Document:

exv10w3

Exhibit 10.3

INDEMNITY AGREEMENT

          This Indemnity Agreement (“Agreement”) is made as of [                    ] by and between
Archipelago Learning, Inc. a Delaware corporation (the “Company”), and [                    ]
(“Indemnitee”).

RECITALS

          WHEREAS, highly competent persons have become more reluctant to serve publicly-held
corporations as directors, officers or in other capacities unless they are provided with adequate
protection through insurance or adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities on behalf of the corporation.

          WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in
order to attract and retain qualified individuals, the Company will maintain on an ongoing basis,
at its sole expense, liability insurance to protect persons serving the Company and its
subsidiaries from certain liabilities. The Certificate of Incorporation (the “Charter”) of
the Company and the Bylaws (the “Bylaws”) of the Company provide for indemnification of the
officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant
to the Delaware General Corporation Law (“DGCL”). The Charter, Bylaws and the DGCL
expressly provide that the indemnification provisions set forth therein are not exclusive, and
thereby contemplate that contracts may be entered into between the Company and members of the board
of directors, officers and other persons with respect to indemnification.

          WHEREAS, the uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons.

          WHEREAS, the Board has determined that the increased difficulty in attracting and retaining
such persons is detrimental to the best interests of the Company’s stockholders and that the
Company should act to assure such persons that there will be increased certainty of such protection
in the future.

          WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified.

          WHEREAS, this Agreement is a supplement to and in furtherance of the Charter and Bylaws and
any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to
diminish or abrogate any rights of Indemnitee thereunder.

          NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:

 

 

     1. Services to the Company. Indemnitee will serve as a director and/or officer of the Company
or Enterprise for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders
his resignation or is terminated.

     2. Definitions. For purposes of this Agreement, the following terms shall have the following
meanings:

          (a) “Corporate Status” describes the status of a person who is or was a director, officer,
trustee, partner, managing member, fiduciary, employee or agent of the Company or of any other
Enterprise which such person is or was serving at the request of the Company.

          (b) “Disinterested Director” shall mean a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by Indemnitee.

          (c) “Enterprise” shall mean the Company, any Subsidiary of the Company and any other
corporation, limited liability company, partnership, limited partnership, limited liability
partnership, joint venture, trust, employee benefit plan or other Enterprise of which Indemnitee is
or was serving at the request of the Company as a director, officer, employee, trustee, partner,
managing member, fiduciary, employee or agent.

          (d) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

          (e) “Expenses” shall include attorneys’ fees and costs, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses
in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being
or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall
include Expenses incurred in connection with any appeal resulting from any Proceeding, including
without limitation, the premium, security for, and other costs relating to any cost bond,
supersedeas bond, or other appeal bond or its equivalent.

          (f) “Independent Counsel” shall mean a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past five years has
been, retained to represent: (i) the Company or Indemnitee in any matter material to either such
party (other than with respect to matters concerning the Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements), or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing,
the term “Independent Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

          (g) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange
Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, and (iii)

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any corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.

          (h) The term “Proceeding” shall include any threatened, pending or completed action, suit,
claim, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether brought in the right of
the Company or otherwise and whether of a civil (including intentional or unintentional tort
claims), criminal, administrative or investigative nature, in which Indemnitee was, is or will be
involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or
officer of the Company, by reason of any action taken by him or of any inaction on his part while
acting as director or officer of the Company, or by reason of the fact that he is or was serving at
the request of the Company as a director, officer, trustee, general partner, managing member,
fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such
capacity at the time any liability or expense is incurred for which indemnification, reimbursement,
or advancement of expenses can be provided under this Agreement.

          (i) “Subsidiary” shall mean, in respect of any Person, any corporation, association, limited
liability company, partnership or other business entity of which more than 50% of the total voting
power of shares of capital stock or other interests (including partnership or membership interests)
entitled (without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly,
by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.

          (j) References to “fines” shall include any excise tax assessed with respect to any employee
benefit plan; references to “serving at the request of the Company” shall include any service as a
director, officer, trustee, partner, managing member, fiduciary, employee or agent of the Company
or which imposes duties on, or involves services by, such director, officer, trustee, partner,
managing member, fiduciary, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably
believed to be in the best interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company”
as such terms are referred to in this Agreement and used in the DGCL.

     3. Indemnity in Third-Party Proceedings. The Company shall indemnify and hold harmless
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is made, or is
threatened to be made, a party to or a participant in (as a witness or otherwise) any Proceeding,
other than a Proceeding by or in the right of the Company to procure a judgment in its favor.
Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses,
judgments, liabilities, fines, penalties and amounts paid in settlement (including, without
limitation, all interest, assessments and other charges paid or payable in connection with or in
respect of any of the foregoing) (collectively, “Losses”) actually and reasonably incurred
by Indemnitee or on his or her behalf in connection with such Proceeding or any action, discovery
event, claim, issue or matter therein or related thereto, if Indemnitee acted in good faith, for a
purpose which he reasonably believed to be in or not opposed to the best interests of the Company
and, in the case of a criminal Proceeding, in addition, had no reasonable cause to believe that his
or her conduct was unlawful.

