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Exhibit 10.8
SKILLSOFT CORPORATION
FIRST AMENDED AND RESTATED
REGISTRATION AND INVESTOR RIGHTS AGREEMENT
This First Amended and Restated Registration and Investor Rights
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 hereinafter referred to
together as "Investors").
RECITALS
A. The Investors and the Company are parties to the Second Amended and
Restated Preferred Stock Purchase Agreement dated as of August 5, 1999 (the
"Purchase Agreement").
B. The Company desires to grant, and the Investors desire to be
granted, the rights created herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, all parties hereto agree as follows:
1. Certain Definitions. All capitalized terms used and not otherwise
defined herein shall have the meanings given them in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following respective
meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Conversion Stock" means the Common Stock issued or issuable
pursuant to conversion of the Preferred Stock.
"Holder" shall mean (i) the Investors and (ii) any person holding
Registrable Securities to whom the rights under this Agreement have been
transferred in accordance with Section 5.9 hereof.
"Initiating Holders" shall mean, prior to the Company's Initial
Public Offering, any Holders who in the aggregate hold not less than 50% of the
Registrable Securities, and after the Company's Initial Public Offering, any
Holders who in the aggregate hold Registrable Securities with market value of at
least $10.0 million.
"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
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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 other recapitalizations) and the proceeds thereof (net
of underwriting commissions and offering expenses) equal or exceed $20,000,000.
"Preferred Stock" shall mean the Series A, Series B and Series C
Preferred Stock of the Company issued or issuable to the Investors pursuant to
the Purchase Agreement.
"Registrable Securities" means the Conversion Stock and any Common
Stock of the Company issued or issuable in respect of the Conversion Stock upon
any stock split, dividend, recapitalization, or similar event, or any Common
Stock otherwise issuable with respect to the Conversion Stock; provided,
however, that shares of Conversion Stock or other securities shall only be
treated as Registrable Securities if and so long as they have not been (a) sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (b) sold in a single transaction exempt from
the registration and prospectus delivery requirements of the Securities Act, so
that all transfer restrictions and restrictive legends with respect thereto are
removed prior to any such sale.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 5.1, 5.2 and
5.3 hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company) and the fees and disbursements of one counsel for all Holders.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and, except as set forth under "Registration Expenses," all fees and
disbursements of counsel for any Holder.
2. Restrictions on Transferability. The Preferred Stock, the Conversion
Stock and any other securities issued in respect of the Preferred Stock or the
Conversion Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event shall not be sold,
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assigned, transferred or pledged except upon the conditions specified in this
Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act. The Investor will cause any proposed
purchaser, assignee, transferee, or pledgee of any such shares held by the
Investors to agree to take and hold such securities subject to the provisions
and upon the conditions specified in this Agreement.
3. Restrictive Legend. Each certificate representing (i) the Preferred
Stock, (ii) the Conversion Stock, and (iii) any other securities issued in
respect of the Preferred Stock or the Conversion Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions of Section 4 below) be stamped or
otherwise imprinted with legends in substantially the following form (in
addition to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.
COPIES OF THE AGREEMENT RESTRICTING THE TRANSFER OF
THESE SHARES MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE CORPORATION.
The Investors and/or Holder consents to the Company making a notation
on its records and giving instructions to any transfer agent of the Preferred
Stock or the Common Stock in order to implement the restrictions on transfer
established in this Agreement.
4. Notice of Proposed Transfer. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership, (ii) in transactions
involving the distribution without consideration of Restricted Securities by the
Investors to any of their partners, or retired partners, or to the estate of any
of their partners or retired partners, (iii) in transactions involving the
transfer without consideration of Restricted Securities by the Investors during
their lifetime by way of gift or on death by will or intestacy, (iv) in
transactions involving the transfer or distribution of Restricted Securities by
a corporation to any subsidiary, parent or affiliated corporation of such
corporation, or (v) in transactions involving the distribution without
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consideration of Restricted Securities by Investor to any of its stockholders,
or (vi) in transactions in compliance with Rule 144), unless there is in effect
a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company addressed to the Company, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear, except if such transfer is made pursuant to Rule 144,
the appropriate restrictive legend set forth in Section 3 above, except that
such certificate shall not bear such restrictive legend if, in the opinion of
counsel for such holder and the Company, such legend is not required in order to
establish compliance with any provision of the Securities Act.
