AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

 

THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement") is made as
of December 20, 2000, by and among bigchalk.com, inc., a Delaware corporation
(the "Company"), holders of Series A Preferred Stock and/or Series A-2 Preferred
listed on Schedule A hereto (collectively the "Series A Investors" and
individually a "Series A Investor"), the purchasers of Series B Preferred Stock
listed on Schedule A hereto (collectively the "Series B Investors" and
individually a "Series B Investor", and together with the Series A Investors,
collectively the "Investors" and individually an "Investor"), holders of the
Company's outstanding Common Stock, $.01 par value per share (the "Common
Stock"), who appear on Schedule A hereto (collectively the "Founders", unless
otherwise indicated on Schedule A), and any subsequent stockholder of the
Company who becomes a party to this Agreement pursuant to the terms and
conditions hereof (collectively, the "Additional Stockholders," and with the
Series A Investors, the Series B Investors, the Founders and the other holders
of Common Stock, listed on Schedule A, sometimes hereinafter collectively
referred to herein as the "Stockholders" or individually as a "Stockholder").
For the purposes of this Agreement, the term "Series A Preferred Stock" includes
Series A Preferred Stock and Series A-2 Preferred Stock of the Company.
"Preferred Stock" shall mean Series A Preferred Stock and Series B Preferred
Stock.

WHEREAS, in connection with the sale and issuance of its Series A Preferred
Stock, the Company entered into that certain Stockholders Agreement dated
January 10, 2000 (the "Original Agreement") with the purchasers of such Series A
Preferred Stock under the Series A Stock Purchase Agreement (the "Series A Stock
Purchase Agreement") and the Founders.

WHEREAS, the Company and the undersigned Series A Investors and Founders,
representing sufficient voting interests to modify the Original Agreement,
desire to amend and restate the Original Agreement and to accept the rights
created pursuant hereto in lieu of the rights under the Original Agreement.

WHEREAS, the Company and the Series B Investors are entering into a Series B
Preferred Stock Purchase Agreement (the "Series B Stock Purchase Agreement") of
even date herewith whereby the Company will sell, and the Series B Investors
will purchase, Series B Preferred Stock of the Company (the "Series B
Financing").

WHEREAS, the closing of the Series B Financing is conditioned upon the execution
and delivery of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree, and the
Company, the Founders and the Series A Investors hereby amend and restate the
Original Agreement in its entirety, as follows:

ELECTION OF DIRECTORS

Election of Directors
. At each annual meeting of the stockholders of the Company, or at each special
meeting of the stockholders of the Company involving the election of directors
of the Company, and at any other time at which stockholders of the Company will
have the right to or will vote for or render consent in writing regarding the
election of directors of the Company, then and in each event, the Stockholders
hereby covenant and agree to vote all shares of voting capital stock of the
Company presently owned or hereafter acquired by them (whether owned of record
or over which any person exercises voting control) in favor of the following
actions:
 a. to fix and maintain the number of directors initially at thirteen which
    number may not be further changed except by an amendment to this Agreement
    approved by the consent of the holders of fifty-one percent (51%) or more of
    the Preferred Stock; and
 b. to cause and maintain the election to the Board of Directors of the Company:
     i.   so long as at least one-third of the number of shares of Series A
          Preferred Stock set forth on Schedule A are outstanding, three
          representatives designated by the Series A Investors, one of whom
          shall be a representative of TBG Information Investors LLC (the "TBG
          Director"), who shall initially be Oakleigh Thorne, one of whom shall
          be a representative of Core Learning Group LLC (the "Core Learning
          Director"), who shall initially be William Oberndorf, and the other of
          whom shall be a representative of the Series A Investors as a class
          (the "Series A Investor Director" and, with the TBG Director and the
          Core Learning Director, the "Series A Investor Directors"), who shall
          initially be George Jenkins;
     ii.  so long as Bell & Howell Company controls one-third of the number of
          shares of Common Stock held by Bell & Howell Company and its
          subsidiaries, as listed on Schedule A, three nominees designated by
          Bell & Howell Company, subject to Section 1.2 below (the "Bell &
          Howell Common Directors");
     iii. so long as Infonautics, Inc. controls one-third of the number of
          shares of Common Stock held by Infonautics, Inc., listed on Schedule
          A, two nominees designated by Infonautics, Inc., who shall initially
          be Lloyd Morrisett and David Van Riper Morris;
     iv.  two nominees represented by the Company's management, who shall
          initially be John J. Lynch, Jr. and Susan Harman; and
     v.   so long as at least one-third of the number of shares of Series B
          Preferred Stock set forth on Schedule A are outstanding, three
          representatives designated by the Series B Investors, one of whom
          shall be a representative of Bell & Howell Company (the "Bell & Howell
          Series B Director"), provided, that Bell & Howell Company holds at
          least thirty percent (30%) of the number of shares of Series B
          Preferred Stock set forth on Schedule A opposite Bell & Howell
          Company's name, and the other directors shall be representatives of
          the Series B investors as a class (the "Series B Investor Directors").

The Series A Investor Director shall be nominated by holders of a majority of
the outstanding Series A Preferred Stock owned by the Series A Investors. The
Series B Investor Directors shall be nominated by holders of a majority of the
outstanding Series B Preferred Stock owned by the Series B Investors other than
Bell & Howell Company (as long as Bell & Howell Company is entitled to nominate
the Bell & Howell Series B Director).

Removal of Bell & Howell Directors
. Notwithstanding the foregoing, if Bell & Howell Company has entered into, or
is actively preparing to enter into, significant competition with the Company,
then (i) Bell & Howell shall thereafter have no rights to designate
representatives to the Board of Directors of the Company; (ii) the Bell & Howell
Common Directors and Bell & Howell Series B Directors shall immediately resign
as directors; (iii) the Company shall use its reasonable efforts to amend its
Certificate of Incorporation, Bylaws and this Agreement to reduce the number of
directors by three (3) to eliminate the vacancies resulting from the resignation
of the Bell & Howell Common Directors; and (iv) the Board seat designated as the
Bell & Howell Series B Director thereafter shall therefore be nominated by a
majority of the outstanding Series B Preferred Stock owned by the Series B
Investors.
Removal of Directors; Vacancy
. Subject to Section 1.2 above, none of the parties hereto, except in the case
of a director designated or nominated by any such party by right in accordance
with Section 1.1(b), shall vote any voting capital stock held by it to remove a
director, except for bad faith or willful misconduct. Any vacancy in the Board
of Directors may only be filled by the party (or class of securities) which,
pursuant to Section 1.1, has the right to designate a director to fill such
directorship. Each of the parties hereto shall vote or cause to be voted all
shares of voting capital stock owned by them or over which they have voting
control (i) to remove from the Board of Directors any director designated by any
party pursuant hereto at the request of such party, and (ii) to fill any vacancy
in the membership of the Board of Directors with a designee pursuant to the
terms of this Agreement.
Notice
. The Company shall provide to each party entitled to designate directors
hereunder prior written notice of any intended mailing of notice to stockholders
for a meeting at which directors are to be elected, and any party entitled to
designate directors pursuant hereto shall notify the Company in writing, prior
to such mailing, of the person designated by it or them as its or their nominee
for election as director. If any party entitled to designate directors hereunder
fails to give notice to the Company as provided above, it shall be deemed that
the designee of such party then serving as director shall be its designee for
reelection.
Committees
. The Board of Directors shall establish an Audit and a Compensation Committee
of the Board of Directors, each of which (i) shall consist of three
"Non-Employee Directors" (as that term is defined in Rule 16b-3 of the Exchange
Act of 1934, as amended), and (ii) shall include at least one of the Series A
Investor Directors or the Series B Investor Directors who shall be different for
each of the Audit and Compensation Committee. Any other committee of the Board
shall have at least one of the Series A Investor Directors or the Series B
Investor Directors as a member.
Observer Rights
. As long as any Series A Investor owns not less than ten percent (10%) of the
shares of Series A Preferred Stock issued pursuant to the Series A Stock
Purchase Agreement (or an equivalent amount of Common Stock issued upon
conversion thereof) and such Series A Investor is not otherwise represented on
the Board by one of the Series A Investor Directors or Series B Investor
Directors directly affiliated with them and as long as any Series B Investor
owns not less than ten percent (10%) of the shares of Series B Preferred Stock
issued pursuant to the Series B Stock Purchase Agreement (or an equivalent
amount of Common Stock issued upon conversion thereof) and such Series B
Investor is not otherwise represented on the Board by one of the Series B
Investor Directors or Series A Investor Directors directly affiliated with them,
the Company shall invite a representative of each such Investor to attend all
meetings of its Board of Directors in a nonvoting-observer capacity and, in this
respect, shall give such representative copies of all notices, minutes, consents
and other materials it provides to its directors; provided, however, that such
representative shall agree to hold such in confidence; and, provided further,
that the Company reserves the right to withhold any information and to exclude
such representative from any meeting or portion thereof if access to such
information or attendance at such meeting will adversely affect the
attorney-client privilege between the Company and its counsel.
Approval of Indebtedness
. So long as at least one-third of the number of shares of Series A Preferred
Stock and Series B Preferred Stock set forth on
Schedule A
are outstanding, the Company will not incur indebtedness in excess of
$2,500,000, in one or a series of related transactions, without the prior
approval of a majority of the directors nominated by the holders of Preferred
Stock.
Termination of Rights
. The rights and obligations of the Company and the Stockholders set forth in
this Article I shall terminate upon the earlier of (i) the consummation of a
sale of two-thirds or more of the Series A Preferred Stock and Series B
Preferred Stock held by the Stockholders immediately after all closings of the
Series B Financing and (ii) the closing of an underwritten public offering of
shares of Common Stock of the Company at a public offering price of at least
$11.50 per share (as adjusted for any stock split, stock dividend or
recapitalization after the date of the first issuance of the Series A Preferred
Stock) and gross proceeds to the Company in excess of $40,000,000 (a "
Qualified IPO
"). Additionally, with respect to each party which has the right to designate or
nominate a director pursuant to Section 1.1(b) above, such right shall terminate
if such party holds less than 100,000 shares of Common Stock of the Company
(assuming the conversion of all Series A Preferred Stock and Series B Preferred
Stock, if applicable, and as adjusted for stock split, dividend, combination or
like forms of recapitalization). Any vacancy in the Board of Directors resulting
from the termination of such right shall be filled by a director elected by all
holders of voting capital stock of the Company in a single class.