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     4. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify
and hold harmless Indemnitee in accordance with the provisions of this Section 4 if
Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness or
otherwise) in any Proceeding by or in the right of the Company to procure a judgment in its favor.
Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually
and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim,
issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company. If applicable law so requires, no
indemnification for Expenses shall be made under this Section 4 in respect of any claim,
issue or matter as to which Indemnitee shall have been finally adjudged by a court in a
non-appealable decision to be liable to the Company, unless and only to the extent that any court
in which the Proceeding was brought or the Delaware Court (as defined below) shall determine upon
application that, despite the adjudication of liability but in view of all the circumstances of the
case, Indemnitee is fairly and reasonably entitled to indemnification.

     5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is a party to (or a
participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of
any claim, issue or matter therein, in whole or in part, the Company shall indemnify and hold
harmless Indemnitee against all Expenses actually and reasonably incurred by him in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify and hold harmless Indemnitee against all Expenses actually
and reasonably incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. If the Indemnitee is not wholly successful in such Proceeding, the Company
also shall indemnify and hold harmless Indemnitee against all Expenses reasonably incurred in
connection with a claim, issue or matter related to any claim, issue, or matter on which the
Indemnitee was successful. For purposes of this Section 5 and without limitation, the
termination of any claim, issue or matter in such a Proceeding by withdrawal or dismissal, with or
without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

     6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness,
or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is
not a party, he shall be indemnified and held harmless against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.

     7. Additional Indemnification.

          (a) Notwithstanding any limitation in Sections 3, 4 or 5 hereof, the
Company shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee is made, or
is threatened to be made, a party to any Proceeding (including a Proceeding by or in the right of
the Company to procure a judgment in its favor) against all Losses actually and reasonably incurred
by Indemnitee in connection with the Proceeding. No indemnification shall be made under this
Section 7(a) on account of Indemnitee’s conduct which constitutes a breach of Indemnitee’s
duty of loyalty to the Company or its stockholders or is an act or omission not in good faith or
which involves intentional misconduct or a knowing violation of the law.

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          (b) For purposes of Section 7(a) hereof, the meaning of the phrase “to the fullest
extent permitted by law” shall include, but not be limited to:

               i. to the fullest extent authorized or permitted by the provisions of the DGCL as in effect as
of the date of this Agreement that authorize or contemplate indemnification by agreement; and

               ii. to the fullest extent authorized or permitted by any amendments to or replacements of the
DGCL adopted after the date of this Agreement that increase the extent to which a corporation may
indemnify its officers and directors.

     8. Contribution in the Event of Joint Liability.

          (a) Whether or not any of the indemnification and hold harmless rights provided in
Sections 3, 4, 5 and 7 hereof are available in respect of
any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in
such Proceeding), the Company shall pay, in the first instance, the entire amount of any judgment
or settlement of such Proceeding without requiring Indemnitee to contribute to such payment, and
the Company hereby waives and relinquishes any right of contribution it may have against
Indemnitee. The Company shall not enter into any settlement of any Proceeding in which the Company
is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement
provides for a full and final release of all claims asserted against Indemnitee.

          (b) Without diminishing or impairing the obligations of the Company set forth in the preceding
subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion
of any judgment or settlement in any Proceeding in which the Company is jointly liable with
Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the amount
of Expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually
incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the
Company and all officers, directors or employees of the Company other than Indemnitee who are
jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and
Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided,
however, that the proportion determined on the basis of relative benefit may, to the extent
necessary to conform to law, be further adjusted by reference to the relative fault of the Company
and all officers, directors or employees of the Company other than Indemnitee who are jointly
liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee,
on the other hand, in connection with the events that resulted in such expenses, judgments, fines
or amounts paid in settlement, as well as any other equitable considerations. The relative fault
of the Company and all officers, directors or employees of the Company other than Indemnitee who
are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and
Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree
to which their actions were motivated by intent to gain personal profit or advantage, the degree to
which their liability is primary or secondary, and the degree to which their conduct is active or
passive.

          (c) The Company hereby agrees to fully indemnify and hold harmless Indemnitee from any claims
for contribution which may be brought by officers, directors or employees of the Company other than
Indemnitee who may be jointly liable with Indemnitee.

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     9. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be
obligated under this Agreement to make any indemnity payment in connection with any claim made
against Indemnitee:

          (a) for which payment actually has been received by or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect to any excess beyond the amount
actually received under any insurance policy or other indemnity provision; or

          (b) for an accounting of profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or
similar provisions of state statutory law or common law; or

          (c) except as otherwise provided in Sections 14(d)-(e) hereof, in connection with any
Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or
any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers,
employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any
Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law; or

          (d) to the extent such payment would violate Section 402 of the Sarbanes-Oxley Act of 2002.