5. Registration.
5.1 Demand Registration.
(a) Demand for Registration. In case the Company
shall receive from Initiating Holders a written request that the Company effect
any registration, qualification or compliance with respect to not less than
thirty (30) percent of the Registrable Securities, the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best
efforts to effect such registration, qualification or compliance (including,
without limitation, appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable regulations
issued under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within 20 days after receipt of such
written notice from the Company; provided, however, that the Company shall not
be obligated to take any action to effect any such registration, qualification
or compliance pursuant to this Section 5.1:
(A) In any particular jurisdiction in which
the Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except as may be required
by the Securities Act;
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(B) Prior to the earlier of December 31,
1999 or six months after the effective date of the Company's Initial Public
Offering;
(C) If the Company, within ten (10) days of
the receipt of the request of the Initiating Holders, gives notice of its bona
fide intention to effect the filing of a registration statement with the
Commission within ninety (90) days of receipt of such request;
(D) During the period starting with the date
of filing of, and ending on the date 180 days immediately following the
effective date of the registration statement for the Company's Initial Public
Offering, and during the period starting with the of filing of, and ending on
the date 90 days immediately following the effective date of any other
registration statement pertaining to securities of the Company, provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective;
(E) After the Company has effected three
registrations pursuant to this Section 5.1(a);
(F) Within twelve (12) months after the
Company has effected such a registration pursuant to this Section 5.1(a); or
(G) If the Company shall furnish to such
Initiating Holders a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its stockholders for a registration statement to
be filed at the date filing would be required, in which case the Company's
obligation to use its best efforts to register, qualify or comply under this
Section 5.1 shall be deferred for a period not to exceed 60 days from the date
of receipt of written request from the Initiating Holders, provided that the
Company may not exercise this deferral right more than twice during any twelve
(12) month period.
Subject to the foregoing clauses (A) through (G), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders.
(b) Underwriting. Any registration pursuant to Section 5.1 shall be
firmly underwritten by an underwriter of national recognition. In the event that
a registration pursuant to Section 5.1 is for a public offering involving an
underwriting, the Company shall so advise the Holders as part of the notice
given pursuant to Section 5.1(a)(i), and the right of any Holder to registration
pursuant to Section 5.1 shall be conditioned upon such Holder's participation in
such underwriting arrangements, and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent requested shall be limited to the
extent provided herein.
The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by a majority in interest of the Initiating Holders, but
subject to the Company's reasonable approval. Notwithstanding any other
provision of this Section 5.1, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the
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Company shall so advise all holders of Registrable Securities, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder to the
nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of
the underwriting, such person may elect to withdraw therefrom by written notice
to the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to (i) 180 days after the effective
date of such registration if the registration was for the Company's Initial
Public Offering, (ii) 90 days after the effective date of all other
registrations, or (iii) such other shorter period of time as the underwriters
may require. If the underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account (or for the account of other stockholders) in such registration if the
underwriter so agrees and if the number of Registrable Securities that would
otherwise have been included in such registration and underwriting will not
thereby be limited.
5.2 Company Registration.
(a) Notice of Registration. If at any time or from time to
time the Company shall determine to register any of its equity securities,
either for its own account or for the account of a security holder or holders,
other than (A) a registration relating solely to employee benefit plans, or (B)
a registration relating solely to a Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within thirty (30) days after receipt of such written notice
from the Company by any Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 5.2(a)(i). In such event the right of any Holder to
registration pursuant to Section 5.2 shall be conditioned upon such Holder's
participation in such underwriting, and the inclusion of Registrable Securities
in the underwriting shall be limited to the extent provided herein.