RIGHTS OF FIRST REFUSAL AND CO-SALE

Proposed Transfer of Shares
. The Stockholders shall not transfer either in a single transaction or in a
series of transactions any shares of capital stock of the Company (the "
Shares
") or any right or interest therein then owned by him or it except by a transfer
that meets the requirements of this Article II and of this Agreement generally.
In the event that a Stockholder (a "
Transferring Stockholder
") proposes to transfer any portion of the Shares (each, a "
Shares Transfer
"), whether voluntarily or involuntarily, other than a Permitted Transfer (as
defined below), then at least sixty (60) days prior to any proposed Shares
Transfer, such Transferring Stockholder shall give written notice (the "
TS Notice
") to the Company and the Investors of his or its intention to effect the Shares
Transfer. The TS Notice shall set forth (i) its bona fide intention to offer
such shares, (ii) the class, series and number of Shares to be sold by the
Transferring Stockholder (the "
Sale Shares
"), (iii) the date or proposed date of the Shares Transfer and the name and
address of the proposed transferee, and (iv) the principal terms of the Shares
Transfer, including the cash or other property or consideration to be received
upon such Shares Transfer. The term "
Permitted Transfer
" shall mean (i) a Shares Transfer made pursuant to the rights and obligations
set forth in Article X of the Master Transaction Agreement, dated as of July 8,
1999, as amended on September 28 and December 15, 1999, by and among certain of
the Founders, Bell & Howell Company and Infonautics Corporation (the "
MTA
"), (ii) a Shares Transfer from a Stockholder to one or more of its "
Affiliates
" or "
Subsidiaries
" as those terms are defined in Rule 405 ("
Rule 405
") of the Securities Act of 1933, as amended, (iii) a Shares Transfer to a
spouse (other than pursuant to any divorce or separation proceedings or
settlement), parents, children (natural or adopted), stepchildren or
grandchildren or a trust for any of their benefit in the case of a Transferring
Stockholder that is an individual, or (iv) a pro rata distribution of the Shares
to such Stockholde's partners, members or stockholders based on such partners,
members or stockholders' ownership interests in the Stockholder in the case of a
Transferring Stockholder that is a partnership, limited liability company or
corporation, as the case may be (each recipient pursuant to any of (i), (ii),
(iii) or (iv) being a "
Permitted Transferee
"); provided, however, that prior to such Shares Transfer, such Permitted
Transferee shall agree in writing to be bound by the obligations imposed upon
Stockholders under this Agreement as if such transferee were originally a
signatory to this Agreement.
Right of First Refusal
.
Exercise by the Company
. At any time within fifteen (15) days after receipt of the Notice, the Company
may elect by giving written notice to the Transferring Stockholder to purchase
all or a portion of the Sale Shares at the purchase price set forth in the TS
Notice.
Exercise by the Investors and Founders
. If the Company does not choose to purchase all of the Sale Shares within
fifteen (15) days after receipt of the TS Notice, each of the Investors and
Founders may elect, by giving written notice to the Transferring Stockholder
within forty-five (45) days after receipt of the TS Notice, to purchase all or a
portion of the Sale Shares not purchased by the Company at the purchase price
set forth in the TS Notice. If the total number of shares the Investors and
Founders offer to purchase exceeds the number of the available Sale Shares, each
Investor and Founder shall be entitled to purchase such Investor's or Founder's
pro rata share of the Sale Shares, based on the proportion that the number of
shares of Common Stock issued and held, or issuable upon conversion of the
Preferred Stock then held by such Investor or Founder, bears to the total number
of shares of Common Stock issued and held, or issuable upon conversion of the
Preferred Stock then held by the participating Investors and Founders. If any
Investor or Founder does not exercise its right of first refusal, each of the
Investors and Founders which did exercise their right of first refusal shall
have the right, exercisable within fifteen (15) days following the date which is
forty-five (45) days after receipt of the TS Notice, to elect to purchase any or
all of such unpurchased Sale Shares. The Sale Shares that would otherwise have
been allocated to the non-exercising Investor or Founder shall be allocated to
each Investor or Founder which so exercises its right within such fifteen (15)
day period on a pro rata basis.
Purchase Price
. The purchase price ("
Purchase Price
") for the Sale Shares purchased by the Company and the Investors and Founders
shall be the price set forth in the TS Notice (the "
Offered Price
"). If the Offered Price includes consideration other than cash, the cash
equivalent value of the non-cash consideration shall be determined by the board
of directors of the Company in good faith.
Payment
. If the Company or the Investors and Founders elect to purchase the Sale
Shares, payment of the Purchase Price shall be made, at the option of the
Company or the Investors and Founders, as the case may be, in cash, by
cancellation of all or a portion of any outstanding indebtedness of the
Transferring Stockholder to the applicable purchaser, or by any combination
thereof, by the date which is ninety (90) days after receipt of the TS Notice.
Transferring Stockholder's Right to Transfer
. If all of the Sale Shares proposed in the TS Notice to be transferred are not
purchased by the Company and the Investors and Founders as provided in this
Article II, the Transferring Stockholder may sell or otherwise transfer the Sale
Shares not purchased by the Company and the Investors and Founders to the
proposed transferee at no less than ninety percent (90%) of the Offered Price or
at a higher price, provided that such sale or other transfer (i) complies with
the provisions of this Article II, including without limitation the co-sale
rights in Section 2.3 below, (ii) is consummated within ninety (90) days after
receipt of the TS Notice, (iii) is in accordance with all the terms of this
Agreement and all other agreements between the Transferring Stockholder and the
Company and (iv) is effected in accordance with any applicable securities laws.
If the Sale Shares are not transferred to the proposed transferee within such
period, a new TS Notice shall be given to the Company and the Investors and
Founders, who shall again be offered a right of first refusal pursuant to this
Agreement, before any Sale Shares held by the Transferring Stockholder may be
sold or otherwise transferred.