     10. Advances of Expenses; Defense of Claim.

          (a) Notwithstanding any provision of this Agreement to the contrary, the Company shall advance
the Expenses incurred by or on behalf of Indemnitee to the fullest extent permitted by law in
connection with any Proceeding within ten (10) business days after the receipt by the Company of a
statement or statements (including, at the request of the Company, reasonable detail underlying the
expenses for which payment is requested) requesting such advances from time to time, whether prior
to or after final disposition of any Proceeding. Advances shall be unsecured, interest free and
shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to
Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.
Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce
this right of advancement, including Expenses incurred preparing and forwarding statements to the
Company to support the advances claimed. The Indemnitee shall qualify for advances solely upon the
execution and delivery to the Company of an undertaking providing that the Indemnitee undertakes to
repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to
be indemnified by the Company. This Section 10(a) shall not apply to any claim made by
Indemnitee for which indemnity is excluded pursuant to Section 9 hereof.

          (b) The Company will be entitled to participate in the Proceeding at its own cost and expense.

          (c) In the event the Company shall be obligated under this Section 10 hereof to pay
the Expenses of any Proceeding against Indemnitee, the Company, if appropriate, shall be entitled
to assume the defense of such Proceeding, with counsel approved by Indemnitee, which

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approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice
of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee
and the retention of such counsel by the Company, the Company will not be liable to Indemnitee
under this Agreement for any fees of counsel subsequently paid or incurred by Indemnitee with
respect to the same Proceeding, provided that (a) Indemnitee shall have the right to employ his
counsel in any such Proceeding at Indemnitee’s expense; and (b) the fees and expenses of
Indemnitee’s counsel shall be at the expense of the Company if (1) the employment of counsel by
Indemnitee has been authorized by the Company, (2) (i) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company (or any other person or persons
included in a joint defense) and Indemnitee in the conduct of any such defense or (ii)
representation by such counsel retained by the Company would be precluded under the applicable
standards of professional conduct, or (3) the Company shall not, in fact, have employed counsel to
assume the defense of such Proceeding. The Company shall not be entitled to assume the defense of
any Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have
reasonably made the conclusion provided for in (2) above.

     11. Procedure for Notification and Application for Indemnification.

          (a) Indemnitee agrees to notify promptly the Company in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of Expenses covered
under this Agreement. The failure of Indemnitee to so notify the Company shall not relieve the
Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise
unless the Company is materially prejudiced by such failure.

          (b) Indemnitee shall thereafter deliver to the Company a written application to indemnify and
hold harmless Indemnitee in accordance with this Agreement. Such application(s) may be delivered
from time to time and at such time(s) as reasonably appropriate. Following such a written
application for indemnification by Indemnitee, the Indemnitee’s entitlement to indemnification
shall be determined according to Section 12(a) hereof.

     12. Procedure Upon Application for Indemnification.

          (a) Upon written request by Indemnitee for indemnification pursuant to Section 11(b)
hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement
thereto shall be made in the specific case by one of the following methods, which shall be at the
election of Indemnitee: (i) by a majority vote of the Disinterested Directors, even though less
than a quorum of the Board; (ii) by Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee; or (iii) by the stockholders of the Company. If it is
so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) business days after such determination. Indemnitee shall reasonably cooperate with
the person, persons or entity making such determination with respect to Indemnitee’s entitlement to
indemnification, including providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by
Indemnitee in so cooperating with the person,

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persons or entity making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.

          (b) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be
selected as provided in this Section 12(b). The Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and
Indemnitee shall give written notice to the Company advising it of the identity of the Independent
Counsel so selected. If the Independent Counsel is selected by the Board, the Company shall give
written notice to Indemnitee advising him of the identity of the Independent Counsel so selected.
In either event, Indemnitee or the Company, as the case may be, may, within ten (10) business days
after such written notice of selection shall have been received, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of “Independent Counsel” as defined in
Section 2 hereof, and the objection shall set forth with particularity the factual basis of
such assertion. Absent a proper and timely objection, the person so selected shall act as
Independent Counsel. If such written objection is so made and substantiated, the Independent
Counsel so selected may not serve as Independent Counsel unless and until such objection is
withdrawn or a court of competent jurisdiction has determined that such objection is without merit.
If, within twenty (20) business days after submission by Indemnitee of a written request for
indemnification pursuant to Section 11(b) hereof, no Independent Counsel shall have been
selected and not objected to, either the Company or Indemnitee may petition the Delaware Court (as
defined below) for resolution of any objection which shall have been made by the Company or
Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Delaware Court, and the person with respect to whom
all objections are so resolved or the person so appointed shall act as Independent Counsel under
Section 12(a) hereof. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

          (c) The Company agrees to pay the reasonable fees and expenses of Independent Counsel and to
fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims,
liabilities and damages arising out of or relating to this Agreement or its engagement pursuant
hereto.

     13. Presumptions and Effect of Certain Proceedings.

          (a) Neither the failure of the Company (including by its directors or Independent Counsel) to
have made a determination prior to the commencement of any action pursuant to this Agreement that
indemnification is proper in the circumstances because Indemnitee has met the applicable standard
of conduct, nor an actual determination by the Company (including by its directors or Independent
Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that Indemnitee has not met the applicable standard of conduct.

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          (b) If the person, persons or entity empowered or selected under Section 12 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a
determination within thirty (30) days after receipt by the Company of the request therefor, the
requisite determination of entitlement to indemnification shall be made in accordance with
Section 14; provided, however, that such thirty (30) day period may be
extended for a reasonable time, not to exceed an additional thirty (30) days, if the person,
persons or entity making the determination with respect to entitlement to indemnification in good
faith requires such additional time for the obtaining or evaluating of documentation and/or
information relating thereto or for compliance with applicable advance notice provisions or
delivery of meeting materials in connection with any stockholder or board meeting.

