Document:

exv10w1

 

Exhibit 10.1

REGISTRATION RIGHTS AND EARNOUT STOCK AGREEMENT

     This REGISTRATION RIGHTS AND EARNOUT STOCK AGREEMENT (this “Agreement”) is made on and
as of January ___, 2008, by and among the individuals listed on Exhibit A attached hereto
(each, a “Recipient”), and Blackboard Inc., a Delaware corporation (“Parent”).

RECITALS

     A. Parent and The NTI Group, Inc., a Delaware corporation (the “Company”), are parties
to that certain Agreement and Plan of Merger dated as of January 11, 2008 (the “Merger
Agreement”), by and among Parent, the Company, a wholly-owned subsidiary of Parent, and Pace
Holdings, LLC, a Delaware limited liability company. This Agreement is an inducement to Parent and
the Company to enter into the Merger Agreement, and it is a condition precedent to Parent’s and the
Company’s obligations to effect the Merger thereunder that this Agreement shall have been entered
into. Capitalized terms used herein but not otherwise defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.

     B. Pursuant to Section 2.9 of the Merger Agreement, at the Effective Time (as defined in the
Merger Agreement), Parent is required to execute and deliver this Agreement, pursuant to which
Parent shall agree to issue to the Recipients shares of Parent Common Stock (as defined in the
Merger Agreement) (the “Earnout Stock”), as more specifically set forth on Exhibit
A attached hereto, at the time and on the terms and conditions set forth herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

     1. Earnout Stock.

          (a) On each of February 15, 2009 and February 15, 2010 (each, a “Payment Date”),
Parent shall issue, or shall cause to be issued, to each Recipient the number of shares of Earnout
Stock set forth opposite such Recipient’s name on Exhibit A attached hereto with respect to
the preceding fiscal year, such number of shares to be adjusted as provided on Exhibit A.
A Recipient need not be employed by or providing services to Parent or the Company or any of their
subsidiaries on the Payment Date in order to receive such shares. In the event that the attainment
of the Earnout Stock for a given fiscal year has not been finally agreed upon by February 1 of the
following year, then (i) any undisputed amounts shall be issued in accordance with the first
sentence of this section and (ii) any amount of the disputed portion subsequently determined to be
payable shall be issuable within 10 days of such determination, not to be later than April 30 of
such following year.

          (b) The shares of Earnout Stock issued to the Recipients pursuant to Section 1(a) above shall
be fully vested and shall not be subject to any restrictions on transferability as of the date of
issuance.

          (c) In the event that, on a Payment Date, the issuance of all or any portion of the Earnout
Stock to be issued to a Recipient on such Payment Date is prohibited for any reason,

 

 

Parent shall, in lieu of issuing such Earnout Stock, pay to such Recipient to whom such shares
are to be issued pursuant to Section 1(a) above an amount in cash equal to the Fair Market Value
(as defined below) of such Earnout Stock on the Payment Date. In the event that, on a Payment
Date, a Recipient is an Unaccredited Stockholder, Parent may, in its sole discretion and in lieu of
issuing such Earnout Stock, pay to such Recipient to whom such shares are to be issued pursuant to
Section 1(a) above an amount in cash equal to the Fair Market Value of such Earnout Stock on the
Payment Date. The aforementioned payments shall be made within ten (10) days following the Payment
Date. The Fair Market Value per share of Earnout Stock shall be an amount (adjusted to the nearest
whole cent) equal to the average closing price of the Parent Common Stock as publicly reported by
the Nasdaq Global Market over the twenty (20) Trading Days ending three (3) Trading Days prior to
the Payment Date (adjusted, as appropriate, for any stock split, stock dividend, reclassification,
recapitalization or similar event).

          (d) [Reserved.]