Right to Participate in Transfer
. To the extent the Company and the Investors and Founders decline to exercise
their right of first refusal (set forth in Section 2.2 hereof), the Transferring
Stockholder shall send a written notice (the "
Second Notice
") to all Investors as to their rights under this Section 2.3 within sixty (60)
days of sending the TS Notice pursuant to Section 2.2. Upon receipt of the
Second Notice, each Investor shall have the right (by written notice to the
Transferring Stockholder and the Company to be sent within twenty (20) days
after the Investor receives the Second Notice) to require the Transferring
Stockholder to cause to be purchased from such Investor the number of shares of
Common Stock issued or issuable upon conversion of shares of Series A Preferred
Stock or Series B Preferred Stock, as applicable, then held by such Investor
that equals (x) the number of Sale Shares that the Transferring Stockholder
proposes to transfer, multiplied by (y) the percentage determined by dividing
(i) the number of shares of Common Stock issued and held, or issuable upon
conversion of the Preferred Stock then held, by the Investor by (ii) the number
of shares of Common Stock issued and held, or issuable upon conversion of the
Preferred Stock then held, by all of the Investors plus the number of shares of
Common Stock issued and held, or issuable upon conversion of the Preferred Stock
then held, by the Transferring Stockholder. Any such purchase shall take place
concurrently with the closing of the applicable Shares Transfer and in any event
within ninety (90) days after receipt of the TS Notice. The foregoing
restriction shall not apply to a transfer or series of transfers by an employee
or employees of the Company which transfer or series of transfers results in the
transfer of less than five percent (5%) of the Shares outstanding on a fully
diluted basis (including, for purpose of such calculation, all Shares issuable
upon exercise of outstanding options as being issued for any such employee and
for outstanding Shares generally).
Terms of Purchase
. The purchase from the Investors pursuant to Section 2.3 shall be on the same
terms and conditions, including per Share price and date of Shares Transfer, as
are received by the Transferring Stockholder and stated in the Second Notice
provided to the Investors; provided, however, that, in all events, the Sale
Shares (and any shares sold by Investors in accordance with this Section 2.3
above) shall continue to be subject to the terms of this Agreement and any such
transferee shall agree in writing to be bound by the obligations imposed upon
Stockholders under this Agreement as if such transferee were originally a
signatory to this Agreement.
Transfers Void
. Any attempted Shares Transfer by the Stockholders in violation of the terms of
this Article II shall be ineffective to vest in any transferee any interest held
by the Transferring Stockholder in the Shares. Without limiting the foregoing,
any purported Shares Transfer in violation hereof shall be ineffective as
against the Investors and the Investors shall have a continuing right and option
(but not an obligation), until the restrictions contained in this Article II
terminate, to purchase the Shares purported to be transferred by the
Transferring Stockholders for a price and on terms the same as those at which
the purported Shares Transfer was effected.
Termination of Restrictions
. The restrictions in this Article II shall terminate upon the consummation of a
Qualified IPO.

RIGHT OF FIRST OFFER

Right of First Offer. Subject to the terms and conditions specified in this
Article III, the Company hereby grants to each Investor and each Founder a right
of first offer with respect to future sales by the Company of its Shares or
securities convertible into or exercisable for any Shares (collectively,
"Offered Securities"). For purposes of this Section, "Investor" includes
transferees of any Investor and any general partners, members and/or affiliates
of an Investor and "Founder" includes transferees of any Founder. An Investor
shall be entitled to apportion the right of first offer hereby granted it among
itself and its partners and affiliates in such proportions as it deems
appropriate.

Each time the Company proposes to offer any Offered Securities, the Company
shall first make an offering of such Offered Securities to each Investor and
Founder in accordance with the following provisions:

 a. The Company shall deliver written notice (the "Offer Notice") to the
    Investors and Founders stating (i) its bona fide intention to offer such
    Offered Securities, (ii) the class, series and number of Offered Securities
    to be offered, and (iii) the price and terms upon which it proposes to offer
    such Offered Securities.
 b. Within thirty (30) days after receipt of the Offer Notice, each Investor and
    Founder may elect to purchase, at the price and on the terms specified in
    the Offer Notice, up to that portion of such Offered Securities which equals
    the proportion that the number of shares of Common Stock issued and held, or
    issuable upon conversion of the Series A Preferred Stock and the Series B
    Preferred Stock then held, by such Investor or Founder, as the case may be,
    bears to the total number of shares of Common Stock of the Company (assuming
    full conversion and exercise of all convertible or exercisable securities)
    then held by all the Company's Stockholders. The Company shall promptly give
    written notice to each Investor and Founder which purchases all the Offered
    Securities available to it (each, a "Fully-Exercising Investor or Founder")
    of any other Investor's or Founder's, as the case may be, failure to do
    likewise. During the twenty (20) day period commencing after receipt of such
    information, each Fully-Exercising Investor or Founder shall be entitled to
    obtain that portion of the Offered Securities not subscribed for by the
    Investors or Founders equal to the proportion the number of shares of Common
    Stock issued and held, or issuable upon conversion of Series A Preferred
    Stock or Series B Preferred Stock then held, by such Fully-Exercising
    Investor or Founder bears to the total number of shares of Common Stock
    issued and held, or issuable upon conversion of the Series A Preferred Stock
    or Series B Preferred Stock then held, by all Fully-Exercising Investors or
    Founders who wish to purchase some of the unsubscribed shares.
 c. If all Offered Securities are not purchased as provided in subsection (b),
    the Company may, during the forty-five (45) day period following the
    expiration of the period provided in subsection (b) hereof, offer the
    remaining unsubscribed portion of such Offered Securities to any person or
    persons at a price not less than, and upon terms no more favorable to the
    offeree than, those specified in the Notice. If the Company does not enter
    into an agreement for the sale of the Offered Securities within such period,
    or if such agreement is not consummated within forty-five (45) days of the
    execution thereof, the right provided hereunder shall be deemed to be
    revived and such Offered Securities shall not be offered unless first
    reoffered to the Investors and Founders in accordance herewith.
 d. The right of first offer in this Article III shall not be applicable to (i)
    the issuance by the Company of options to employees, directors or
    unaffiliated consultants (or to the exercise of such options) pursuant to
    option plans adopted by the Board of Directors in amounts calculated as
    follows: (A) options to purchase up to 3,000,000 shares of Common Stock
    reserved for issuance (subject to appropriate adjustments in the event of
    any stock dividend, stock split, combination or similar recapitalization
    affecting such shares), (B) options to purchase such number of shares of
    Common Stock that equals up to twenty percent (20%) of the Series A
    Preferred Stock and the Series B Preferred Stock (calculated on an
    as-converted basis), and (C) options to purchase such number of shares of
    Common Stock that equals up to twenty percent (20%) of any shares of future
    equity issued by the Company (calculated on an as-converted basis); (ii) the
    issuance of securities pursuant to the conversion or exercise of convertible
    or exercisable securities; (iii) the issuance of securities in connection
    with a bona fide business acquisition of or by the Company, whether by
    merger, consolidation, sale of assets, sale or exchange of stock or
    otherwise; (iv) the issuance of securities pursuant to equipment lease
    financing arrangements with equipment lessors which have been approved by
    the Board, including a majority of the Investor Directors; (v) the issuance
    of securities pursuant to a Qualified IPO; or (vi) issuances of shares of
    Series B Preferred Stock pursuant to the Series B Stock Purchase Agreement,
    including shares issued to any Additional Investors (as defined in the
    Series B Stock Purchase Agreement).

Termination of Rights. The rights and obligations of the Company and
Stockholders set forth in this Article III shall terminate upon the Closing of a
Qualified IPO.

3.3 For purposes of this Article III, the term "Investor" shall be deemed to
include the HomeworkCentral Holders (as defined in the First Amendment to
Stockholders Agreement executed in connection with the Company's acquisition of
Ho meworkCentral.com, Inc. on April 1, 2000), and for purposes of the
HomeworkCentral Holders, the number of shares of Common Stock held by such
persons shall include all shares issuable upon conversion or exercise of
convertible or exercisable securities held by such persons and such persons'
family members (and any trusts for the benefit thereof).