          (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee
did not act in good faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was not unlawful.

     14. Remedies of Indemnitee.

          (a) In the event that (i) a determination is made pursuant to Section 12 hereof that
Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is
not timely made pursuant to Section 10 of this Agreement, (iii) no determination of
entitlement to indemnification shall have been made pursuant to Section 12(a) of this
Agreement within thirty (30) days after receipt by the Company of the request for indemnification
(as such time period may extended in accordance with Section 13(b)), (iv) payment of
indemnification is not made pursuant to Section 5, 6 or the last sentence of
Section 12(a) hereof within ten (10) business days after receipt by the Company of a
written request therefor, or (v) payment of indemnification pursuant to Section 3,
Section 4 or Section 7 hereof is not made within ten (10) business days after a
determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be
entitled to an adjudication by the Delaware Court (as defined below) to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. Except as set forth herein, the provisions of Delaware law
(without regard to its conflict of laws rules) shall apply to any such arbitration. The Company
shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

          (b) If a determination shall have been made pursuant to Section 12(a) hereof that
Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 14 shall be conducted in all respects as a de novo
trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that
adverse determination. If Indemnitee commences a judicial proceeding or arbitration pursuant to
this Section 14, Indemnitee shall not be required to reimburse the Company for any advances
pursuant to Section 10 hereof until a final determination is made with respect to
Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted
or lapsed).

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          (c) If a determination shall have been made pursuant to Section 12(a) hereof that
Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable law.

          (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 14 that the procedures and presumptions of this
Agreement are not valid, binding and enforceable and shall stipulate in any such court or before
any such arbitrator that the Company is bound by all the provisions of this Agreement.

          (e) The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted
by law against all Expenses and, if requested by Indemnitee, shall (within ten (10) business days
after the Company’s receipt of such written request) advance such Expenses to Indemnitee, which are
incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by
Indemnitee (i) to enforce his rights under, or to recover damages for breach of, this Agreement or
any other indemnification, advancement or contribution agreement or provision of the Company’s
Charter or Bylaws now or hereafter in effect; or (ii) for recovery or advances under any insurance
policy maintained by any person for the benefit of Indemnitee, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advance, contribution or insurance
recovery, as the case may be.

     15. Non-exclusivity; Survival of Rights; Subrogation.

          (a) The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Charter, Bylaws, any agreement, a vote of stockholders of the
Company or a resolution of the Board, or otherwise. No amendment, alteration or repeal of this
Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status
prior to such amendment, alteration or repeal. To the extent that a change in Delaware law,
whether by statute or judicial decision, permits greater indemnification or advancement of Expenses
than would be afforded currently under the Charter, Bylaws or this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change. No right or remedy herein conferred is intended to be exclusive of any other right
or remedy, and every other right and remedy shall be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

          (b) The Company or its Subsidiaries shall be primarily liable for all indemnification,
reimbursements, advancements or similar payments (the “Indemnity Obligations”) afforded to
Indemnitee acting on behalf or at the request of the Company or any of its Subsidiaries, whether
the Indemnity Obligations are created by law, organizational or constituent documents, contract
(including this Agreement) or otherwise. Notwithstanding the fact that such Indemnitee’s employer,
other than the Company (such persons, together with its

10

 

and their heirs, successors and assigns, the “Employer
Parties”), may have concurrent liability to Indemnitee with respect to the Indemnity
Obligations, the Company hereby agrees that in no event shall the Company or any of its
Subsidiaries have any right or claim against any of the Employer Parties for contribution or have
rights of subrogation against any Employer Parties through Indemnitee for any payment made by the
Company or any of its Subsidiaries with respect to any Indemnity Obligation. In addition, the
Company hereby agrees that in the event that any Employer Parties pay or advance to Indemnitee any
amount with respect to an Indemnity Obligation, the Company will, or will cause its Subsidiaries
to, as applicable, promptly reimburse such Employer Parties for such payment or advance upon
request.

          (c) In the event of any payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.

          (d) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any insurance policy,
contract, agreement or otherwise.

          (e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is
or was serving at the request of the Company as a director, officer, trustee, partner, managing
member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount
Indemnitee has actually received as indemnification or advancement of expenses from such
Enterprise.

     16. Settlement.

          (a) Notwithstanding anything in this Agreement to the contrary, the Company shall have no
obligation to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any
Proceeding effected without the Company’s prior written consent.

          (b) The Company shall not, without the prior written consent of Indemnitee, consent to the
entry of any judgment against Indemnitee or enter into any settlement or compromise which (1)
includes an admission of fault of Indemnitee, any non-monetary remedy affecting or obligation of
Indemnitee, or monetary loss for which Indemnitee is not wholly indemnified hereunder or (2) with
respect to any Proceeding with respect to which Indemnitee may be or is made a party, witness or
participant or may be or is otherwise entitled to seek indemnification hereunder, does not include,
as an unconditional term thereof, the full release of Indemnitee from all liability in respect of
such Proceeding, which release shall be in form and substance reasonably satisfactory to
Indemnitee. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any
proposed settlement under this Section 16.

