Amendment to Second Amended and Restated Investors' Rights Agreement by NetLibrary, Inc. and Series A, B, C, and D Preferred Stockholders

Summary

This amendment, dated January 18, 2000, updates the Second Amended and Restated Investors' Rights Agreement between NetLibrary, Inc. and its Series A, B, C, and D Preferred Stockholders. The changes clarify and expand rights related to registration, preemptive rights, and voting, and add Series D investors to the agreement. It also adjusts thresholds for certain rights and updates references to related agreements. The amendment ensures all parties are bound by the revised terms and reflects the addition of new investors from the Series D financing round.

EX-10.17 21 ex10-17.txt AM. TO 2ND AND RESTATED INVESTORS RIGHTS AGREEMENT 1 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 2 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. 2 3 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. 3 4 (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] 4 5 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. 3080 Center Green Drive Boulder, CO 80301 After October 31, 1999: By: /s/ TIMOTHY R. SCHIEWE ---------------------------------- Name: Timothy R. Schiewe Title: President INVESTORS: ABC-CLIO ANSCHUTZ FAMILY INVESTMENT COMPANY LLC By: Anschutz Company, its Manager By: /s/ RONALD J. BOEHM By: /s/ SCOTT CARPENTER --------------------------------- --------------------------------- Name: Ronald J. Boehm Name: Scott Carpenter Title: CEO Title: Vice President Date: January 10, 2000 Date: January __, 2000 BOWANA FOUNDATION BCI INVESTMENTS II, LLC By: /s/ ERIC SWANSON By: /s/ JEFFREY S. DEMOND --------------------------------- --------------------------------- Name: Eric Swanson Name: Jeffrey S. DeMond Title: VP Title: Manager/Member Date: January __, 2000 Date: January __, 2000 5 6 BAIN CAPITAL FUND VI, L.P. PEP INVESTMENTS PTY LTD By: Bain Capital Partners VI, L.P., By: Bain Capital, Inc., its General Partner its attorney-in-fact By: Bain Capital Investors VI, Inc., By: /s/ JOSHUA BERENSTEIN its General Partner ------------------------------ Name: Joshua Berenstein Title: Managing Director Date: January __, 2000 By: /s/ JOSHUA BERENSTEIN ------------------------- Name: Joshua Berenstein Title: Managing Director Date: January __, 2000 BROOKSIDE CAPITAL PARTNERS SANKATY HIGH YIELD ASSET FUND, L.P. PARTNERS, L.P. By: /s/ DOMENIC FERRANTE By: /s/ JOSHUA BERENSTEIN ----------------------------- ------------------------------ Name: Domenic Ferrante Name: Joshua Berenstein Title: Managing Director Title: Managing Director Date: January __, 2000 Date: January __, 2000 BCIP ASSOCIATES II BCIP ASSOCIATES II-B By: Bain Capital, Inc., By: Bain Capital, Inc., its Managing Partner its Managing Partner By: /s/ JOSHUA BERENSTEIN By: /s/ JOSHUA BERENSTEIN ------------------------- -------------------------- Name: Joshua Berenstein Name: Joshua Berenstein Title: Managing Director Title: Date: January __, 2000 Date: January __, 2000 6 7 BERGER NEW GENERATION FUND A SERIES OF THE BERGER INVESTMENT PORTFOLIO OF TRUSTS By: /s/ MARK S. SUNDERHUSE ----------------------------- Name: Mark S. Sunderhuse Title: Vice President Date: January 25, 2000 COMCAST INTERACTIVE CAPITAL, L.P. By: CIC Partners, LP, its general partner By: /s/ ABRAM E. PATLOVE ------------------------- Name: Abram E. Patlove Title: Vice President Date: January __, 2000 COVESTCO-MEDEURA, LLC UNIVERSITY OF COLORADO FOUNDATION INC. By: /s/ ALBIN JOHANN By: /s/ JIM BARLOW ----------------------------- ------------------------------ Name: Albin Johann Name: Jim Barlow Title: Director Title: CFO, Treasurer Date: January 14, 2000 Date: March 2, 2000 DLJ CAPITAL CORP. DLJ ESC II, L.P. By: /s/ ROBERT FINZI By: /s/ ROBERT FINZI ----------------------------- ------------------------------ Name: Robert Finzi Name: Robert Finzi Title: Vice President Title: Attorney-in-Fact Date: January 11, 2000 Date: January 11, 2000 7 8 EBSCO INDUSTRIES, INC. EPIXTECH, INC. (FORMERLY KNOW AS AMERITECH LIBRARY SERVICES) By: /s/ TIM COLLINS By: /s/ LANA PORTER ----------------------------- ------------------------------ Name: Tim Collins Name: Lana Porter Title: Vice President Title: President & CEO Date: January 10, 2000 Date: January __, 2000 FOLLETT CORPORATION HOUGHTON MIFFLIN By: /s/ KENNETH J. HALL By: /s/ NADER F. DAREHSHORI ----------------------------- ------------------------------ Name: Kenneth J. Hall Name: Nader F. Darehshori Title: Chairman/CEO Title: Chairman, President & CEO Date: January 11, 2000 Date: January 18, 2000 LDIG NL, INC. MARCEL DEKKER, INC. By: /s/ CRAIG ENENSTEIN By: /s/ DAVID DEKKER ----------------------------- ------------------------------ Name: Craig Enenstein Name: David Dekker Title: VP. Business Development Title: COO & Strategy Date: January 31, 2000 Date: March 3, 2000 MARKET STREET PARTNERS NL MARQUETTE VENTURE PARTNERS III, L.P. By: Marquette III, L.L.C., its general partner By: /s/ MICHAEL C. FRANSON By: /s/ LLOYD D. RUTH ----------------------------- ------------------------------ Name: Michael C. Franson Name: Lloyd D. Ruth Title: Managing Partner Title: Authorized Signatory Date: January 11, 2000 Date: January __, 2000 8 9 THE MCGRAW-HILL COMPANIES, INC. PARKER & SON LIMITED By: /s/ ROBERT J. BAHASH By: /s/ TIM EUSTACE ------------------------------ ------------------------------- Name: Robert J. Bahash Name: Tim Eustace 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/ JOHN RUTHERFORD By: /s/ JOHN RUTHERFORD ------------------------------ ------------------------------- Name: John Rutherford Name: John Rutherford Title: Managing Member Title: General Partner Date: January 18, 2000 Date: January 18, 2000 PEARL STREET TRUST REPERTOIRE CAPITAL VENTURES RLLLP By: /s/ SCOTT A. BECK By: /s/ KARL FRIEDMAN ------------------------------ ------------------------------- Name: Scott A. Beck Name: Karl Friedman 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/ THOMAS G. WASHING By: /s/ THOMAS G. WASHING ------------------------------ ------------------------------- Name: Thomas G. Washing Name: Thomas G. Washing Title: General Partner Title: General Partner Date: January 10, 2000 Date: January 10, 2000 9 10 SORENSON LIMITED PARTNERSHIP, FLLLP By: /s/ RALPH F. SORENSON ------------------------------ Name: Ralph F. Sorenson 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/ ROBERT FINZI By: /s/ ROBERT FINZI ------------------------------ ------------------------------- Name: Robert Finzi Name: Robert Finzi Title: Vice President Title: Vice President Date: January 11, 2000 Date: January 11, 2000 THE TELL ERTL FAMILY TRUST WORLD VENTURE PARTNERS, INC. By: /s/ JOSEPH L. FOX By: /s/ PETE ESTLER ------------------------------ ------------------------------- Name: Joseph L. Fox Name: Pete Estler Title: Trustee Title: Principal Date: January 4, 2000 Date: January 20, 2000 10 11 WPG NETWORKING FUND, LP WPG SOFTWARE FUND, LP By: Weiss, Peck & Greer, LLC, By: Weiss, Peck & Greer, LLC, its General Partner its General Partner By: /s/ RICHARD POLLACK By: /s/ RICHARD POLLACK -------------------------- --------------------------- Member Member Name: Richard Pollack Name: Richard Pollack 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: Weiss, Peck & Greer, LLC, By: Weiss, Peck & Greer, LLC, its General Partner its General Partner By: /s/ RICHARD POLLACK By: /s/ RICHARD POLLACK -------------------------- --------------------------- Member Member Name: Richard Pollack Name: Richard Pollack 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: Weiss, Peck & Greer, LLC, By: Weiss, Peck & Greer, LLC, its attorney-in-fact its attorney-in-fact By: /s/ RICHARD POLLACK By: /s/ RICHARD POLLACK -------------------------- --------------------------- Member Member Name: Richard Pollack Name: Richard Pollack Title: General Counsel & Title: General Counsel & Managing Director Managing Director Date: January , 2000 Date: January , 2000 -- 11 12 /s/ RAJ MEHRA /s/ LLOYD RUTH - --------------------------------- ---------------------------------- RAJ MEHRA LLOYD RUTH /s/ TIM COLLINS /s/ SHARON MAGNESS - --------------------------------- ---------------------------------- TIM COLLINS SHARON MAGNESS /s/ NAVEEN JAIN /s/ PETER BEHRENDT - --------------------------------- ---------------------------------- NAVEEN JAIN PETER BEHRENDT /s/ ANU JAIN - --------------------------------- ANU JAIN /s/ RALPH Z. SORENSON /s/ NANCY OVERMAN - --------------------------------- ---------------------------------- RALPH Z. SORENSON NANCY OVERMAN /s/ MARK WATTLES /s/ LILLIAN NADHIR - --------------------------------- ---------------------------------- MARK WATTLES LILLIAN NADHIR 12 13 /s/ R. MICHAEL SEGROVES - --------------------------------- R. Michael Segroves /s/ HAROLD S. SCHWENK, JR. - --------------------------------- Harold S. Schwenk, Jr. GRAND CENTRAL HOLDINGS, LLC By: /s/ WARREN H. HABER, JR. ------------------------------ Name: Warren H. Haber, Jr. Title: Member GCH PEANUT PRESS, LLC By: Grand Central Holdings, LLC, Its Managing Member By: /s/ WARREN H. HABER, JR. ------------------------------ Name: Warren H. Haber, Jr. Title: Member HUDSON VENTURE PARTNERS, L.P. By: Grand Central Holdings, LLC, Holder of an irrevocable proxy By: /s/ WARREN H. HABER, JR. ------------------------------ Name: Warren H. Haber, Jr. Title: Member 13 14 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/ DAN H. BROUGHTON - --------------------------------- DAN H. BROUGHTON 14