All Holders proposing to distribute their securities through
such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other
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provision of this Section 5.2, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of the Registrable
Securities to be included in such registration (i) in the case of the Company's
initial public offering, to zero, and (ii) in the case of any other offering, to
an amount no less than 25% of all shares to be included in such offering;
provided however, that (x) any such limitation or "cutback" shall be first
applied to all shares proposed to be sold in such offering other than for the
account of the Company which are not Registrable Securities. The Company shall
so advise all Holders and other holders distributing their securities through
such underwriting, and the number of shares of Registrable Securities or other
securities that may be included in the registration and underwriting shall be
first allocated among all the Holders in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities held by such Holder at the
time of filing the Registration Statement. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the number
of shares allocated to any Holder or holder to the nearest 100 shares.
If any Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 180 days after the effective date
of the registration statement thereto, or such other shorter period of time as
the underwriters may require.
(c) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 5.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
5.3 Registration on Form S-3.
(a) If any Holder or Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of the shares of Registrable Securities, the reasonably
anticipated aggregate price to the public of which would equal or exceed Seven
Hundred Thousand dollars ($700,000), and the Company is a registrant entitled to
use Form S-3 to register the Registrable Securities for such an offering, the
Company shall use its best efforts to cause such Registrable Securities to be
registered for the offering on such form and to cause such Registrable
Securities to be qualified in such jurisdictions as such Holder or Holders may
reasonably request, provided, however, the Company shall not be required to
undertake such a registration on Form S-3 more than twice in any one-year
period. The Company shall inform any other Holders of the proposed registration
and offer them the opportunity to participate. In the event the registration is
proposed to be part of a firm commitment underwritten public offering, the
substantive provisions of Section 5.1(b) shall be applicable to each such
registration initiated under this Section 5.3.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 5.3:
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(i) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(ii) if the Company, within ten (10) days of the receipt
of the request of the initiating Holders, gives notice of its bona fide
intention to effect the filing of a registration statement with the Commission
within ninety (90) days of receipt of such request;
(iii) during the period starting with the date of filing
of, and ending on the date 90 days immediately following the effective date of,
any registration statement pertaining to securities of the Company, provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective;
(iv) if the Company shall furnish to such Holder or
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its stockholders for registration statements to be filed at
the date filing would be required, in which case the Company's obligation to use
its best efforts to file a registration statement shall be deferred for a period
not to exceed 60 days from the receipt of the request to file such registration
by such Holder or Holders, provided that the Company may not exercise this
deferral right more than twice during any twelve (12) month period; or
5.4 Expenses of Registration. All Registration Expenses
incurred in connection with all registrations pursuant to Sections 5.1, 5.2 and
5.3 shall be borne by the Company. Notwithstanding the foregoing, the Company
shall not be required to effect or to pay any Registration Expenses of any
registration begun pursuant to Sections 5.1 or 5.3, the request of which has
been subsequently withdrawn by Holders of a number of shares of Registrable
Securities such that there are no Holders of Registrable Securities intending to
participate in the registration sufficient to request such a registration, in
which case such expenses shall be borne by the Holders of securities (including
Registrable Securities) requesting or causing such withdrawal; provided further,
however, that if at the time of such withdrawal, the Holders have learned of a
material adverse change in the condition, business or prospects of the Company
from that known to the Holders at the time of their request, then the Holders
shall not be required to pay any of such Registration Expenses and shall retain
their rights pursuant to Sections 5.1, 5.2, 5.3 and 5.4.
5.5 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed, whichever first occurs; and
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(b) Furnish to the Holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such Holders and
underwriters may reasonably request in order to facilitate the public offering
of such securities.
(c) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(d) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(e) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
5.6 Indemnification.
(a) The Company will indemnify each Holder of Registrable
Securities included in a registration pursuant to this Agreement, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act of 1933, the Securities Exchange Act of 1934, state securities
law or any rule or regulation promulgated under the such laws applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, each of its officers, directors
and partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred, as such expenses are incurred, in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in
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conformity with written information furnished to the Company by an instrument
duly executed by any Holder, controlling person or underwriter and stated to be
specifically for use therein; provided, however, that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any such
untrue statement, alleged untrue statement, omission or alleged omission made in
a preliminary prospectus, such indemnity agreement shall not inure to the
benefit of any underwriter, or any Holder, if there is no underwriter, if a copy
of the final prospectus filed with the Commission pursuant to its Rule 424(b)
was not furnished to the person asserting the loss, liability, claim or damage
at or prior to the time such action is required by the Securities Act, and if
such final prospectus cured the untrue statement, alleged untrue statement,
omission or alleged omission giving rise to the loss, liability, claim or
damage.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such registration statement, each person who controls the
Company or such underwriter within the meaning of Section 15 of the Securities
Act, and each other such Holder, each of its officers, directors and partners
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, such Holders, such directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred, as such expenses are incurred, in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this Section 5.6(b) shall be limited in an amount equal to the
net proceeds of the shares sold by such Holder. In no event will any Holder be
required to enter into any agreement or undertaking for the benefit of the
Company in connection with any registration under this Section 5 providing for
any indemnification or contribution obligations on the part of such Holder
greater than such Holder's obligations under this Section 5.6 (b).