          (e) In the event of any (i) stock split, (ii) reverse stock split, (iii) stock dividend, (iv)
recapitalization, combination of shares, reclassification of shares, spin-off or other similar
change in capitalization or event, (v) any distribution to holders of Common Stock, (vi) merger or
consolidation, (viii) liquidation or dissolution, (ix) sale, transfer, exchange or other
disposition of all or substantially all of the assets of Parent, or (x) exchange of Parent Common
Stock or other securities of Parent, in each case that affects the Parent Common Stock payable
hereunder such that an adjustment is necessary or appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under this
Agreement, then the Board shall equitably adjust the number of shares of Parent Common Stock to be
issued to the Recipients hereunder and any such adjustment shall be reflected on Exhibit A
attached hereto, although the failure to so amend Exhibit A shall not affect the
validity of any such changes approved by the Board.

     2. Registration Rights.

          (a) Prior to each Payment Date, Parent shall have filed or caused to be filed with the
Securities and Exchange Commission (the “SEC”) a registration statement (a
“Registration Statement”) on any appropriate form under the Securities Act of 1933, as
amended (the “Securities Act”), with respect to the offering and sale or other disposition
by the Recipients of no less than one hundred percent (100%) of the Earnout Stock to be issued to
the Recipients (the “Registrable Securities”) on such Payment Date and such Registration
Statement shall have been declared effective under the Securities Act. Each Recipient agrees to
cooperate with and provide assistance to Parent, as Parent may reasonably request, in connection
with any registration and sale of the Registrable Securities.

          (b) Parent agrees that it will (i) keep each Registration Statement continuously effective
until the earlier of (A) two years from the relevant Payment Date, (B) the date on which all of the
Registrable Securities have been sold or (C) the date on which all such shares may be continuously
sold by each Recipient named therein without any volume limitations in reliance on Rule 144 of the
Securities Act or any rule of similar effect and prepare and file with the SEC any amendments or
supplements to the Registration Statement or prospectus which may be necessary to comply with the
provisions of the Securities Act with respect to the offer of the Registrable Securities covered by
such Registration Statement; (ii) prepare and promptly file with the SEC and promptly notify the
Recipients of the filing of such amendment or supplement to such Registration Statement or
prospectus as may be necessary to correct any statement therein or

 

 

omission therefrom if, at any time when a prospectus relating to the Registrable Securities is
required to be delivered under the Securities Act, any event with respect to Parent shall have
occurred as a result of which any prospectus would include an untrue statement of material fact or
omit to state any material fact necessary to make the statements therein not misleading; (iii) in
case the Recipients are required to deliver a prospectus, prepare promptly such amendment or
amendments to such Registration Statement and such prospectus or prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Securities Act; (iv) advise
the Recipients promptly after Parent shall receive notice or obtain knowledge of the issuance of
any stop order by the SEC suspending the effectiveness of the Registration Statement or amendment
thereto or of the initiation or threatening of any proceedings for that purpose, and promptly use
commercially reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; (v) use commercially reasonable efforts to qualify
such Registrable Securities for sale under the securities or “blue sky” laws of such states within
the United States as the Recipients may reasonably designate, except that Parent shall not be
required in connection therewith or as a condition thereto to qualify to do business in any such
state or to take any action which would subject it to general service of process in any such
jurisdiction where it is not then so subject; and (vi) furnish to the Recipients, as soon as
available, copies of any such Registration Statement and each preliminary and final prospectus, or
supplement or amendment required to be prepared with respect thereto, all in such quantities as
they may from time to time reasonably request.

          (c) Parent shall pay all expenses incident to the performance of or compliance with this
Section 2, including, without limitation, all registration, filing and Financial Industry
Regulatory Authority (formerly the “NASD”) fees, all fees and expenses of complying with securities
or blue sky laws of any jurisdiction pursuant to clause 2(b)(v), all word processing, duplicating
and printing expenses, messenger and delivery expenses, the fees and disbursements of counsel for
Parent and one counsel for the Recipients as a group (as selected by a majority in interest of the
Recipients who participate in the registration), and expenses for any audits incident to or
required by any such registration. Each Recipient shall pay the underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of such Recipient’s Registrable
Securities.

          (d) Each Recipient included in any Registration Statement will furnish to Parent such
information regarding such Recipient and the distribution proposed by such Recipient as Parent may
reasonably request.