MANAGEMENT AND CONTROL

General. The business and affairs of the Company shall be managed, controlled
and operated in accordance with its certificate of incorporation and bylaws, as
the same may be amended from time to time, except that neither the certificate
of incorporation nor the bylaws shall be amended in any manner that would
conflict with, or be inconsistent with, the provisions of this Agreement.
Limitation on Certain Actions by the Company.
 a. The Company shall not take any of the actions listed in Section 4.2 (a)(i),
    (ii), (iii), (iv) and (ix) below without the written consent or affirmative
    vote of the holders of at least seventy percent (70%) of the then
    outstanding shares of Series B Preferred Stock and shall not take any of the
    actions listed in Section 4.2 (a)(v), (vi), (vii), (viii) and (x) below
    without the written consent or affirmative vote of the holders of at least
    fifty-one percent (51%) of the then outstanding shares of Preferred Stock,
    voting as a single class:
     i.    any amendment or change of the rights, preferences, privileges or
           powers of, or the restrictions provided for the benefit of, the
           Series B Preferred Stock;
     ii.   any action that authorizes, creates or issues shares of any class or
           series of stock having preferences superior to the Series B Preferred
           Stock;
     iii.  any action that reclassifies any outstanding shares into shares
           having preferences or priority as to dividends or assets senior to
           preferences of the Series B Preferred Stock;
     iv.   any amendment of the Company's Certificate of Incorporation that
           adversely affects the rights of the Series B Preferred Stock;
     v.    any transaction which is described in Section 2(c) of Article FOURTH
           of the Certificate of Incorporation of the Company unless holders of
           Preferred Stock receive at least $4.545 per share (subject to
           appropriate adjustments in the event of any stock dividend, stock
           split, combination or other similar recapitalization affecting such
           shares);
     vi.   the sale of all or substantially all of the Company's assets unless
           holders of Series A Preferred Stock receive at least $4.545 per share
           (subject to appropriate adjustments in the event of any stock
           dividend, stock split, combination or other similar recapitalization
           affecting such shares);
     vii.  the liquidation or dissolution of the Company;
     viii. the declaration or payment of a dividend on the Common Stock (other
           than a dividend payable solely in shares of Common Stock);
     ix.   taking any other actions adversely affecting the Series B Preferred
           Stock vis-à-vis the right of holders of any other securities of the
           Corporation, provided that issuances of pari passu securities shall
           not be deemed to be adverse affect the Series B Preferred Stock; or
     x.    the repurchase of any shares of Common Stock except from employees
           upon termination of employment pursuant to the terms and conditions
           of employment agreements approved by the Board.

 b. The Company shall not take any of the actions listed in Section 4.2 (b)(i),
    (ii), (iii), (iv) and (v) below without the written consent or affirmative
    vote of the holders of at least seventy percent (70%) of the then
    outstanding shares of Series A Preferred Stock:
     i.   any amendment or change of the rights, preferences, privileges or
          powers of, or the restrictions provided for the benefit of, the Series
          A Preferred Stock;
     ii.  any action that authorizes, creates or issues shares of any class or
          series of stock having preferences superior to the Series A Preferred
          Stock;
     iii. any action that reclassifies any outstanding shares into shares having
          preferences or priority as to dividends or assets senior to
          preferences of the Series A Preferred Stock;
     iv.  any amendment of the Company's Certificate of Incorporation that
          adversely affects the rights of the Series A Preferred Stock; or
     v.   taking any other actions adversely affecting the Series A Preferred
          Stock vis-à-vis the right of holders of any other securities of the
          Corporation, provided that issuances of pari passu securities shall
          not be deemed to be adverse affect the Series A Preferred Stock.

REGISTRATION RIGHTS

Definitions. As used in this Article V, the following terms shall have the
following meanings:
 a. "Commission" shall mean the Securities and Exchange Commission, or any other
    federal agency at the time administering the Securities Act.
 b. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
    or any similar federal statute and the rules and regulations thereunder, all
    as the same shall be in effect at the time.
 c. "Holder" shall mean any holder of outstanding Registrable Securities or
    anyone who holds outstanding Registrable Securities to whom the registration
    rights conferred by this Agreement have been transferred in compliance with
    this Agreement.
 d. "Initiating Holders" shall mean any Holder or Holders of at least
    twenty-five percent (25%) of the Registrable Securities then outstanding.
 e. "Register," "registered" and "registration" shall 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, and compliance with applicable state securities
    laws of such states in which Holders notify the Company of their intention
    to offer Registrable Securities.
 f. "Registrable Securities" shall mean all of the following to the extent the
    same have not been sold to the public (i) any and all shares of Common Stock
    of the Company, issued or issuable, upon conversion of shares of the
    Company's Series A Preferred Stock, Series B Preferred Stock and up to an
    aggregate of 7,600,000 shares (subject to appropriate adjustments in the
    event of any stock dividend, stock split, combination or other similar
    recapitalization affecting such shares) of Common Stock owned by Founders;
    or (ii) stock issued in respect of stock referred to in (i) above in any
    reorganization; or (iii) stock issued in respect of the stock referred to in
    (i) or (ii) as a result of a stock split, stock dividend, recapitalization
    or combination. Notwithstanding the foregoing, Registrable Securities shall
    not include otherwise Registrable Securities (i) sold by a person in a
    transaction in which his rights under this Agreement are not properly
    assigned; (ii) (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
    transaction exempt from the registration and prospectus delivery
    requirements of the Securities Act under Section 4(1) thereof so that all
    transfer restrictions, and restrictive legends with respect thereto, if any,
    are removed upon the consummation of such sale; or (iii) if they are held by
    a Holder who can sell all Registrable Securities held by such holder in any
    three-month period without registration pursuant to Rule 144.
 g. "Rule 144" shall mean Rule 144 under the Securities Act or any successor or
    similar rule as may be enacted by the Commission from time to time, but
    shall not include Rule 144A.
 h. "Securities Act" shall mean the Securities Act of 1933, as amended, or any
    similar federal statute and the rules and regulations thereunder, all as the
    same shall be in effect at the time.

Demand Registration.
 a. If the Company shall receive, at any time after the earlier of December 31,
    2002 or one hundred eighty (180) days following the effective date of a
    Qualified IPO, from Initiating Holders a written request that the Company
    effect any registration with respect to all or at least twenty-five percent
    (25%) of the issued and outstanding Registrable Securities held by Holders,
    the Company shall:
     i.  promptly give written notice of the proposed registration to all other
         Holders; and
     ii. as soon as practicable use its best efforts to register (including,
         without limitation, the execution of an undertaking to file
         post-effective amendments and any other governmental requirements) all
         Registrable Securities which the Initiating Holders request to be
         registered; provided, that the Company shall not be obligated to file a
         registration statement pursuant to this Section 5.2:
          A. in any particular state in which the Company would be required to
             execute a general consent to service of process in effecting such
             registration;
          B. within one hundred eighty (180) days following the effective date
             of any registered offering of the Company's securities to the
             general public in which the Holders of Registrable Securities shall
             have been able effectively to register all Registrable Securities
             as to which registration shall have been requested;
          C. in any registration having an aggregate offering price (before
             deduction of underwriting discounts and expenses of sale) of less
             than $5,000,000;
          D. after the Company has effected two such registrations by the
             Investors and two such Registrations by the Founders pursuant to
             this Section 5.2 and such registrations have been declared or
             ordered effective, except as provided in Section 5.3; or
          E. during the period starting with the date sixty (60) days prior to
             the Company's good faith estimate of the date of filing of, and
             ending on a date one hundred eighty (180) days after the effective
             date of, a registration subject to Section 5.3 hereof; provided
             that the Company is actively employing in good faith its best
             efforts to cause such registration statement to become effective;
             and provided further that the Company may not rely on this Section
             5.2(a)(ii)(E) more than once during the term of this Agreement to
             not register Registrable Securities pursuant to a request made by
             Initiating Holders pursuant to this Section 5.2.

