEREAS, in connection with the consummation of the Series D Financing
and as a condition of entering into the Series D Purchase Agreement, the Company
and the Investors desire to amend the Agreement as set forth below. Certain
capitalized terms used in this Amendment are defined in the Agreement and used
with the same meaning below.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties mutually agree that the Agreement is and shall be amended
as follows:
1. In Section 1.1 of the Agreement, the term "Shares" shall be amended
in its entirety to read as follows:
SHARES shall mean the Company's Series A Stock issued
pursuant to the Series A Purchase Agreement, the Series B
Stock issued pursuant to the Series B Purchase Agreement, the
Series C Stock issued pursuant to the Series C Purchase
Agreement, and the Series D Stock issued pursuant to the
Series D Purchase Agreement
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and held by the Investors listed on Exhibit A hereto and their
permitted assigns.
2. Section 2.11 of the Agreement shall be amended in its entirety to
read as follows:
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision
of this Section 2 may be amended and the observance thereof
may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the
written consent of the Company and Investors holding at least
two-thirds (2/3) of the Shares or Registrable Securities, as
applicable, then outstanding; provided, that if an amendment
does not treat all such Investors in the same fashion, it
shall not be effective against any such Investors who are
materially adversely affected (relative to other such
Investors) by the amendment unless such amendment is approved
in writing by such adversely affected Investors. Any amendment
or waiver effected in accordance with this Section 2.11 shall
be binding upon each Investor and the Company. By acceptance
of any benefits under this Section 2, Investors hereby agree
to be bound by the provisions hereunder.
3. There shall be added to the end of Section 2.12, a new sentence to
read as follows:
The Investors hereby consent to and approve registration
rights, granted pari passu with the Series B Stock, the Series
C Stock and the Series D Stock, respectively, to Silicon
Valley Bank with respect to 20,625 shares of the Company's
Series A Preferred Stock subject to the Warrant Agreement
dated January 8, 1999 , and to Imperial Bank with respect to
24,582 shares of the Company's Common Stock granted pursuant
to the Warrant Agreement dated October 1999.
4. Section 3.1(f) shall be modified so that the phrase "390,000 or more
Shares" shall read "390,000 or more Shares in the case of Series A Stock, Series
B Stock or Series C Stock, and 280,000 Shares in the case of Series D Stock."
5. Section 3.5 shall be amended so as to eliminate the requirement that
specific directors approve changes to the vesting schedule for stock options, by
deleting the following provision from the first four lines thereof: "(including
at least one Series A Preferred Designee and one Series B Preferred Designee (as
defined in the Second Amended and Restated Stockholders Agreement dated as of
the date hereof, by and among the Company, the Investors and certain
stockholders of the Company))."
6. In Section 3.10, the reference to the Company's Third Amended and
Restated Certificate of Incorporation shall be modified to refer to the
Company's Fourth Amended and Restated Certificate of Incorporation.
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7. In Section 3.14, the introductory language preceding paragraph (a)
thereof shall be amended in its entirety to read as follows: "So long as any
Series A Stock or Series B Stock or Series C Stock or Series D Stock remains
outstanding, the Company shall not, without the prior written consent of at
least a majority of the outstanding Series A Stock, Series B Stock, Series C
Stock and Series D Stock (voting collectively)."
8. In Section 3.16, the words "at least 390,000 shares of either Series
A Stock, Series B Stock or Series C Stock" (in the second line thereof) shall be
replaced by the words "at least 390,000 shares of either Series A Stock, Series
B Stock, Series C Stock, or at least 280,000 Shares of Series D Stock." In
addition, Section 3.16 shall be interpreted so as not to grant visitation rights
to any Investor who at that time, together with its Affiliates, has the right to
appoint, or to control the appointment of, a member of the Company's Board of
Directors.
9. Section 4.4 shall be amended in its entirety to read as follows:
4.4 TERMINATION AND WAIVER OF PREEMPTIVE RIGHTS. The
preemptive rights established by this Section 4 shall
terminate upon the closing of the Company's Qualified Public
Offering. Notwithstanding the foregoing, the preemptive rights
established by this Section 4 shall terminate as to any
Investor, and shall not apply to any Investor, who, together
with any Affiliates, holds less than 500,000 Shares in the
case of an Investor who holds Series A Stock or Series B
Stock, or 390,000 Shares in the case of an Investor who holds
Series C Stock, or 280,000 Shares in the case of an Investor
who holds Series D Stock (in each case, as adjusted for stock
splits, recapitalizations and the like).