          (e) Parent shall use commercially reasonable efforts to cause the shares of Earnout Stock
issued pursuant to this Agreement to be listed for trading on any securities exchange on which
Parent Common Stock is at the time listed for trading.

          (f) Indemnification.

               (i) Parent’s Indemnification of Recipients. To the extent permitted by law, the
Parent will indemnify each Recipient with respect to which registration, qualification or
compliance of Registrable Securities has been effected pursuant to this Section 2, and each
underwriter, if any, and each person who controls any underwriter, against all claims, losses,
damages or liabilities (or actions in respect thereof) arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact contained in any Registration Statement,
prospectus, offering circular, or other document incident to any such registration, qualification
or compliance, 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, or
any violation by the Parent of any rule or regulation promulgated under the Securities Act or
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or state or federal law
applicable to the Parent and relating to action or inaction required of the Parent in connection
with any such registration, qualification or compliance; and the Parent will reimburse each such
person for any legal and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, however, that the indemnity
contained in this Section 2(f)(i) shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent of the Parent
(which consent shall not unreasonably be withheld); and provided, further, that the Parent will not
be liable in any such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based upon (A) any untrue statement or omission based upon written information
furnished to the Parent by such Recipient, underwriter, or controlling person and stated to be for
use in connection with the offering of securities of the Parent, (B) any violation by such
Recipient of any rule or regulation promulgated under the Securities Act or Exchange Act or state
or federal law applicable to such Recipient or (C) such Recipient’s willful misconduct or fraud.

               (ii) Recipient’s Indemnification of Parent. To the extent permitted by law, each
Recipient will, if Registrable Securities held by such Recipient are included in the securities as
to which such registration, qualification or compliance is being effected pursuant to this Section
2, indemnify the Parent, each of its directors and officers, each underwriter, if any, of the
Parent’s securities covered by such a Registration Statement, each person who controls the Parent
or such underwriter within the meaning of the Securities Act, and each other such Recipient,
against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of
or based upon any untrue statement (or alleged untrue statement) of a material fact about such
Recipient or about the sale by such Recipient of such Recipient’s Registrable Securities that may
be contained in any such Registration Statement, prospectus, offering circular or other document
incident to such registration, qualification or compliance, or any omission (or alleged omission)
to state therein a material fact about such Recipient or about the sale by such Recipient of such
Recipient’s Registrable Securities that may be required to be stated therein or necessary to make
the statements therein not misleading but only, in the case of statements, to the extent that such
untrue statement is contained in any information or affidavit furnished in writing by such
Recipient to the Parent with authorization by such Recipient to use such information or affidavit
in connection with such Registration Statement, prospectus, offering circular or other document, as
the case may be, any violation by such Recipient of any rule or regulation promulgated under the
Securities Act or Exchange Act or state or federal law applicable to such Recipient and relating to
action or inaction required of such Recipient in connection with any such registration,
qualification or compliance or such Recipient’s willful misconduct or fraud; and will reimburse
each such person for any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action; provided, however,
that the indemnity contained in this Section 2(f)(ii) shall not apply to amounts paid in settlement
of any such claim, loss, damage, liability or action if settlement is effected without the consent
of such Recipient (which consent shall not unreasonably be withheld); and provided, further, that
each Recipient’s liability under this Section 2(f)(ii) shall be several, and not joint with other
Recipients or holders, and shall not exceed such Recipient’s net proceeds from the offering of
securities made in connection with such registration.

 

 

               (iii) Indemnification Procedure. Promptly after receipt by an indemnified party of
notice of the commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 2(f), notify the
indemnifying party in writing of the commencement thereof and generally summarize such action. The
indemnifying party shall have the right to participate in and to assume the defense of such action
and to select counsel for the defense of such action with the approval of any parties entitled to
indemnification, which approval shall not be unreasonably withheld; provided, however, that if
either party reasonably determines that there may be a conflict between the position of the
indemnifying party and the indemnified party in conducting the defense of such action by reason of
recognized claims for indemnity under this Section 2(f), then counsel for such party shall be
entitled to conduct the defense to the extent reasonably determined by such counsel to be necessary
to protect the interest of such party. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to the ability of the indemnifying party to defend
such action, shall relieve such indemnifying party, to the extent so prejudiced, of any liability
to the indemnified party under this Section 2(f).