    Subject to the foregoing clauses (A) through (E), the Company shall file a
    registration statement covering the Registrable Securities so requested to
    be registered as soon as practical, but in any event within sixty (60) days
    after receipt of the request or requests of the Initiating Holders and shall
    use reasonable best efforts to have such registration statement promptly
    declared effective by the Commission whether or not all Registrable
    Securities requested to be registered can be included; provided, however,
    that if the Company shall furnish to such 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 and its
    Stockholders for such registration statement to be filed within such sixty
    (60) day period and it is therefore essential to defer the filing of such
    registration statement, the Company shall have an additional period of not
    more than 60 days after the expiration of the initial sixty (60) day period
    within which to file such registration statement; provided, that during such
    time the Company may not file a registration statement for securities to be
    issued and sold for its own account except as contemplated by Section
    5.2(a)(ii)(E) above.

 b. If the Initiating Holders intend to distribute the Registrable Securities
    covered by their request by means of an underwriting, they shall so advise
    the Company as a part of their request. In such event, if so requested in
    writing by the Company, the Initiating Holders shall negotiate with an
    underwriter selected by the Company with regard to the underwriting of such
    requested registration; provided, however, that if a majority in interest of
    the Initiating Holders have not agreed with such underwriter as to the terms
    and conditions of such underwriting within twenty (20) days following
    commencement of such negotiations, a majority in interest of the Initiating
    Holders may select an underwriter of their choice. 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 such
    Holder's Registrable Securities in the underwriting (unless otherwise
    mutually agreed by a majority in interest of the Initiating Holders and such
    Holder) 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 underwriter
    or underwriters selected for such underwriting. Notwithstanding any other
    provision of this Section 5, if the managing underwriter advises the
    Initiating Holders in writing that marketing factors require a limitation of
    the number of shares to be underwritten, the Company shall so advise all
    Holders, and the number of shares of Registrable Securities that may be
    included in the registration and underwriting may be reduced up to an amount
    that is not less than twenty-five percent (25%) of all the securities
    included in such registration and the Registrable Securities to be included
    shall be allocated among all Holders thereof in proportion, as nearly as
    practicable, to the respective amounts of Registrable Securities held by
    such Holders; provided, however, that securities to be included in such
    registration statement as a result of piggyback registration rights not
    contained in this Article V as well as any securities to be offered by the
    Company, its officers and employees shall be excluded from the registration
    statement prior to the exclusion of any Registrable Securities held by the
    Holders and further provided that no Registrable Securities held by Holders
    other than the Founders shall be reduced if any Registrable Securities held
    by the Founders are included in the registration. If any Holder disapproves
    of the terms of the underwriting, he may elect to withdraw therefrom by
    written notice to the Company, the managing underwriter and the Initiating
    Holders. If, by the withdrawal of such Registrable Securities, a greater
    number of Registrable Securities held by other Holders may be included in
    such registration (up to the limit imposed by the underwriters) the Company
    shall offer to all Holders who have included Registrable Securities in the
    registration the right to include additional Registrable Securities in the
    same proportion used in determining the limitation as set forth above. Any
    Registrable Securities which are excluded from the underwriting by reason of
    the underwriter's marketing limitation or withdrawn from such underwriting
    shall be withdrawn from such registration.

Piggyback Registration.
 a. If at any time or from time to time, the Company shall determine to register
    any of its securities, for its own account or the account of any of its
    Stockholders, other than a registration relating solely to employee benefit
    plans, or a registration relating solely to a transaction pursuant to Rule
    145 under the Securities Act, a transaction relating solely to the sale of
    debt or convertible debt instruments or a registration on any form (other
    than Form S-1, S-2 or S-3, or their successor forms) which does not include
    substantially the same information as would be required to be included in a
    registration statement covering the sale of Registrable Securities, the
    Company will:
     i.  give to each Holder written notice thereof as soon as practicable prior
         to filing the registration statement; and
     ii. include in such registration and in any underwriting involved therein,
         all the Registrable Securities specified in a written request or
         requests, made within fifteen (15) days after receipt of such written
         notice from the Company, by any Holder or Holders, except as set forth
         in subsection (b) below.

 b. If the registration 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 subsection 5.3. In such event, the right of
    any Holder to registration pursuant to Section 5.3 shall be conditioned upon
    such Holder's participation in such underwriting and the inclusion of such
    Holder's Registrable Securities in the underwriting 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 underwriter or
    underwriters selected for such underwriting by the Company. Notwithstanding
    any other provision of this Section 5.3, if the managing underwriter advises
    the Holders who are participating in such underwriting in writing that
    marketing factors require a limitation of the number of shares to be
    underwritten, the managing underwriter may limit the number of Registrable
    Securities to be included in the registration and underwriting to an amount
    that is not less than twenty-five percent (25%) of all the securities
    included in such registration, or may exclude Registrable Securities
    entirely from such registration if the registration is the first registered
    offering for the sale of the Company's equity securities to the general
    public (provided that no shares held by officers and directors of the
    Company, other than Registrable Securities that may be owned by officers and
    directors, are included in the registration and underwriting and further
    provided that no Registrable Securities held by Holders other than the
    Founders shall be reduced if any Registrable Securities held by the Founders
    are included in the registration). The Company shall so advise all Holders,
    and the number of shares of Registrable Securities that may be included in
    the registration and underwriting shall be allocated first 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 and next to holders of piggyback registration rights
    not contained in this Article V. 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. If, by the withdrawal of such
    Registrable Securities, a greater number of Registrable Securities held by
    other Holders may be included in such registration (up to the limit imposed
    by the underwriters), the Company shall offer to all Holders who have
    included Registrable Securities in the registration the right to include
    additional Registrable Securities. Any Registrable Securities excluded or
    withdrawn from such underwriting shall be withdrawn from such registration.

Form S-3. The Company shall use its reasonable best efforts to qualify for
registration on Form S-3 or its successor form. After the Company has qualified
for the use of Form S-3, Initiating Holders shall have the right at any time to
request that the Company effect any registration on Form S-3 (such requests
shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of shares by
such Holders), subject only to the following:
 a. The Company shall not be required to file a registration statement pursuant
    to this Section 5.4 within one hundred eighty (180) days of the effective
    date of any registration referred to in Sections 5.2 and 5.3 above.
 b. The Company shall not be required to file a registration statement pursuant
    to this Section 5.4 unless the Holder or Holders requesting registration
    propose to dispose of shares of Registrable Securities having an aggregate
    disposition price (before deduction of underwriting discounts and expenses
    of sale) of at least $1,000,000.
 c. The Company shall not be required to file more than two registration
    statements pursuant to this Section 5.4 within any twelve-month period.

The Company shall give written notice to all Holders of Registrable Securities
of the receipt of a request for registration pursuant to this Section 5.4 and
shall provide a reasonable opportunity for other Holders to participate in the
registration; provided, that if the registration is for an underwritten
offering, the following terms shall apply to all participants in such offering:
The right of any Holder to registration pursuant to Section 5.4 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting 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 underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 5.4, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, the Company shall so advise all Holders,
and the number of shares of Registrable Securities that may be included in the
registration and underwriting may be reduced up to an amount that is not less
than twenty-five percent (25%) of all the securities included in such
registration and the Registrable Securities to be included shall be allocated
among all Holders thereof in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders; provided,
however, that securities to be included in such registration statement as a
result of piggyback registration rights not contained in this Article V as well
as any securities to be offered by the Company, its officers and employees shall
be excluded from the registration statement prior to the exclusion of any
Registrable Securities held by the Holders and further provided that no
Registrable Securities held by Holders other than the Founders shall be reduced
if any Registrable Securities held by the Founders are included in the
registration. 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
underwriter. If, by the withdrawal of such Registrable Securities, a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the limit imposed by the underwriters), the Company shall
offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities in the same
proportion used in determining the limitation as set forth above. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration. Subject to the foregoing, the Company will use
its best efforts to effect promptly the registration of all shares of
Registrable Securities on Form S-3 to the extent requested by the Holder or
Holders thereof for purposes of disposition.