10. Section 5.4 shall be amended by replacing the phrase "and the
Series C Purchase Agreement (to the extent applicable) and the Second Amended
and Restated Stockholders Agreement" with the following phrase: ", the Series C
Purchase Agreement (to the extent applicable) and the Series D Purchase
Agreement (to the extent applicable) and the Second Amended and Restated
Stockholders Agreement (as amended by the Amendment thereto dated January 18,
2000)."
11. Section 5.6 shall be amended in its entirety to read as follows:
5.6 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this
Agreement may be amended or modified only upon the written consent
of the Company and, as to any Shares representing a particular
class or series of the Company's stock, by the holders of at least
two-thirds (2/3) of such class or series.
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(b) Except as otherwise expressly provided, the
obligations of the Company and the rights of the Investors under
this Agreement may be waived only with the written consent of the
Investors holding at least two-thirds (2/3) of the Shares or
Registrable Securities, as applicable.
(c) Notwithstanding the foregoing, this Agreement
may be amended in connection with the closing of any purchase of
the Company's Series D Preferred Stock so as to add any such
purchaser of the Series D Preferred Stock as a party hereto, and as
an Investor as defined above, by having each such purchaser execute
a counterpart copy of this Agreement and modifying Exhibit A to
include such person. All shares of Series D Preferred Stock
acquired by any such purchaser shall be Shares under this
Agreement.
12. WAIVER AND CONSENT. Subject to the terms of the Series D Purchase
Agreement, each Investor who is a party to the Investors' Rights Agreement
hereby waives any rights or notice it may have or be entitled to thereunder in
connection with the Series D Financing (including any rights to participate in
the Series D Financing), grants any consent required by the Investors' Rights
Agreement with respect to the Series D Financing, and waives any breach or
default as may have occurred under the Investors' Rights Agreement.
Except as specifically set forth above, the Agreement remains in
effect, without modification.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT TO SECOND
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT as of the date set forth in the
first paragraph hereof.
COMPANY:
NETLIBRARY, INC.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
After October 31, 1999:
By: /s/ XXXXXXX X. XXXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
INVESTORS:
ABC-CLIO ANSCHUTZ FAMILY
INVESTMENT COMPANY LLC
By: Anschutz Company, its Manager
By: /s/ XXXXXX X. XXXXX By: /s/ XXXXX XXXXXXXXX
--------------------------------- ---------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx Xxxxxxxxx
Title: CEO Title: Vice President
Date: January 10, 2000 Date: January __, 2000
BOWANA FOUNDATION BCI INVESTMENTS II, LLC
By: /s/ XXXX XXXXXXX By: /s/ XXXXXXX X. XXXXXX
--------------------------------- ---------------------------------
Name: Xxxx Xxxxxxx Name: Xxxxxxx X. XxXxxx
Title: VP Title: Manager/Member
Date: January __, 2000 Date: January __, 2000
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XXXX CAPITAL FUND VI, L.P. PEP INVESTMENTS PTY LTD
By: Xxxx Capital Partners VI, L.P., By: Xxxx Capital, Inc.,
its General Partner its attorney-in-fact
By: Xxxx Capital Investors VI, Inc., By: /s/ XXXXXX XXXXXXXXXX
its General Partner ------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director
Date: January __, 2000
By: /s/ XXXXXX XXXXXXXXXX
-------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director
Date: January __, 2000
BROOKSIDE CAPITAL PARTNERS SANKATY HIGH YIELD ASSET
FUND, L.P. PARTNERS, L.P.
By: /s/ XXXXXXX XXXXXXXX By: /s/ XXXXXX XXXXXXXXXX
----------------------------- ------------------------------
Name: Xxxxxxx Xxxxxxxx Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director Title: Managing Director
Date: January __, 2000 Date: January __, 2000
BCIP ASSOCIATES II BCIP ASSOCIATES II-B
By: Xxxx Capital, Inc., By: Xxxx Capital, Inc.,
its Managing Partner its Managing Partner
By: /s/ XXXXXX XXXXXXXXXX By: /s/ XXXXXX XXXXXXXXXX
------------------------- --------------------------
Name: Xxxxxx Xxxxxxxxxx Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director Title:
Date: January __, 2000 Date: January __, 2000
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XXXXXX NEW GENERATION FUND
A SERIES OF THE XXXXXX INVESTMENT
PORTFOLIO OF TRUSTS
By: /s/ XXXX X. XXXXXXXXXX
-----------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
Date: January 25, 2000
COMCAST INTERACTIVE CAPITAL, L.P.