     17. Insurance. The Company shall obtain and maintain a policy or policies of director’s and
officer’s liability insurance customary for similarly situated companies in a sufficient amount as
determined by the Board, with reputable insurance companies providing the Indemnitee, other officers of the Company and members of the Board with coverage for losses

11

 

from wrongful acts, and to ensure the Company’s performance of its indemnification obligations
under this Agreement. In all policies of director and officer liability insurance, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee at least the same rights and
benefits as are accorded to the most favorably insured of the Company’s officers and directors.
Notwithstanding anything to the contrary in this Agreement, the Company shall not indemnify the
Indemnitee to the extent the Indemnitee is actually reimbursed from the proceeds of insurance, and
in the event the Company makes any indemnification payments to the Indemnitee and the Indemnitee is
subsequently reimbursed from the proceeds of insurance, the Indemnitee shall promptly refund such
indemnification payments to the Company to the extent of such insurance reimbursement.

     18. Duration of Agreement. This Agreement shall continue until and terminate upon the later
of: (a) six (6) years after the date that Indemnitee shall have ceased to serve as a director or
officer of the Company or as a director, officer, trustee, partner, managing member, fiduciary,
employee or agent of any other corporation, partnership, joint venture, trust, employee benefit
plan or other Enterprise which Indemnitee served at the request of the Company; or (b) one (1) year
after the final termination of any Proceeding (including any rights of appeal thereto) then pending
in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Section 14 hereof
relating thereto (including any rights of appeal of any Section 14 Proceeding).

     19. Severability. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including without limitation, each
portion of any Section, paragraph or sentence of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest
extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent
necessary to conform to applicable law and to give the maximum effect to the intent of the parties
hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any Section, paragraph or sentence of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that is not itself invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

     20. Enforcement and Binding Effect.

          (a) The Company expressly confirms and agrees that it has entered into this Agreement and
assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director
or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this
Agreement in serving as a director or officer of the Company.

          (b) This Agreement constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings, oral, written and
implied, between the parties hereto with respect to the subject matter hereof.

12

 

          (c) The indemnification and advancement of expenses provided by, or granted pursuant to this
Agreement shall be binding upon and be enforceable by the parties hereto and their respective
successors and assigns (including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business or assets of the Company),
shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of
the Company or of any other Enterprise at the Company’s request, and shall inure to the benefit of
Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other
legal representatives.

          (d) The Company shall require and cause any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all, substantially all or a substantial part, of the
business and/or assets of the Company, by written agreement in form and substance satisfactory to
the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such succession had taken
place.

          (e) The Company and Indemnitee agree herein that a monetary remedy for breach of this
Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further
agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto
agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific
performance hereof, without any necessity of showing actual damage or irreparable harm and that by
seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from
seeking or obtaining any other relief to which he may be entitled. The Company and Indemnitee
further agree that Indemnitee shall be entitled to such specific performance and injunctive relief,
including temporary restraining orders, preliminary injunctions and permanent injunctions, without
the necessity of posting bonds or other undertaking in connection therewith. The Company
acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee
by any court of competent jurisdiction, and the Company hereby waives any such requirement of such
a bond or undertaking.

     21. Modification and Waiver. No supplement, modification, termination or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions of this Agreement nor shall any waiver constitute a continuing waiver.

     22. Notices. All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (a) if delivered by hand and
receipted for by the party to whom said notice or other communication shall have been directed, or
(b) mailed by certified or registered mail with postage prepaid, on the third business day after
the date on which it is so mailed:

          (a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or
such other address as Indemnitee shall provide in writing to the Company.

13

 

          (b) If to the Company to:

Archipelago Learning, Inc.

3400 Carlisle Street, Suite 345

Dallas, TX 75204

Attention: Board of Directors

or to any other address as may have been furnished to Indemnitee in writing by the Company.

     23. Contribution. To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to Indemnitee in whole or in part for
any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the
amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid
or to be paid in settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in
light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits
received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving
cause to such Proceeding; and (ii) the relative fault of the Company (and its directors, officers,
employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

     24. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among
the parties, and all claims or causes of action or other matters (whether in contract, tort or
otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation,
execution or performance of this Agreement, shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.
Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a)
hereof, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action
or proceeding arising out of or in connection with this Agreement shall be brought only in the
Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state
or federal court in the United States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding
arising out of or in connection with this Agreement, (iii) waive any objection to the laying of
venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to
plead or to make, any claim that any such action or proceeding brought in the Delaware Court has
been brought in an improper or inconvenient forum.

     25. Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall for all purposes be deemed to be an original but all of which together shall constitute one
and the same Agreement. Only one such counterpart signed by the party against whom enforceability
is sought needs to be produced to evidence the existence of this Agreement.

     26. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the
feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.

14

 

[Remainder of this page intentionally left blank.]

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CONFIDENTIAL

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	ARCHIPELAGO LEARNING, INC.	 	 	 	INDEMNITEE
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Address:	 	 
	 

	 	 	 	 	 	 	 	 

[signature page to the indemnity agreement]

16exv10w36

Exhibit 10.36

ARCHIPELAGO LEARNING, INC.