Expenses of Registration. In addition to the fees and expenses contemplated by
Section 5.6 hereof, all expenses incurred in connection with registrations
pursuant to Sections 5.2, 5.3 and 5.4 hereof, including without limitation all
registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company and expenses of any special audits of
the Company's financial statements incidental to or required by such
registration, shall be borne by the Company, except that the Company shall not
be required to pay underwriters' fees, discounts or commissions relating to
Registrable Securities or fees of a separate legal counsel of a Holder.
Registration Procedures. In the case of each registration effected by the
Company pursuant to this Agreement, the Company will keep each Holder
participating therein advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense the Company will:
 a. keep such registration pursuant to Sections 5.2, 5.3 and 5.4 continuously
    effective for periods of one hundred twenty (120) days, or, in each case,
    such reasonable period necessary to permit the Holder or Holders to complete
    the distribution described in the registration statement relating thereto,
    whichever first occurs;
 b. promptly prepare and file with the Commission such amendments and
    supplements to such registration statement and the prospectus used in
    connection therewith as may be necessary to comply with the provisions of
    the Securities Act, and to keep such registration statement effective for
    that period of time specified in Subsection 5.6(a) above;
 c. furnish such number of prospectuses and other documents incident thereto as
    a Holder from time to time may reasonably request;
 d. use reasonable best efforts to obtain the withdrawal of any order suspending
    the effectiveness of a registration statement, or the lifting of any
    suspension of the qualification of any of the Registrable Securities for
    sale in any jurisdiction, at the earliest possible moment;
 e. subject to Subsection 5.2(a)(ii)(A), register or qualify such Registrable
    Securities for offer and sale under the securities or Blue Sky laws of such
    jurisdictions as any Holder or underwriter reasonably requires, and keep
    such registration or qualification effective during the period set forth in
    Subsection 5.6(a) above;
 f. cause all Registrable Securities covered by such registrations to be listed
    on each securities exchange, including NASDAQ, on which similar securities
    issued by the Company are then listed or, if no such listing exists, use
    reasonable best efforts to list all Registrable Securities on one of the New
    York Stock Exchanges, the American Stock Exchange or NASDAQ; and
 g. cause its accountants to issue to the underwriter, if any, or the Holders,
    if there is no underwriter, comfort letters and updates thereof, in
    customary form and covering matters of the type customarily covered in such
    letters with respect to underwritten offerings;
 h. enter into such customary agreements (including underwriting agreements in
    customary form) and take all such other actions as the holders of a majority
    of the Registrable Securities being sold or the underwriters, if any,
    reasonably, request in order to expedite or facilitate the disposition of
    such Registrable Securities (including, without limitation, effecting a
    stock split or a combination of shares);
 i. make available for inspection by any seller of Registrable Securities, any
    underwriter participating in any disposition pursuant to such registration
    statement, and any attorney, accountant or other agent retained by any such
    seller or underwriter, such financial and other records, pertinent corporate
    documents and properties of the Company, and cause the Company's officers,
    directors, employees and independent accountants to supply such information
    reasonably requested by any such seller, underwriter, attorney, accountant
    or agent in connection with such registration statement; and
 j. if the offering is underwritten, at the request of any Holder of Registrable
    Securities to furnish on the date that Registrable Securities are delivered
    to the underwriters for sale pursuant to such registration: (i) an opinion
    dated such date of counsel representing the Company for the purposes of such
    registration, addressed to the underwriters and to such Holder, stating that
    such registration statement has become effective under the Securities Act
    and that (A) to the best knowledge of such counsel, no stop order suspending
    the effectiveness thereof has been issued and no proceedings for that
    purpose have been instituted or are pending or contemplated under the
    Securities Act, (B) the registration statement, the related prospectus and
    each amendment or supplement thereof comply as to form in all material
    respects with the requirements of the Securities Act (except that such
    counsel need not express any opinion as to financial statements or other
    financial data contained therein) and (C) to such other effects as
    reasonably may be requested by counsel for the underwriters or by such
    Holder or its counsel and (ii) a letter dated such date from the independent
    public accountants retained by the Company, addressed to the underwriters
    and to such seller, stating that they are independent public accountants
    within the meaning of the Securities Act and that, in the opinion of such
    accountants, the financial statements of the Company included in the
    registration statement or the prospectus, or any amendment or supplement
    thereof, comply as to form in all material respects with the applicable
    accounting requirements of the Securities Act, and such letter shall
    additionally cover such other financial matters (including information as to
    the period ending no more than five (5) business days prior to the date of
    such letter) with respect to such registration as such underwriters
    reasonably may request;
 k. notify each Holder, at any time a prospectus covered by such registration
    statement is required to be delivered under the Securities Act, of the
    happening of any event of which it has knowledge 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; and
 l. take such other actions as shall be reasonably requested by any Holder.

Indemnification.
 a. In the event of a registration of any of the Registrable Securities under
    the Securities Act pursuant to Sections 5.2, 5.3 or 5.4, the Company will
    indemnify, defend and hold harmless each Holder of such Registrable
    Securities thereunder, each underwriter of such Registrable Securities
    thereunder and each other person, if any, who controls such Holder or
    underwriter within the meaning of the Securities Act, against any losses,
    claims, damages or liabilities, joint or several, to which such Holder,
    underwriter or controlling person may become subject under the Securities
    Act or otherwise, insofar as such losses, claims, damages or liabilities (or
    actions in respect thereof) arise out of or are based upon any untrue
    statement or alleged untrue statement of any material fact contained in any
    registration statement under which such Registrable Securities were
    registered under the Securities Act, any preliminary prospectus or final
    prospectus contained therein, or any amendment or supplement thereof, or
    arise out of or are based upon the 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
    any rule or regulation promulgated under the Securities Act or any state
    securities law applicable to the Company and relating to action or inaction
    required of the Company in connection with any such registration, and will
    indemnify 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 reasonable legal and any
    other expenses incurred in connection with investigating, defending or
    settling 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 or liability arises out of or is based on any untrue
    statement or omission based upon written information furnished to the
    Company by an instrument duly executed by such Holder or underwriter
    specifically for use therein; provided, further, that the Company shall not
    be liable if any such omission or statement of material fact is corrected in
    a later prospectus that was provided to the Investors in a timely manner by
    the Company and the Investors did not deliver such updated prospectus.
 b. Each Holder will, if Registrable Securities held by or issuable to such
    Holder are included in the securities as to which such registration is being
    effected, indemnify and hold harmless the Company, each of its directors and
    officers, each underwriter, if any, of the Company's securities covered by
    such a registration statement, each person who controls the Company and each
    underwriter within the meaning of the Securities Act, and each other such
    Holder, each of its officers, directors and partners and each person
    controlling such Holder, against all claims, losses, expenses, 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 or underwriters for any reasonable
    legal or any other expenses incurred in connection with investigating,
    defending or settling 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 specifically for use
    therein; provided, however, the total amount for which any Holder, its
    officers, directors and partners, and any person controlling such Holder,
    shall be liable under this Section 5.7 shall not in any event exceed the
    aggregate proceeds received by such Holder from the sale of Registrable
    Securities sold by such Holder in such registration.
 c. Each party entitled to indemnification under this Section 5.7 (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 claims 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
    not be unreasonably 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 hereunder, unless such failure
    resulted in actual detriment to the Indemnifying 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 of such claim or litigation.
 d. Notwithstanding the foregoing, to the extent that the provisions on
    indemnification contained in the underwriting agreements entered into among
    the selling Holders, the Company and the underwriters in connection with the
    underwritten public offering are in conflict with the foregoing provisions,
    the provisions in the underwriting agreement shall be controlling as to the
    Registrable Securities included in the public offering; provided, however,
    that if, as a result of this Subsection 5.7(d), any Holder, its officers,
    directors, and partners and any person controlling such Holder is held
    liable for an amount which exceeds the aggregate proceeds received by such
    Holder from the sale of Registrable Securities included in a registration,
    as provided in Subsection 5.7(b) above, pursuant to such underwriting
    agreement (the "Excess Liability"), the Company shall reimburse any such
    Holder for such Excess Liability.
 e. If the indemnification provided for in this Section 5.7 is held by a court
    of competent jurisdiction to be unavailable to an indemnified party with
    respect to any loss, liability, claim, damage or expense referred to
    therein, then the indemnifying party, in lieu of indemnifying such
    indemnified party thereunder, shall contribute to the amount paid or payable
    by such indemnified party as a result of such loss, liability, claim, damage
    or expense in such proportion as is appropriate to reflect the relative
    fault of the indemnifying party on the one hand and of the indemnified party
    on the other hand in connection with the statements or omissions which
    resulted in such loss, liability, claim, damage or expense as well as any
    other relevant equitable considerations. The relevant fault of the
    indemnifying party and the indemnified party shall be determined by
    reference to, among other things, whether the untrue or alleged untrue
    statement of a material fact or the omission or alleged omission to state a
    material fact relates to information supplied by the indemnifying party or
    by the indemnified party and the parties' relative intent, knowledge, access
    to information and opportunity to correct or prevent such statement or
    omission. Notwithstanding the foregoing, the amount any Holder shall be
    obligated to contribute pursuant to this Subsection 5.7(e) shall be limited
    to an amount equal to the proceeds to such Holder of the Restricted
    Securities sold pursuant to the registration statement which gives rise to
    such obligation to contribute (less the aggregate amount of any damages
    which the Holder has otherwise been required to pay in respect of such loss,
    claim, damage, liability or action or any substantially similar loss, claim,
    damage, liability or action arising from the sale of such Restricted
    Securities).
 f. Survival of Indemnity. The indemnification provided by this Section 5.7
    shall be a continuing right to indemnification and shall survive the
    registration and sale of any securities by any Person entitled to
    indemnification hereunder and the expiration or termination of this
    Agreement.