               (iv) Contribution. If the indemnification provided for in this Section 2(f) 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 herein, then the indemnifying party, in lieu
of indemnifying such indemnified party hereunder, 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 in connection with the statements, actions or
omissions that resulted in such loss, liability, claim, damage or expense as well as any other
relevant equitable considerations; provided that, in no event shall any contribution by a Recipient
under this Section 2(f) exceed the net proceeds from the relevant offering received by such
Recipient. The relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether an untrue or alleged untrue statement of a
material fact or the 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.

     3. Notices. All notices, requests, demands, claims and other communications required
or permitted hereunder shall be duly given only if made in writing and personally delivered, mailed
by first class, certified or registered mail, postage prepaid, sent by a major national delivery
service, or sent by telecopier (if confirmation of successful transmission is obtained). Any such
communications shall be effective (i) upon receipt, if personally delivered, (ii) on the fifth day
following the date of mailing, postage prepaid, if mailed, (iii) on the day of delivery if sent by
major national delivery service, or (iv) at the time transmission to the recipient’s telecopier is
completed (as shown by such confirmation of transmission), if sent by telecopier. Any such
communication shall be addressed to the parties at the following addresses (or at such other
address for a party as such party shall specify by like notice):

          (a) if to Parent:

 

 

Blackboard Inc.

1899 L Street, NW

5th Floor

Washington, DC 20036

Attention: Matthew H. Small

          (b) if to a Recipient, as set forth on such Recipient’s signature
page hereto.

     4. Survival of Terms. This Agreement shall apply to and bind each Recipient and
Parent and their respective permitted assignees and transferees, heirs, legatees, executors,
administrators and legal successors.

     5. Tax Matters. Each Recipient represents that he or she has reviewed with his or her
own tax advisors the federal, state, local and foreign tax consequences of the transactions
contemplated by the Merger Agreement and this Agreement and any receipt of amounts hereunder and
thereunder. Each Recipient is relying solely on such advisors and not on any statements or
representations of Parent or any of its agents. Each Recipient understands that he or she (and not
Parent) shall be responsible for his or her own tax liability that may arise as a result of the
transactions contemplated by the Merger Agreement and this Agreement and any receipt of funds
hereunder and thereunder.

     6. Withholding. Notwithstanding anything to the contrary in this Agreement, Parent
shall be entitled to require (and may compel) payment to Parent or any of its subsidiaries in cash,
by deduction from other compensation payable to a Recipient, or by reduction of reduction of
Earnout Stock issuable to a Recipient (valued at the Fair Market Value), of any sums required by
federal, state or local tax law to be withheld with respect to the execution of this Agreement or
the issuance of the Earnout Stock. Parent shall not be obligated to deliver any certificate
representing shares of Earnout Stock issuable to a Recipient unless and until such Recipient shall
have paid or otherwise satisfied in full the amount of all federal, state and local taxes
applicable to the taxable income of the Recipient resulting from the issuance of the Earnout Stock.

     7. Amendments. Any term of this Agreement may be amended only with the written
consent of the Parent and Recipients holding ninety percent (90%) in interest of Earnout Stock
issuable hereunder. Any amendment or waiver effected in accordance with this Section 7 shall be
binding upon each Recipient and the Company.

     8. [Reserved.]

     9. Severability. In the event that any one or more of the terms or provisions
contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect any other term or
provision of this Agreement, and the parties to this Agreement shall use their commercially
reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into
this Agreement which, insofar as practicable, implement the purposes and intent of this Agreement.
Any term or provision of this Agreement held invalid or unenforceable only in part, degree or
within certain jurisdictions shall remain in full force and effect to the extent not held invalid
or unenforceable to the extent consistent with the intent of the parties as reflected by this
Agreement.