(c) Each party entitled to indemnification under this
Section 5.6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall be unreasonably
be withheld), and the Indemnified party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action,
and provided further that the Indemnifying
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Party shall not assume the defense for matters as to which representation of
both the Indemnifying Party and the Indemnified Party by the same counsel would
be inappropriate due to actual or potential differing interests between them,
but shall instead in such event pay the fees and costs of separate counsel for
the Indemnified Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) Contribution. If the indemnification provided for in
this Section 5.6 shall for any reason be held by a court to be unavailable to an
indemnified party under paragraph (a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under paragraph (a) or (b) hereof, the indemnified
party and the indemnifying party under paragraph (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the prospective Holders of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action in respect thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company and such Holders from the offering of the securities covered by such
registration statement. No party hereto guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any party hereto who was not guilty of such fraudulent
misrepresentation. Such Holders' obligation to contribute as provided in this
paragraph (d) are several in proportion to the relative value of their
respective Registrable Securities covered by such registration statement and not
joint. In addition, no party shall be obligated to contribute hereunder any
amounts in payment for any settlement of any action or claim effected without
such party's consent, which consent shall not be unreasonably withheld.
(e) Timing of Payments. The indemnification and
contribution required by this Section 5.6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
5.7 Information by Holder. The Holder or Holders of
Registrable Securities included in any registration shall furnish to the Company
such information regarding such Holder or Holders, the Registrable Securities
held by them and the distribution proposed by such Holder or Holders as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
5.8 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use reasonable efforts to:
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(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act;
(b) File with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Securities Exchange Act (at any time after it has become subject to such
reporting requirements); and
(c) So long as a Holder owns any Restricted Securities to
furnish to such Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at any
time after 90 days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public)
and of the Securities Act and the Securities Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as the Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing the Holder to sell
any such securities without registration.
5.9 Transfer of Registration Rights. The rights to cause the
Company to register securities granted the Investors under Sections 5.1, 5.2 and
5.3 may be assigned to a transferee or assignee in connection with any transfer
or assignment of Registrable Securities by the Investors provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) such assignee or transferee acquires at least 100,000 shares of
Registrable Securities held by the assignor or transferor (appropriately
adjusted for recapitalizations, stock splits and the like) (iii) written notice
is promptly given to the Company and (iv) such transferee agrees to be bound by
the provisions of this Agreement. Notwithstanding the foregoing, the rights to
cause the Company to register securities may be assigned to (A) any affiliated
partnership or constituent partner or retired partner of an Investor which is a
partnership, or (B) a family member or trust for the benefit of an Investor who
is an individual, provided written notice thereof is promptly given to the
Company and the transferee agrees to be bound by the provisions of this
Agreement.
5.10 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of Holders holding more than fifty percent (50%) of the
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company which would allow such holder or
prospective holder to (i) require the Company to effect a registration, prior to
the date set forth in Section 5.1 (a) (ii) (B) or (ii) include any securities in
any registration filed under Section 5.1, 5.2 or 5.3 hereof, unless, under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not diminish the amount of Registrable Securities which are
included in such registration and includes the equivalent of Section 11 as a
term.
5.11 Termination of Registration Rights. The rights granted
pursuant to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate as to
any Holder at such time as a
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public market shall have existed for the Company's securities for a period of at
least 180 days following the Company's Initial Public Offering and (i) such
Holder beneficially owns less than 1% of the outstanding Common Stock of the
Company and can sell all of his Registrable Securities pursuant to Rule 144(k)
promulgated under the Securities Act or (ii) such Holder can sell all of his
Registrable Securities pursuant to Rule 144 promulgated under the Securities Act
in any single ninety (90) day period.