2009 EMPLOYEE STOCK PURCHASE PLAN

The Company wishes to attract, retain and motivate employees of the Company and its Subsidiaries
and to promote the success of the Company’s business by providing employees with a convenient
method of acquiring a proprietary interest in the long-term success of the Company. This Plan is
not intended to comply with the provisions of Section 423 of the Code and is not intended to be
subject to Section 401(a) of the Code or the Employee Retirement Income Security Act of 1974.

1. Definitions.

When used herein, the following terms shall have the respective meanings set forth below:

“Board” means the Board of Directors of the Company.

“Broker” shall mean a broker selected by the Company pursuant to Section 7 hereof.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board or any other committee designated by the
Board to administer the Plan pursuant to Section 3 hereof.

“Common Stock” means the common stock of the Company, par value $0.001 per share.

“Company” means Archipelago Learning Inc., a Delaware corporation.

“Effective Date” means November [ ], 2009.

“Eligible Compensation” for any pay period means, unless otherwise determined by the Committee, the
amount of gross compensation for such period. Eligible Compensation does not include, without
limitation, any payments for reimbursement of expenses and other non-basic payments, unless
otherwise determined by the Committee.

“Eligible Employee” means employees eligible to participate in the Plan pursuant to Section
4 hereof.

“Enrollment Period” means such period preceding an Offer Period as is specified by the Committee
with respect to such Offer Period.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” per Share as of a particular date means (i) if Shares are then listed on a
recognized national stock exchange, the closing price per Share on the exchange for the last
preceding date on which there was a sale of Shares on such exchange, as determined by the
Committee, (ii) if Shares are not then listed on a national stock exchange but are then traded on
an established over-the-counter market, the average of the closing bid and ask prices for such
Shares in such over-the-counter market for the last preceding date on which there was a sale of
such Shares in such market, as determined by the Committee, or (iii) if Shares are not then listed
on a national exchange or traded on an over-the-counter market, such value as the Committee in its
discretion may in good faith determine; provided that, if such shares are listed or traded in
accordance with clause (i) or (ii) above, but the shares have not been traded for 10 trading days
the Committee may make a discretionary determination in accordance with clause (iii) above.

 

 

“Offer Date” means January 1st and July 1st of each Plan Year, unless
otherwise provided by the Committee.

“Offer Period” means the six month period commencing on each Offer Date and ending on the next
succeeding Purchase Date, unless otherwise provided by the Committee.

“Participating Employee” means an employee for whom payroll deductions are currently being made.

“Payroll Account” means an account maintained by the Company with respect to each Participating
Employee as contemplated by Section 5 hereof.

“Plan” means this Archipelago Learning, Inc. 2009 Employee Stock Purchase Plan, as it may from time
to time be amended.

“Plan Year” means any fiscal year.

“Purchase Date” means the last trading day of each Offer Period, unless otherwise provided by the
Committee.

“Shares” means shares of Common Stock, or any other class or kind of shares resulting from the
application of Section 12 hereof.

“Stock Account” means a brokerage account as contemplated by Section 7 hereof.

“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company (or any parent of the Company) if each of the corporations, other than
the last corporation in each unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain.

2. Shares Reserved for the Plan.

There shall be reserved for issuance and purchase by Participating Employees under the Plan an
aggregate of 500,000 Shares, subject to adjustment as provided in Section 12 hereof.
Shares subject to the Plan may be Shares now or hereafter authorized but unissued, or Shares that
were once issued and subsequently reacquired by the Company. If and to the extent that any right
to purchase reserved Shares shall not be exercised by any employee for any reason or if such right
to purchase shall terminate as provided herein, Shares that have not been so purchased hereunder
shall again become available for the purposes of the Plan unless the Plan has been terminated.

3. Administration of the Plan.

The Plan shall be administered by the Committee, which shall have full and exclusive power to
interpret and administer the Plan. The Committee shall have full and exclusive power to adopt
rules, forms, instruments, and guidelines for administering the Plan as the Committee deems
necessary or proper. All actions taken and all interpretations and determinations made by the
Committee shall be final and binding upon the Participating Employees, the Company, and all other
interested individuals.

The acts of a majority of the members present at any meeting of the Committee at which a quorum is
present, or acts approved in writing by a majority of the entire Committee, shall be the acts of
the Committee for purposes of the Plan. No member of the Committee may act as to matters under the
Plan specifically relating to such member.

2

 

The Committee may delegate to one or more of its members, one or more officers of the Company or
any Subsidiary, and one or more agents or advisors such administrative duties or powers as it may
deem advisable; provided that the Committee shall not delegate to officers of the Company or any
Subsidiary the power to make grants of Awards to officers of the Company or any Subsidiary;
provided, further, that no delegation shall be permitted under the Plan that is prohibited by
applicable law.

4. Eligible Employees.

All full-time employees of the Company and each Subsidiary designated by the Committee for
participation shall be Eligible Employees, provided that no employee who owns stock possessing 5%
or more of the total combined voting power or value of all classes of capital stock of the Company
or any Subsidiary may participate. The Committee may designate additional classes of employees to
become eligible to participate, in its sole discretion.