     10. Entire Agreement. This Agreement and the Merger Agreement constitute the

 

 

entire agreement, and supersede all prior representations, warranties, agreements and
understandings, both written and oral, among the parties with respect to the subject matter hereof
and thereof.

     11. Counterparts. This Agreement may be executed in one or more counterparts, all of
which constitute a single agreement, and shall become effective when one or more counterparts has
been signed by each of the parties and delivered to the other parties.

     12. Rules of Construction. The parties hereto agree that they have been represented
by counsel during the negotiation and execution of this Agreement and therefore waive the
application of any law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such agreement or
document.

     13. RECIPIENT REVIEW. EACH RECIPIENT REPRESENTS THAT HE OR SHE HAS READ THIS
AGREEMENT, HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THE PREPARATION OF THIS AGREEMENT,
AND IS FAMILIAR WITH ITS TERMS AND PROVISIONS. EACH RECIPIENT FURTHER REPRESENTS THAT HE OR SHE
HAS RECEIVED AND HAD A REASONABLE OPPORTUNITY TO REVIEW CERTAIN OF THE PARENT’S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION AND CERTAIN OTHER MATERIALS FURNISHED BY PARENT TO THE
RECIPIENT, INCLUDING, WITHOUT LIMITATION, PARENT’S MOST RECENT ANNUAL REPORT ON FORM 10-K.

     14. Assignment. A Recipient’s rights under this Agreement shall not be assignable by
such Recipient, other than by will or the laws of descent and distribution, and shall not be
subject to attachment, lien, levy, or other creditors’ rights under state or Federal law.

     15. Beneficiary Designation. Each Recipient may designate on a form satisfactory to
Parent one or more beneficiaries to receive any payments which may become payable hereunder in the
event of the Recipient’s death (“Beneficiary Designation”). A Beneficiary Designation may
be changed by a Recipient at any time upon written notice to Parent. If a Recipient shall have
made more than one Beneficiary Designation, the Beneficiary Designation most recently filed with
Parent prior to the time of the Recipient’s death shall govern. If any amounts under this
Agreement become payable following a Recipient’s death at a time when no Beneficiary Designation is
applicable, such payments shall be made in a lump sum:

          (a) to the Recipient’s then living spouse, if any;

          (b) if none, then to such person or persons, including the Recipient’s estate, as the
Recipient may designate under his or her last will, making specific reference hereto; or

          (c) if the Recipient is not survived by a spouse or shall fail to so designate such person or
persons by will, then such payments shall be made to the then living children of the Recipient, if
any, in equal shares; and

          (d) if none, then in one lump sum to the Recipient’s estate.

     16. Governing Law. To the extent not superseded by the laws of the United States,
this Agreement will be governed by and construed in accordance with the laws of the State of

 

 

New York without regard to principles of conflicts of laws. Each party to this Agreement
irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising
out of this Agreement shall be brought in any state court of general jurisdiction located in New
York, New York (or, if no such court has jurisdiction or accepts jurisdiction, in any United States
District Court located in New York, New York); (ii) consents to the jurisdiction of any such court
in any such suit, action or proceeding; and (iii) waives any objection that such party may have to
the laying of venue of any such suit, action or proceeding in any such court. Each of the parties
to this Agreement hereby agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each party to this Agreement hereby irrevocably consents to service of
process in the manner provided for notices in Section 3. Nothing in this Agreement shall affect
the right of any party to this Agreement to serve process in any other manner permitted by
applicable law. A party prevailing in any suit, action or other legal proceeding arising out of
this Agreement shall have such party’s reasonable attorneys fees and other legal fees paid by the
non-prevailing party or parties, as the case may be. The prevailing party shall be reimbursed for
such fees within forty-five (45) days following any such award, but in no event later than the last
day of the prevailing party’s taxable year following the taxable year in which the fees were
incurred. The parties’ obligations pursuant to the two preceding sentences of this Section 16
shall terminate on the tenth (10th) anniversary of the date hereof.