By: CIC Partners, LP, its general partner
By: /s/ XXXXX X. XXXXXXX
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Date: January __, 2000
COVESTCO-MEDEURA, LLC UNIVERSITY OF COLORADO FOUNDATION
INC.
By: /s/ XXXXX XXXXXX By: /s/ XXX XXXXXX
----------------------------- ------------------------------
Name: Xxxxx Xxxxxx Name: Xxx Xxxxxx
Title: Director Title: CFO, Treasurer
Date: January 14, 2000 Date: Xxxxx 0, 0000
XXX XXXXXXX XXXX. XXX ESC II, L.P.
By: /s/ XXXXXX XXXXX By: /s/ XXXXXX XXXXX
----------------------------- ------------------------------
Name: Xxxxxx Xxxxx Name: Xxxxxx Xxxxx
Title: Vice President Title: Attorney-in-Fact
Date: January 11, 2000 Date: January 11, 2000
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EBSCO INDUSTRIES, INC. EPIXTECH, INC. (FORMERLY KNOW
AS AMERITECH LIBRARY SERVICES)
By: /s/ XXX XXXXXXX By: /s/ XXXX XXXXXX
----------------------------- ------------------------------
Name: Xxx Xxxxxxx Name: Xxxx Xxxxxx
Title: Vice President Title: President & CEO
Date: January 10, 2000 Date: January __, 2000
XXXXXXX CORPORATION HOUGHTON MIFFLIN
By: /s/ XXXXXXX X. XXXX By: /s/ XXXXX X. XXXXXXXXXX
----------------------------- ------------------------------
Name: Xxxxxxx X. Xxxx Name: Xxxxx X. Xxxxxxxxxx
Title: Chairman/CEO Title: Chairman, President & CEO
Date: January 11, 2000 Date: January 18, 2000
LDIG NL, INC. XXXXXX XXXXXX, INC.
By: /s/ XXXXX XXXXXXXXX By: /s/ XXXXX XXXXXX
----------------------------- ------------------------------
Name: Xxxxx Xxxxxxxxx Name: Xxxxx Xxxxxx
Title: VP. Business Development Title: COO
& Strategy Date: January 31, 2000
Date: March 3, 0000
XXXXXX XXXXXX XXXXXXXX XX XXXXXXXXX VENTURE PARTNERS
III, L.P.
By: Marquette III, L.L.C., its
general partner
By: /s/ XXXXXXX X. XXXXXXX By: /s/ XXXXX X. XXXX
----------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxx
Title: Managing Partner Title: Authorized Signatory
Date: January 11, 2000 Date: January __, 2000
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THE XXXXXX-XXXX
COMPANIES, INC. XXXXXX & SON LIMITED
By: /s/ XXXXXX X. XXXXXX By: /s/ XXX XXXXXXX
------------------------------ -------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxx Xxxxxxx
Title: Executive Vice President/CFO Title: Director/Secretary
Date: January 11, 2000 Date: January , 2000
--
PARTHENON INVESTORS, L.P. PCIP INVESTORS
By: Parthenon Investment Advisors, L.L.C.
its general partner
By: /s/ XXXX XXXXXXXXXX By: /s/ XXXX XXXXXXXXXX
------------------------------ -------------------------------
Name: Xxxx Xxxxxxxxxx Name: Xxxx Xxxxxxxxxx
Title: Managing Member Title: General Partner
Date: January 18, 2000 Date: January 18, 0000
XXXXX XXXXXX TRUST REPERTOIRE CAPITAL
VENTURES RLLLP
By: /s/ XXXXX X. XXXX By: /s/ XXXX XXXXXXXX
------------------------------ -------------------------------
Name: Xxxxx X. Xxxx Name: Xxxx Xxxxxxxx
Title: Trustee Title: General Partner
Date: January 11, 2000 Date: January , 2000
--
SEQUEL LIMITED PARTNERSHIP SEQUEL EURO LIMITED
PARTNERSHIP
By: Sequel Venture Partners, L.L.C., By: Sequel Venture Partners,
General Partner L.L.C., General Partner
By: /s/ XXXXXX X. WASHING By: /s/ XXXXXX X. WASHING
------------------------------ -------------------------------
Name: Xxxxxx X. Washing Name: Xxxxxx X. Washing
Title: General Partner Title: General Partner
Date: January 10, 2000 Date: January 10, 2000
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XXXXXXXX LIMITED PARTNERSHIP,
FLLLP
By: /s/ XXXXX X. XXXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: General Partner
Date: , 2000
------------------
SPROUT CAPITAL VIII, L.P. SPROUT VENTURE CAPITAL, L.P.