Lockup Agreement. In consideration for the Company agreeing to its obligations
under this Agreement, each Holder agrees in connection with any registration of
the Company's securities (whether or not such Holder is participating in such
registration) upon the request of the Company and 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 any
Registrable Securities (other than those included in the registration) 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 in the
case of the Company's initial public offering and ninety (90) days in any other
public offering) from the effective date of such registration as the Company and
the underwriters may specify, so long as all Holders or stockholders holding
more than one percent (1%) of the outstanding common stock and all officers and
directors of the Company are, and continue to be, bound by a comparable
obligation; provided, however, that nothing herein shall prevent any Holder that
is a partnership or corporation from making a distribution of Registrable
Securities to the partners or Stockholders thereof that is otherwise in
compliance with applicable securities laws, so long as such distributees agree
to be so bound. Rule 144. With a view to making available to Holders of
Registrable Securities the benefits of certain rules and regulations of the
Commission which may permit the sale of the Registrable Securities to the public
without registration, the Company agrees at all times after ninety (90) days
after the effective date of the first registration filed by the Company for an
offering of its securities to the general public to:
 a. make and keep public information available, as those terms are understood
    and defined in Rule 144; and
 b. use its reasonable best efforts to file with the Commission in a timely
    manner all reports and other documents required of the Company under the
    Securities Act and the Exchange Act.

Transfer of Registration Rights. The rights to cause the Company to register
Registrable Securities of a Holder and other rights under this Section 5 may be
assigned by a Holder to any partner or Stockholder of such Holder, to any other
Holder, or to a transferee or assignee who receives at least 50,000 shares of
Registrable Securities (as adjusted for any stock split, stock dividend or
recapitalization after the date of the first issuance of the Series A Preferred
Stock); provided, that the Company is given written notice by the Holder at the
time of or within a reasonable time after said transfer, stating the name and
address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being assigned. Limitations on
Subsequent Registration Rights. From and after the date these registration
rights are granted, the Company shall not, without the prior written consent of
the Investors with at least fifty-one percent (51%) of the outstanding shares of
Registrable Securities held by all Investors, 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 include such securities in any registration
filed under Sections 5.2, 5.3 and 5.4 hereof other than rights subordinate to
the rights of any Holder hereunder; provided, further, that granting
registration rights to holders in connection with a Rule 145 transaction shall
not require the approval of the Investors. Termination of Rights. The rights and
obligations of the Company and the Stockholders set forth in this Article V
shall terminate on December 31, 2006 (except for the provisions in regard to
indemnification which shall continue and shall survive the termination hereof).
Notwithstanding anything contained herein to the contrary, any Holder who may
sell all such Holder's shares of Registrable Securities in any three-month
period without registration pursuant to Rule 144 shall not be entitled to the
registration rights set forth in Sections 5.2, 5.3 and 5.4 above.

MISCELLANEOUS

Information Rights. For so long as the Company is not subject to the periodic
reporting requirements of Section 12 of the Securities Exchange Act of 1934, as
amended, the Investors shall have the right to receive the information stated in
this Section 6.1 from the Company.
Periodic Financial and Other Information
. So long as an Investor is the holder of not less than (i)100,000 shares of
Series A Preferred Stock, (ii) 100,000 shares of Series B Preferred Stock, or
(iii) 200,000 shares of Series A Preferred Stock and/or Series B Preferred Stock
in the aggregate:
 i.   within ninety (90) days after the end of each fiscal year of the Company,
      the Company will provide such Investor with financial statements of the
      Company for such fiscal year, consisting of an income statement, balance
      sheet and statement of changes in financial position, and prepared in
      accordance with generally accepted accounting principles consistently
      applied ("GAAP") which may be audited by such Investor's internal auditors
      at such times and from time to time as such Investor deems appropriate;
      the Company shall provide such Investor with full access to its premise,
      officers, employees, books and records as shall be requested by such
      Investor in order to exercise such audit right;
 ii.  within forty-five (45) days after the end of each quarterly accounting
      period of each fiscal year of the Company, the Company will provide such
      Investor with an unaudited income statement, balance sheet and statement
      of changes in financial position with comparisons to budget and the
      immediately preceding fiscal year for such quarter and for the year to
      date, prepared in accordance with GAAP;
 iii. within thirty (30) days after the end of each fiscal month, commencing
      with the first fiscal month ending after the date hereof or ending in the
      thirty (30) day period before the date hereof, the Company will provide
      such Investor with internal monthly financial and operating statements for
      such month, plus a statement setting forth a comparison by reasonable
      categories to the applicable budget and comparable figures for the prior
      year; and
 iv.  within thirty (30) days after the end of each fiscal year, the Company
      will provide such Investor with an annual budget for the next succeeding
      fiscal year, with the first such annual budget to be provided January 30,
      2001;

provided, however, that the Company need not provide any such budgets to any
Investor which has entered into, or is actively preparing to enter into,
significant competition with the Company.

Additional Information
. So long as an Investor is the holder of not less than (i)100,000 shares of
Series A Preferred Stock, (ii) 100,000 shares of Series B Preferred Stock, or
(iii) 200,000 shares of Series A Preferred Stock and/or Series B Preferred Stock
in the aggregate, the Company will permit such Investor or any representative of
such Investor to visit and inspect the Company's premises and properties,
including its books and records of account, from time to time, and to discuss
the Company's business, finances and accounts with the Company's officers at
reasonable times during the Company's regular business hours, upon reasonable
advance written notice to the Company and in a manner that will not unreasonably
interfere with the normal business operations of the Company; and
Books and Records
. The Company will keep books and records of account in which full, accurate and
correct entries in all material respects will be made of all dealings and
transactions in relation to the business and affairs of the Company in
accordance with GAAP.

(d) For purposes of this Section 6.1, a HomeworkCentral Holder (as defined in
the First Amendment to Stockholders Agreement executed in connection with the
Company's acquisition of HomeworkCentral.com, Inc. on April 1, 2000) shall be
deemed to be an "Investor" who is a "holder of not less than 100,000 shares of
Series A Preferred Stock" so long as such HomeworkCentral Holder owns,
individually or together with such HomeworkCentral Holder's family members, in
excess of 100,000 shares of Common Stock of the Company, including all shares
issuable upon conversion or exercise of convertible or exercisable securities
held by such persons (and any trusts for the benefit thereof).

Transfer of Stock. Except as otherwise expressly provided by this Agreement,
each Stockholder agrees not to transfer any of his shares of capital stock of
the Company unless the transferee agrees in writing to be bound by the terms and
conditions of this Agreement and executes a counterpart of this Agreement, and
unless such Stockholder has complied with applicable law and all provisions of
this Agreement in connection with such transfer. Duration of Agreement. Except
for those provisions that, by their terms, terminate sooner, the rights and
obligations of the Company and each Stockholder under this Agreement shall
terminate as to such Stockholder on the earliest to occur of the following: (a)
the transfer in accordance with this Agreement of all Shares held by such
Stockholder or (b) upon the written consent of the Company and the holders of at
least a majority of the shares of capital stock then subject to this Agreement,
based upon voting power and calculated on an "as if converted" basis, together
with the consent of Investors and Founders holding at least sixty percent (60%)
of the outstanding Shares held by the Investors and the Founders outstanding on
the date hereof. Legend. In addition to any legends which the Company determines
to be reasonably necessary at the time of issuance to comply with restrictions
or requirements imposed by Federal or state securities laws or by General
Corporation Law of the State of Delaware, each certificate representing shares
of Series A Preferred Stock, Series B Preferred Stock and Common Stock shall
bear the following legend, until such time as the shares of Series A Preferred
Stock, Series B Preferred Stock and Common Stock represented thereby are no
longer subject to the provisions hereof:

"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT WHICH INCLUDES, AMONG OTHER
THINGS, TRANSFER RESTRICTIONS AND A VOTING AGREEMENT. COPIES OF THE STOCKHOLDERS
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY'S SECRETARY."