     17. ERISA. To the extent this Agreement is subject to ERISA, this Agreement is
intended to be unfunded and maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA. This Agreement shall be administered and interpreted to
the extent possible in a manner consistent with that intent.

     18. Funding. No provision of this Agreement shall require Parent, for purposes of
satisfying any obligations under this Agreement, to purchase assets or place any assets in a trust
or other entity to which contributions are made or otherwise to segregate any assets, nor shall
Parent maintain separate bank accounts, books, records or other evidence of the existence of a
segregated or separately maintained or administered fund for such purposes. Recipients shall have
no rights under this Agreement other than as unsecured general creditors of Parent or its
successors.

     19. Section 409A; No Right to Continued Employment.

          (a) Section 409A of the Code. This Agreement shall be interpreted, construed and
administered in a manner that satisfies the requirements of Section 409A of the Code.
Notwithstanding anything to the contrary in this Agreement, the parties acknowledge and agree that
any payment to be made to a Recipient pursuant to this Agreement shall be delayed to the extent
necessary for this Agreement and such payment or benefit to comply with Section 409A of the Code.
Neither the time nor form of payments under this Agreement may be changed, including, without
limitation, any acceleration of such payments, except as may be permitted by the Board of Directors
of Parent (the “Board”) in accordance with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and the Treasury Regulations and Internal Revenue Service
guidance thereunder.

          (b) No Right to Continued Employment. The provisions of this Section 19(b) shall
apply only to Recipients who are employees of Parent, the Company, or any subsidiary of Parent or
the Company. Subject to the terms of any employment agreement that may exist

 

 

between Parent, the Company, or any of their respective subsidiaries, on the one hand, and a
Recipient, on the other hand, Parent, the Company, each such subsidiary, and each Recipient each
have an absolute and unrestricted right to terminate such Recipient’s employment with Parent, the
Company, or such subsidiary at any time for any reason whatsoever, with or without cause, and
nothing in this Agreement shall entitle a Recipient to any continued employment with Parent, the
Company, or such subsidiary.

     20. Effectiveness. This Agreement shall be effective as of the Closing.

 

 

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereby execute and
deliver this Registration Rights and Earnout Stock Agreement, on and as of the date first set forth
above.

	 	 	 	 	 
	 	 	BLACKBOARD INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

 

 

	 	 	 	 	 
	 	 	RECIPIENTS:
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address:	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Phone:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Amount of Earnout Stock:exv10w2

 

EXHIBIT 10.2

ESCROW AGREEMENT

     Escrow Agreement (the “Agreement”) dated January 31, 2008 among Blackboard Inc., a
Delaware corporation (“Parent”), Pace Holdings, LLC, a Delaware limited liability company
(“Pace”), and American Stock Transfer & Trust Company, as escrow agent (the “Escrow
Agent”).

RECITALS

     A. This is the escrow agreement referred to in the Agreement and Plan of Merger dated as of
January 11, 2008 (the “Merger Agreement”) among Parent, Bookstore Merger Sub, Inc., a
Delaware corporation (“Merger Sub”), The NTI Group, Inc., a Delaware corporation (the
“Company”), and Pace pursuant to which Merger Sub will merge with and into the Company,
with the Company surviving (the “Merger”). Capitalized terms used in this agreement
without definition shall have the respective meanings given to them in the Merger Agreement, a copy
of which has been furnished to Escrow Agent solely for the purpose of enabling it to reference such
meanings.

     B. In connection with the Merger, Pace and the other Equityholders have agreed that 55,218
shares of Parent Common Stock representing a portion of the total merger consideration to be paid
to the Equityholders pursuant to the Merger Agreement, shall be deposited with Escrow Agent to
secure the Parent’s rights under section 2.8 of the Merger Agreement (the “Working Capital
Escrow Shares”).

     C. In connection with the Merger, Pace has agreed that 345,113 shares of Parent Common Stock,
representing a portion of the total merger consideration to be paid to Pace pursuant to the Merger
Agreement, shall be deposited with Escrow Agent to secure Parent’s rights under Article X of the
Merger Agreement (the “Indemnity Escrow Shares”).