6. Financial Information.
6.1 The Company will provide the following reports to each
holder of Preferred Stock and/or Conversion Stock:
(a) As soon as practicable after the end of each fiscal
year, and in any event within 60 days thereafter, consolidated balance sheets of
the Company, as of the end of such fiscal year, and consolidated statements of
operations and of cash flows and stockholders' equity of the Company, for such
year, prepared in accordance with generally accepted accounting principles, all
in reasonable detail and audited by independent public accountants of national
standing selected by the Company.
6.2 The Company will provide the following reports to each
holder of at least One Hundred Thousand (100,000) shares of Preferred Stock
and/or Conversion Stock:
(a) At least thirty days prior to the beginning of each
fiscal year, a budget adopted by the Company's Board of Directors for the fiscal
year, and, as soon as prepared, any other budgets or revised budgets prepared by
the Company;
(b) Within 30 days after the end of each monthly
accounting period, an unaudited consolidated condensed balance sheet of the
Company, as of the end of each such monthly period, and unaudited consolidated
condensed statement of operations of the Company for such period and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles (other than for accompanying notes), subject to changes
resulting from year-end audit adjustment, and a comparison to the budget
approved by the Board of such statements.
7. Visitation and Inspection.
7.1 The Company will afford each holder of Preferred Stock
and/or Conversion Stock reasonable access during normal business hours to the
Company's accounting books and records and minutes of proceedings of the
stockholders and the Board and committees of the Board, and all information
distributed to the Board, for a purpose reasonably related to such holder's
interests as a stockholder of the Company.
7.2 The Company will afford to each holder of at least One
Hundred Thousand (100,000) shares of Preferred Stock and/or Conversion Stock the
right, upon twenty business (20) days, advance notice, to meet periodically with
the Company's principal executive officer or chief financial officer during
normal business hours to discuss and make recommendations regarding the conduct
of the Company's business and affairs.
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8. Confidentiality. Notwithstanding the foregoing, the Company is
not required to disclose trade secrets or confidential information pursuant to
Section 6 or Section 7 if not covered by an appropriate non-disclosure
agreement.
9. Pre-emptive Right.
9.1 The Company hereby grants to each holder of at least
100,000 shares of Preferred Stock and/or Conversion Stock (appropriately
adjusted for recapitalizations, stock splits and the like) (each such holder
referred to herein as a "Qualified Investor"), the right of first refusal to
purchase its Pro Rata Share of New Securities (as defined in this Section 9)
which the Company may, from time to time, propose to sell and issue. A "Pro Rata
Share," for purposes of this right of first refusal, is the ratio that (i) the
sum of the number of shares of Common Stock then held by each Qualified Investor
and the number of shares of Common Stock issuable upon conversion of the
Preferred Stock then held by such Qualified Investor bears to (ii) the sum of
the total number of shares of Common Stock then outstanding and the number of
shares of Common Stock issuable upon conversion of all then outstanding shares
convertible into Common Stock.
9.2 Except as set forth below, "New Securities" shall mean any
shares of capital stock of the Company, including Common Stock and any series of
preferred stock, whether now authorized or not, and rights, options or warrants
to purchase said shares of Common Stock or preferred stock, and securities of
any type whatsoever that are, or may become, convertible into or exchangeable
for said shares of Common Stock or preferred stock. Notwithstanding the
foregoing, "New Securities" does not include (i) the Conversion Stock, (ii)
Common Stock offered to the public generally pursuant to a registration
statement under the Securities Act in connection with the Company's Initial
Public Offering, (iii) up to 3,990,000 shares (net of any repurchases or
cancellations and excluding the shares underlying the convertible securities
referenced in clause (iv) hereof) of the Company's Common Stock or any other
securities excluded from the definition of Additional Shares of Common Stock set
forth in the Article III(A)(3) of the Company's Amended and Restated Certificate
of Incorporation to be filed concurrent with the closing of the Purchase
Agreement (or such greater amount as may be approved by a majority of the
holders of the Preferred Stock) issued on or after inception of the Company to
employees, officers and directors of, and consultants to, the Company, pursuant
to arrangements approved by the Board of Directors of the Company, (iv) stock
issued pursuant to any rights, agreements or convertible securities, including
without limitation options and warrants, provided that (a) any such convertible
securities as were issued prior to the date hereof and disclosed to the
Investors in the Purchase Agreement or (b) the rights of first refusal
established by this Section 9 applied with respect to the initial sale or grant
by the Company of such rights, agreements or convertible securities or (v) stock
issued in connection with any stock split, stock dividend or recapitalization by
the Company.