Severability; Governing Law. If any provisions of this Agreement shall be
determined to be illegal or unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms.
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Delaware. Injunctive Relief. It is acknowledged
that it will be impossible to measure the damages that would be suffered by the
nonbreaching party if any party fails to comply with the provisions of this
Agreement and that in the event of any such failure, the nonbreaching parties
will not have an adequate remedy at law. The non-breaching parties shall,
therefore, be entitled to obtain specific performance of the breaching party's
obligations hereunder and to obtain immediate injunctive relief. The breaching
party shall not urge, as a defense to any proceeding for such specific
performance or injunctive relief, that the nonbreaching parties have an adequate
remedy at law. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled. Binding Effect. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assignees, legal representatives and heirs.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. The administrator,
executor or legal representative of any deceased or incapacitated Stockholder
shall have the right to execute and deliver all documents and perform all acts
necessary to exercise and perform the rights and obligations of such Stockholder
under the terms of this Agreement. Additional Stockholders. Prior to being
issued Shares, all future stockholders of the Company during the term of this
Agreement shall agree to be Additional Stockholders and to be bound by the terms
and provisions of this Agreement, including, without limitation, those who
obtain Shares through the exercise of the options described in Section 3.1(d).
The Company shall add Additional Stockholders by joinder whereby the Additional
Stockholders shall sign a counterpart to this Agreement and the Schedule A
hereto shall be amended to reflect the Shares issued to the Additional
Stockholder. The joinder of an Additional Stockholder as contemplated by the
preceding sentence shall not constitute an amendment to this Agreement requiring
the consent of the existing Stockholders except as may otherwise required by
this Agreement in connection with the issuance of such Shares. Promptly
following the addition of an Additional Stockholder, the Company shall
distribute to all Stockholders copies of this Agreement executed by the
Additional Stockholder with a revised Schedule A. Modification or Amendment.
Neither this Agreement nor any provisions hereof can be modified, amended,
changed, discharged or terminated except by an instrument in writing, signed by
the Company and the holders of at least a majority of the shares of capital
stock then subject to this Agreement, based upon voting power and calculated on
an "as if converted" basis, together with the consent of Investors and Founders
holding at least sixty percent (60%) of the outstanding Shares held by the
Investors and the Founders outstanding on the date hereof. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one
and the same instrument. Notices. All notices to be given or otherwise made to
any party to this Agreement shall be deemed to be sufficient if contained in a
written instrument, delivered by hand in person, or by express overnight courier
service, or by electronic facsimile transmission (with a copy sent by
first-class mail, postage prepaid), or by registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth on Schedule A to the Series B Stock Purchase Agreement or at such other
address as may heretofore or hereafter been designated in writing by the
addressee to the addressor.

All such notices shall, when mailed or transmitted, be effective when received
or when attempted delivery is refused.

No Other Agreements. Each Stockholder represents that he has not granted and is
not a party to any proxy, voting trust or other agreement which is inconsistent
with or conflicts with the provisions of this Agreement, and no holder of Shares
shall grant any proxy or become party to any voting trust or other agreement
which is inconsistent with or conflicts with the provisions of this Agreement.
Certificate of Incorporation and Bylaws. The certificate of incorporation and
bylaws of the Company may be amended in any manner permitted thereunder, except
that neither the certificate nor the bylaws shall be amended in any manner that
would conflict with, or be inconsistent with, the provisions of this Agreement.
Significant Competition. Each of the Stockholders covenants that, in the event
such Stockholder actively prepares to enter into significant competition with
the Company, such Stockholder shall provide immediate notice to the Company in
writing. Each of the Stockholders covenants that it will promptly respond to any
inquiries by the Company regarding (i) whether such Stockholder has entered
into, or is actively preparing to enter into, significant competition with the
Company and (ii) the extent of any such competition Stock Splits, etc. All
references in this Agreement to share numbers and thresholds based on share
numbers are subject to proportional adjustments for stock splits, stock
combinations, stock dividends or other like forms of recapitalization.

IN WITNESS WHEREOF, the Company, the Investors and the Founders have executed
this agreement in counterparts as of the date first above specified.

"Company"

BIGCHALK.COM, INC. 

By: /s/ John J. Lynch, Jr.

Name: John J. Lynch, Jr.
Title: President & CEO

 

"Stockholders"

TBG INFORMATION INVESTORS LLC

 By: /s/ Jack W. Blumenstein

Name: Jack W. Blumenstein
Title: President

 

CORE LEARNING GROUP LLC

 By: /s/ William E. Oberndorf

Name: William E. Oberndorf
Title: Chairman

 

CORE LEARNING GROUP BC, LLC

 By: /s/ William E. Oberndorf

Name: William E. Oberndorf
Title: Chairman

 

APA EXCELSIOR V, L.P.

By: APA Excelsior Partners L.P.,
its General Partner
By: Patricof & Co. Managers, Inc.
its General Partner

 By: /s/ George M. Jenkins

Name: George M. Jenkins
Title:

 

PATRICOF PRIVATE INVESTMENT CLUB II, L.P.

By: APA Excelsior Partners L.P.,
its General Partner
By: Patricof & Co. Managers, Inc.
its General Partner

 By: /s/ George M. Jenkins

Name: George M. Jenkins
Title:

 

SOFTBANK VENTURES, INC.

 By: /s/ Keisoko Chuman

Name: Keisoko Chuman
Title: President & CEO

 

BELL & HOWELL INFORMATION AND
LEARNING COMPANY

 By: /s/ Nils Johanson

Name: Nils Johanson
Title: Vice President

 

INFONAUTICS, INC.

 By: /s/ David Van Riper Morris

Name: David Van Riper Morris
Title: President & CEO

 

IGSB LSP I, LLC

 By: /s/ Timothy K. Bliss

Name: Timothy K. Bliss
Title: Manager

 

 

 

"Additional Stockholders"

Stockholder:

By: /s/ Frank A. Bonsal, Jr.

Name: Frank A. Bonsal, Jr.
Title:

 

Stockholder:

By:

Name:
Title:

 

Stockholder:

By:

Name:
Title:

 

Stockholder:

By:

Name:
Title:

 

Stockholder:

By:

Name:
Title:

 

.:

SCHEDULE A

FORMATION ISSUANCES

Founders

Number of Shares of Common Stock

BELL & HOWELL INFORMATION AND LEARNING COMPANY

10,366,667

INFONAUTICS, INC.

4,633,333

Gerald Frankel

 

Anne Toder

 

Toder Trust

 

Peter C. Van Roden

 

[Executive Officers](1)

 

[Directors](1)

 

(1) For purposes of Article III (Right of First Offer) of this agreement, this
party shall not be deemed to be a "Founder" and shall not be deemed to be a
party to said Article III.

SERIES A PREFERRED STOCK

Investors

Number of Shares of
Series A Preferred Stock

TBG INFORMATION INVESTORS LLC

3,010,000

CORE LEARNING GROUP LLC

2,510,000

CORE LEARNING GROUP BC, LLC

500,000

APA EXCELSIOR V, L.P.

1,486,941

PATRICOF PRIVATE INVESTMENT CLUB II, L.P.

18,060

FRANK A. BONSAL, JR.

35,715

WS INVESTMENT COMPANY 99B

14,286

ALAN K. AUSTIN

14,286

THE SAN DOMENICO TRUST

3,286

TIMOTHY J. SPARKS

7,143

DANIEL K. YUEN

285

SERIES A PREFERRED TOTAL

7,600,002

 

 

SERIES B PREFERRED STOCK

Investors

Number of Shares of
Series B Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

ADDITIONAL ISSUANCES

NAME

Number and Class of Shares