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the
parties hereby agree as follows:

     1. Establishment of Escrow.

          (a) Parent is depositing with the Escrow Agent an aggregate of 400,331 shares of Parent Common
Stock (the “Escrow Account”). Any dividends paid or distributions made on the shares of
Parent Common Stock deposited in the Escrow Account shall be retained in the Escrow Account and
released in accordance with this Agreement.

          (b) For purposes of this Agreement, the value of one share of Parent Common Stock shall be
deemed to equal the Parent Average Closing Price, as equitably adjusted to reflect any stock split,
stock dividend, reclassification, recapitalization or similar event.

 

 

          (c) The Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and disburse
the Escrow Account pursuant to the terms and conditions hereof.

     2. Establishment of Separate Funds. Of the initial Escrow Account:

          (a) The Working Capital Escrow Shares, together with any dividends paid or distributions made
on such shares, shall be maintained on the books of the Escrow Agent as the “Working Capital
Escrow Account”; and

          (b) The Indemnity Escrow Shares, together with any dividends paid or distributions made on
such shares, shall be maintained on the books of the Escrow Agent as the “Indemnity Escrow
Account.”

     3. Working Capital Escrow Account.

          (a) Upon receipt by the Escrow Agent of:

               (i) a written instruction jointly signed by the Parent and Pace (a “Joint
Instruction”) with respect to the disposition of the Working Capital Escrow Account,

               (ii) a written notice from the Parent to Pace and the Escrow Agent (a “Parent
Instruction”) certifying that the Net Working Capital Adjustment Statement has been duly
delivered to Pace pursuant to Section 2.8(a)(i) of the Merger Agreement, that 30 days have expired
without Pace having delivered a Notice of Objection thereto, or a notice from Pace that the Net
Working Capital Adjustment Statement has been accepted without objection (a “Pace’s
Acceptance”), in each case stating if the Closing Date Net Working Capital is less than the
Estimated Net Working Capital and if so, specifying the amount of such deficit (the “Working
Capital Deficit”), or

               (iii) a written determination of the Independent Accounting Firm specifying the amount of the
Final Net Working Capital and stating if the Final Net Working Capital is less than the Estimated
Net Working Capital and if so, specifying the amount of such deficit (the “Final Working
Capital Deficit”) (if any),

the Escrow Agent shall (A) deliver an amount of the Working Capital Escrow Shares to the Parent,
from the available balance in the Working Capital Escrow Account (but not in excess of such
balance), having a value (as determined pursuant to Section 1(b) hereof) equal to (x) the amount
specified in the Joint Instruction, (y) the Working Capital Deficit (if any) specified in the
Parent Instruction, or Pace’s Acceptance, or (z) the Final Working Capital Deficit (if any), and
(B) disburse any remaining balance in the Working Capital Escrow Account upon receipt of Joint
Instruction, Pace’s Acceptance, or the Final Working Capital Deficit, to the Equityholders in
accordance with the percentages set forth on Schedule A hereto.

          (b) In the event that that the disputed items are submitted for resolution to an Independent
Accounting Firm and Pace owes any amounts to the Independent Accounting Firm,
Pace shall be entitled to use the amounts in the Working Capital Escrow Account to pay such
expenses.

 

 

          (c) In the event that Working Capital Escrow Shares, if any, would otherwise be distributable
to Optionholders or Unaccredited Stockholders pursuant to Section 3(b), Parent shall instead
deliver cash in lieu of Working Capital Escrow Shares (valued at the Parent Average Closing Price)
to such Optionholders or Unaccredited Stockholders and Parent shall be entitled to receive from the
Working Capital Escrow Account such Working Capital Escrow Shares for which each Optionholders or
Unaccredited Stockholders, as the case may be, was paid pursuant to this provision.