9.3 In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Qualified Investor written notice of its
intention, describing the amount and type of New Securities, and the price and
terms upon which the Company proposes to issue the same. Each Qualified Investor
shall have thirty (30) calendar days from the date of receipt of any such notice
to agree to purchase up to its respective Pro Rata Share of such New Securities
for the price and upon the terms specified in the notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased. If any Qualified Investor fails to agree to purchase its full Pro
Rata Share within such thirty (30) calendar day
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period, the Company will give the Qualified Investor who did so agree (the
"Electing Qualified Investor") notice of the number of New Securities which were
not subscribed for. Such notice may be by telephone if followed by written
confirmation within two days. The Electing Qualified Investor shall have ten
(10) business days from the date of such second notice to agree to purchase
their Pro Rata Share of all or any part of the New Securities not purchased by
such other Qualified Investor. For the purpose of this second election under
this Section 9(c), shares held by Qualified Investor other than Electing
Qualified Investor shall be excluded from clause (ii) for the definition of "Pro
Rata Share" contained in Section 9(a).
9.4 In the event all of the New Securities are not elected to
be purchased by Qualified Investor within ten (10) business days after the
second notice pursuant to Section 9(c) above, the Company shall have ninety (90)
days thereafter to sell the New Securities not elected to be purchased by
Qualified Investor at the price and upon the terms no more favorable to the
purchasers of such securities than specified in the Company's notice. In the
event the Company has not sold the New Securities within said ninety (90) day
period, the Company shall not thereafter issue or sell any New Securities
without first offering such securities in the manner provided above.
9.5 The right of first refusal hereunder is not assignable
except by each of such Qualified Investor to any party who acquires at least
100,000 shares of the Preferred Stock and/or Conversion Stock (appropriately
adjusted for recapitalizations, stock splits and the like).
10. Termination of Covenants. The covenants set forth in Sections 6, 7,
9 and 12 shall terminate and be of no further force or effect upon the
consummation of a bona fide, firm commitment underwriting pursuant to a
registration statement filed pursuant to the Securities Act, the public offering
price of which is not less than $6.30 per share (adjusted to reflect subsequent
stock dividends, stock splits, combinations or other recapitalizations) and the
proceeds thereof (net of underwriting commissions and offering expenses) equal
or exceed $20,000,000 or at such time as the Company is required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act, whichever shall
occur first.
11. Standoff Agreement. In connection with the initial public offering
of the Company's securities, each Investor and each Holder 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 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 options to purchase stock of the Company also agree to such
restrictions. Each Investor and each Holder agrees that the Company may instruct
its transfer agent to place stop-transfer notations in its records to enforce
the provisions of this Section 11. Each Investor and each Holder 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.
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12. Additional Covenants of the Company.
(a) The Company covenants that it shall not without the
approval of Investors holding in aggregate sixty percent (60%) of the Preferred
Stock: (a) sell or issue any equity or debt securities of the Company, except
for stock options approved by the Board of Directors of the Company and shares
underlying such options and equity securities in connection with equipment
leasing transactions approved by the Board of Directors; (b) sell, lease, or
dispose of any assets of the Company with a value in excess of the greater of
$500,000 or 20% of the assets of the Company, except in the ordinary course of
business; (c) incur any indebtedness or make any capital expenditures in excess
of the greater of $500,000 or 20% of the assets of the Company; (d) engage in
any business other than the business described in the business plan presented to
the Investors prior to the date hereof; (e) increase the compensation of the
officers of the Company; (f) alter materially the Company's accounting methods
or policies or appoint new auditors for the Company; (g) make any acquisitions
or enter into any mergers; or (h) amend the Company's Certificate of
Incorporation or Bylaws. The rights set forth in this Section 12 shall not be
transferable except to an affiliate (as defined in Rule 144(a) of the Securities
Act of 1933, as amended) of Warburg.