The employment of an employee of a Subsidiary which ceases to be a “Subsidiary” as defined herein
shall, automatically and without any further action, be deemed to have terminated (and such
employee shall cease to be an Eligible Employee hereunder).

5. Election to Participate and Payroll Deductions.

Participation in the Plan is voluntary with respect to each Offer Period. To participate in an
Offer Period an Eligible Employee must complete a written enrollment form provided by the Company
which authorizes payroll deductions. Each Eligible Employee may elect a payroll deduction of 1% to
10% of Eligible Compensation from each paycheck paid during the Offer Period, in increments of 1%
(i.e., 1%, 2%, 3%, etc.), unless otherwise so provided by the Committee. A Participating Employee
may elect to change his or her rate of payroll deductions during an Offer Period by written notice
to the Committee in such form as it may require.

All payroll deductions shall be credited, as promptly as practicable, to a notional Payroll Account
in the name of the Participating Employee. All funds held by the Company under the Plan shall not
be segregated from other corporate funds (except that the Company may in its discretion establish
separate bank or investment accounts in its own name) and may be used by the Company for any
corporate purpose. No interest or other earnings shall be credited to any contributions under the
Plan.

Each Eligible Employee may cancel his or her election to participate in the Plan by written notice
to the Committee in such form and at such times as the Committee may require. A Participating
Employee’s voluntary withdrawal during an Offer Period shall have no effect upon such Participating
Employee’s eligibility to participate during any other Offer Period under the Plan, but such
Participating Employee shall be required to deliver a new enrollment form in order to participate
during a subsequent Offer Period.

Unless otherwise provided by the Committee, an Eligible Employee who is a Participating Employee
immediately prior to the beginning of an Offer Period will be deemed (i) to have elected to
participate for such Offer Period and (ii) to have authorized the same percentage payroll deduction
for such Offer Period in effect for such Eligible Employee as that in effect on the day before such
Offer Period.

6. Purchase Price.

The purchase price for each Share shall be 100% of the Fair Market Value of a Share on the Purchase
Date.

3

 

7. Method of Purchase.

As of the Purchase Date, each Participating Employee shall be deemed, without any further action,
to have purchased the number of whole Shares which the balance of his or her Payroll Account at
that time will purchase, determined by dividing the balance in his or her Payroll Account by the
purchase price as determined in Section 6 hereof.

The Committee shall select a Broker which shall hold and act as custodian of Shares purchased
pursuant to the Plan. Absent instructions to the contrary from a Participating Employee, Shares
shall not be distributed by the Broker to a Participating Employee.

A Participating Employee may at any time withdraw all or any number of Shares credited to his or
her Stock Account under the Plan by directing the Broker to cause such Shares to be (i) distributed
to such Participating Employee, (ii) transferred to another brokerage account, or (iii) sold and
the net proceeds (less applicable commissions and other changes) distributed in cash to such
Participating Employee. The Company assumes no responsibility in connection with such
transactions, and all commissions, fees or other charges arising in connection therewith shall be
borne directly by the Participating Employees.

For so long as such Shares are maintained in Stock Accounts, all dividends paid with respect to
such Shares shall be paid directly to the holder of record of such Shares on such dividend payment
date.

Unless otherwise provided by the Committee, in no event shall fractional Shares be purchased
hereunder, and any remaining cash in a Participating Employee’s Payroll Account resulting from such
failure to invest in fractional Shares shall remain in the Payroll Account for use in the next
Offer Period; provided, however, that, if the Participating Employee terminates employment with the
Company prior to the next Purchase Date, such remaining cash shall be returned to the Participating
Employee as soon as practicable, but not later than thirty (30) days, following such termination.

8. Termination of Participation or Employment.

The right to participate in the Plan shall terminate immediately when a Participating Employee
ceases to be employed by the Company or its Subsidiaries for any reason (including death or
disability) or a Participating Employee otherwise becomes ineligible.

The Company shall distribute to such former Participating Employee (or, in the event of death, to
his or her estate) the balance in their Payroll Account as soon as practicable, but not later than
thirty (30) days, following such termination.

9. Title of Stock Accounts.

Each Stock Account shall be in the name of the Participating Employee or, if permitted by the
Committee and the Participating Employee so indicates on the appropriate form, in his or her name
jointly with another person, with right of survivorship. If permitted by the Committee, a
Participating Employee who is a resident of a jurisdiction that does not recognize such a joint
tenancy may have a Stock Account in his or her name as tenant in common with another person without
right of survivorship.

10. Rights as a Stockholder.

At the time funds from a Participating Employee’s Payroll Account are used to purchase Shares, he
or she shall have all of the rights and privileges of a stockholder of the Company with respect to
the purchased Shares.

4

 

11. Rights Not Transferable.

Rights granted under the Plan are not transferable by a Participating Employee other than by will
or the laws of descent and distribution and are exercisable during his or her lifetime only by him
or her.