By: DLJ Capital Corp. By: DLJ Capital Corp.
Its: Managing General Partner Its: Managing General Partner
By: /s/ XXXXXX XXXXX By: /s/ XXXXXX XXXXX
------------------------------ -------------------------------
Name: Xxxxxx Xxxxx Name: Xxxxxx Xxxxx
Title: Vice President Title: Vice President
Date: January 11, 2000 Date: January 11, 0000
XXX XXXX XXXX FAMILY TRUST WORLD VENTURE PARTNERS, INC.
By: /s/ XXXXXX X. XXX By: /s/ XXXX XXXXXX
------------------------------ -------------------------------
Name: Xxxxxx X. Xxx Name: Xxxx Xxxxxx
Title: Trustee Title: Principal
Date: January 4, 2000 Date: January 20, 2000
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WPG NETWORKING FUND, LP WPG SOFTWARE FUND, LP
By: Xxxxx, Xxxx & Xxxxx, LLC, By: Xxxxx, Xxxx & Xxxxx, LLC,
its General Partner its General Partner
By: /s/ XXXXXXX XXXXXXX By: /s/ XXXXXXX XXXXXXX
-------------------------- ---------------------------
Member Member
Name: Xxxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxxx
Title: General Counsel & Title: General Counsel &
Managing Director Managing Director
Date: January , 2000 Date: January , 2000
-- --
WPG INSTITUTIONAL WPG INSTITUTIONAL
NETWORKING FUND, LP SOFTWARE FUND, LP
By: Xxxxx, Xxxx & Xxxxx, LLC, By: Xxxxx, Xxxx & Xxxxx, LLC,
its General Partner its General Partner
By: /s/ XXXXXXX XXXXXXX By: /s/ XXXXXXX XXXXXXX
-------------------------- ---------------------------
Member Member
Name: Xxxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxxx
Title: General Counsel & Title: General Counsel &
Managing Director Managing Director
Date: January , 2000 Date: January , 2000
-- --
WPG RAYTHEON WPG RAYTHEON
NETWORKING FUND, LP SOFTWARE FUND, LP
By: Xxxxx, Xxxx & Xxxxx, LLC, By: Xxxxx, Xxxx & Xxxxx, LLC,
its attorney-in-fact its attorney-in-fact
By: /s/ XXXXXXX XXXXXXX By: /s/ XXXXXXX XXXXXXX
-------------------------- ---------------------------
Member Member
Name: Xxxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxxx
Title: General Counsel & Title: General Counsel &
Managing Director Managing Director
Date: January , 2000 Date: January , 2000
--
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/x/ XXX XXXXX /s/ XXXXX XXXX
--------------------------------- ----------------------------------
XXX XXXXX XXXXX XXXX
/s/ XXX XXXXXXX /s/ XXXXXX XXXXXXX
--------------------------------- ----------------------------------
XXX XXXXXXX XXXXXX XXXXXXX
/s/ XXXXXX XXXX /s/ XXXXX XXXXXXXX
--------------------------------- ----------------------------------
XXXXXX XXXX XXXXX XXXXXXXX
/s/ XXX XXXX
---------------------------------
XXX XXXX
/s/ XXXXX X. XXXXXXXX /s/ XXXXX XXXXXXX
--------------------------------- ----------------------------------
XXXXX X. XXXXXXXX XXXXX XXXXXXX
/s/ XXXX XXXXXXX /s/ XXXXXXX XXXXXX
--------------------------------- ----------------------------------
XXXX XXXXXXX XXXXXXX XXXXXX
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/s/ R. XXXXXXX XXXXXXXX
---------------------------------
R. Xxxxxxx Xxxxxxxx
/s/ XXXXXX X. XXXXXXX, XX.
---------------------------------
Xxxxxx X. Xxxxxxx, Xx.
GRAND CENTRAL HOLDINGS, LLC
By: /s/ XXXXXX X. XXXXX, XX.
------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Member
GCH PEANUT PRESS, LLC
By: Grand Central Holdings, LLC,
Its Managing Member
By: /s/ XXXXXX X. XXXXX, XX.
------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Member
XXXXXX VENTURE PARTNERS, L.P.
By: Grand Central Holdings, LLC,
Holder of an irrevocable proxy
By: /s/ XXXXXX X. XXXXX, XX.
------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Member
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In addition to becoming a party to the Agreement, the undersigned consents to be
bound by the terms of the Second Amended and Restated Investors' Rights
Agreement.
/s/ XXX X. XXXXXXXXX
---------------------------------
XXX X. XXXXXXXXX
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