(b) The Company also covenants that it shall undertake in good
faith to cause all holders of the Company's Preferred Stock and Common Stock, in
connection with the purchase of their stock, to be subject to a restriction
stating that in connection with an underwritten public offering of the Company's
securities, each holder will not 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 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 offering as may be requested by the
underwriters.
13. Determination of Share Amounts and Percentages. For the
purposes of determining the minimum holdings set forth in this Agreement,
including without limitation the minimum holdings pursuant to Sections 5.9,
6(a), 9(a) and 9(e), the following rules shall govern:
13.1 All shares held by entities affiliated with the holder
shall be deemed held by such holder, and any holder which is a partnership shall
be deemed to hold any shares of Preferred Stock and/or Conversion Stock
originally purchased by such holder and subsequently distributed to partners of
such holder, which have not been resold by such partners.
13.2 When shares of Preferred Stock are counted together with
shares of Conversion Stock, or shares of Common Stock that are not Conversion
Stock, such shares of Preferred Stock shall be counted on an as-converted into
Common Stock basis, and the term "Conversion Stock" shall mean only the shares
of Common Stock which have been issued pursuant to conversion of Preferred
Stock.
14. Amendment. Any provision of this Agreement may be amended or
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 the holders of a majority of the Registrable
Securities then outstanding or deemed to be outstanding. Any amendment or waiver
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effected in accordance with this Section 14 shall be binding upon each Investor
and each Holder of Registrable Securities at the time outstanding or deemed to
be outstanding (including securities into which such securities are
convertible), each future holder of all such securities, and the Company.
15. Governing Law. This Agreement and the legal relations between the
parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware. The parties hereto agree to submit to
the jurisdiction of the federal and state courts of the State of Delaware with
respect to the breach or interpretation of this Agreement or the enforcement of
any and all rights, duties, liabilities, obligations, powers, and other
relations between the parties arising under this Agreement.
16. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties regarding the matters set forth
herein. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon the successors, assigns,
heirs, executors and administrators of the parties hereto.
17. Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or three (3) days after
deposit with the United States mail, by registered or certified mail, postage
prepaid, addressed (a) if to an Investor, at such Investor's address as set
forth in the Purchase Agreement, or at such other address as such Investor shall
have furnished to the Company in writing in accordance with this Section 17, (b)
if to any other holder of Preferred Stock or Conversion Stock, at such address
as such holder shall have furnished the Company in writing in accordance with
this Section 17, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder thereof who has so
furnished an address to the Company, or (c) if to the Company, at its principal
office.
18. Attorneys' Fees. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party shall be
entitled to all costs and expenses of maintaining such suit or action, including
reasonable attorney's fees.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
20. Amendment and Restatement of Registration and Investor Rights
Agreement. This Agreement hereby amends and restates in its entirety the
Registration and Investor Rights Agreement dated January 8, 1998 between the
Company, Warburg, Xxxxxx Ventures, L.P. and SI Venture Fund, L.L.C.
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The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
SkillSoft Corporation
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
-------------------------------------------------
By: Xxxxxxx Xxxxx
Title: President and Chief
Executive Officer
"INVESTORS"
Warburg, Xxxxxx Ventures, L.P.,
By: Warburg, Xxxxxx & Co.
Its: General Partner
By: /s/ Xxxxxxx Xxxxx
-------------------------------------------------
Title: Partner
Si Venture Fund, L.L.C.,
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------------
Title: Managing Member
/s/ Xxxxxxx Xxxxxxx
----------------------------------------------------
Xxxxxxx X. Xxxxxxx III, Trustee Xxxxxxx Family Trust
/s/ Xxxxx Xxxxxxxx
----------------------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxx Xxx
----------------------------------------------------
Xxxxx Xxxx Yau
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