12. Adjustment in Case of Changes Affecting Common Stock.

If (i) the Company shall at any time be involved in a merger, consolidation, dissolution,
liquidation, reorganization, exchange of shares, sale of all or substantially all of the assets or
stock of the Company or any Subsidiary or a transaction similar thereto, (ii) any stock dividend,
stock split, reverse stock split, stock combination, reclassification, recapitalization or other
similar change in the capital structure of the Company, or any distribution to holders of Common
Stock (other than regular cash dividends), shall occur or (iii) any other event shall occur which
in the judgment of the Committee necessitates action by way of adjusting the number or kind of
Shares, or both, which thereafter may be sold under the Plan, then the Committee shall take any
such action as in its judgment shall be necessary to preserve the Participating Employees’ rights
substantially proportionate to the rights existing prior to such event, and to maintain the
continuing availability of Shares under Section 2 in a manner consistent with the intent
hereof, including, without limitation, adjustments in (x) the number and kind of shares subject to
the Plan, and (y) the purchase price of such shares under the Plan.

Notwithstanding any other provision of the Plan, if the Common Stock ceases to be listed or traded,
as applicable, on a national stock exchange or over-the-counter market (a “Triggering Event”),
then, in the discretion of the Committee, (i) the balance in the Participating Employee’s Payroll
Account not theretofore invested may be refunded to the Participating Employee, and such
Participating Employee shall have no further rights or benefits under the Plan, (ii) an amount
equal to the product of the Fair Market Value of a Share on the date of the Triggering Event
multiplied by the number of Shares such Participating Employee would have been able to purchase
with the balance of his or her Payroll Account on such Triggering Event if such Triggering Event
were the Purchase Date may be paid to the Participating Employee, and such Participating Employee
shall have no further rights or benefits under the Plan, or (iii) the Plan may be continued without
regard to the application of this sentence.

13. Amendment and Termination.

The Board may at any time terminate or amend the Plan in any respect, including, but not limited
to, terminating the Plan prior to the end of an Offer Period or reducing the term of an Offer
Period; provided, however, that the number of Shares subject to purchase under the Plan shall not
be increased without approval of the Company’s shareholders.

The Plan and all rights of Participating Employees to purchase any Shares hereunder shall terminate
at the earlier of the conclusion of the last Offer Period authorized herein, or as otherwise
determined by and at the discretion of the Company.

Upon termination of the Plan at the end of an Offer Period, Shares shall be issued to Participating
Employees, and cash, if any, remaining in the Payroll Accounts of the Participating Employees,
shall be refunded to them. Upon termination of the Plan prior to the end of an Offer Period, all
amounts not previously applied to the purchase of Shares shall be refunded to the Participating
Employees.

14. Governmental and Other Regulations; Further Assurances.

The Plan, and the grant and exercise of the rights to purchase Shares hereunder, and the Company’s
obligation to sell and deliver Shares upon the exercise of rights to purchase Shares, shall be
subject to all applicable federal, state and foreign laws, rules and regulations, and to such
approvals by any regulatory

5

 

or governmental agency as may be required. The Company shall not be required to issue or deliver
any certificates for Shares prior to the completion of any registration or qualification of such
Shares under, and the obtaining of any approval under or compliance with, any state or federal law,
or any ruling or regulation of any government body which the Company shall, in its sole discretion,
determine to be necessary or advisable. Certificates for Shares issued hereunder may be legended
as the Committee may deem appropriate.

Each Participating Employee shall take whatever additional actions and execute whatever additional
documents the Committee may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on the Participating
Employees pursuant to the Plan.

15. Indemnification of Committee.

The Company shall indemnify and hold harmless the members of the Board and the members of the
Committee from and against any and all liabilities, costs and expenses incurred by such persons as
a result of any act or omission in connection with the performance of such person’s duties,
responsibilities and obligations hereunder if such person acts in good faith and in a manner that
he or she reasonably believes to be in, or not opposed to, the best interests of the Company, to
the maximum extent permitted by law.

16. Withholding.

Notwithstanding any other provision of the Plan, the Company shall deduct from all Payroll Accounts
paid under the Plan all federal, state, local and other taxes required by law to be withheld with
respect to such payments.

17. Notices.

All notices under the Plan shall be in writing (which for these purposes shall include reasonably
acceptable means of electronic transmission), and if to the Company, shall be delivered to the
Board or mailed to its principal office, addressed to the attention of the Board of Directors; and
if to a Participating Employee, shall be delivered personally or mailed to such Participating
Employee at the address appearing in the records of the Company.

18. Severability.

If any particular provision of the Plan is found to be invalid or unenforceable, such provision
shall not affect the other provisions of the Plan, but the Plan shall be construed in all respects
as if such invalid provision had been omitted.

19. No Right to Continued Employment.

The Plan and any right to purchase Shares granted hereunder shall not confer upon any employee any
right with respect to continued employment by the Company or any Subsidiary, nor shall they
restrict or interfere in any way with the right of the Company or any Subsidiary by which an
employee is employed to terminate his or her employment at any time.

20. Captions.

The use of captions in the Plan is for convenience. The captions are not intended to and do not
provide substantive rights.

6

 

21. Effective Date of the Plan.

The Plan shall be effective as of the Effective Date, provided that the Plan is approved by
stockholders of the Company prior thereto.

22. Governing Law.

The provisions of the Plan shall be governed by and construed in accordance with the laws of the
State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of the Plan to the substantive law of another jurisdiction.

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}]]