     4. Indemnity Escrow Account.

          (a) From time to time on or before January 31, 2009 (the “Escrow Period”), Parent may,
on behalf of itself or any Indemnified Party, give written notice (a “Notice”) to Pace and
the Escrow Agent of any claim it has for Damages under Section 10.2 of the Merger Agreement (an
“Indemnity Claim”). Each Notice shall (x) specify in reasonable detail and in good faith
the nature of the Indemnity Claim underlying the specific provision of the Merger Agreement and (y)
specify the dollar amount of the Indemnity Claim and the amount of such Indemnity Claim that
exceeds the minimum amounts set forth in Section 10.3(c) of the Merger Agreement.

          (b) If Pace gives written notice to Parent and the Escrow Agent disputing any Indemnity Claim
or amount thereof (a “Counter Notice”) within 30 days following receipt by the Escrow Agent
of the Notice regarding such Indemnity Claim, such Indemnity Claim shall be resolved as provided in
Section 5(d). If no Counter Notice is received by the Escrow Agent within such 30-day period, then
the amount claimed by the Parent shall be deemed established for purposes of this Agreement and the
Merger Agreement on the first business day following the expiration of such 30-day period, the
Escrow Agent shall deliver to the applicable Indemnified Party the amount equal to the amount
claimed in the Notice from (and only to the extent of) the Indemnity Escrow Account. The Escrow
Agent shall not inquire into or consider whether an Indemnity Claim falls within the category
specified by Parent or complies with the requirements of the Merger Agreement.

          (c) If a timely Counter Notice is given with respect to an Indemnity Claim, the Escrow Agent
shall make a payment with respect thereto only in accordance with (i) a Joint Instruction or (ii) a
certified copy of a final non-appealable order or judgment of a court of competent jurisdiction (a
“Final Judgment”). The Escrow Agent shall act on such court order without further
question. Each Joint Instruction or Final Judgment shall identify the Indemnity Claim to which it
pertains and shall state the amount, if any, to be paid to the applicable Indemnified Party in
respect thereof. The parties hereto acknowledge that Escrow Agent is not expected to analyze
judicial actions or arbitrational awards in order to determine their finality, their
nonappealability or the jurisdiction or authority of the courts or arbitrators rendering them.
Accordingly, it is agreed that for purposes hereof, jurisdiction, finality and nonappealability
shall be deemed conclusively established upon the Escrow Agent’s receipt of a certificate of the
prevailing party to the effect that 30 days has elapsed since entry of the order, judgment, decree
or arbitration award in question and no appeal or motion seeking to set aside the effect of the
order, judgment or decree in question has been filed by the non-prevailing party.

 

 

          (d) If at the time the Escrow Agent is required to make a payment to an Indemnified Party with
respect to an Indemnity Claim pursuant to this Section 4 and the balance in the Indemnity Escrow
Account is insufficient to make the required payment in full, the Escrow Agent shall so notify the
Parent, and shall pay the remaining balance in the Indemnity Escrow Account (but not in excess of
such balance) to the Indemnified Parties in proportion to the amounts they are due.

     5. Release and Termination of Indemnity Escrow Account. Within 10 days following
receipt by the Escrow Agent of written notice from Parent or Pace relating to the distribution
described in this Section 5, the Escrow Agent shall deliver and distribute the balance remaining in
the Indemnity Escrow Account as of January 31, 2009 (the “Distribution Date”) to Pace (the
“Final Escrow Distribution”) unless any Indemnity Claims are then pending, in which case an
amount equal to the amount of the good faith estimate by Parent of its indemnifiable Damages in
respect of such Indemnity Claim (“Good Faith Damages Estimate”) (as shown in the Notices of
such Indemnity Claims or any amendments thereto) shall be deducted from the Final Escrow
Distribution and retained by the Escrow Agent in the Escrow Account; provided that such
distribution does not occur prior to the Distribution Date. Upon receipt by the Escrow Agent of a
Joint Instruction or a Final Judgment as contemplated by Section 5(d) as to any pending Indemnity
Claim, the Escrow Agent shall within 10 days after receipt thereof disburse to the appropriate
Indemnified Parties the amount of Damages due to such Indemnified Party as set forth in the Joint
Instructions or Final Judgment. For purposes of this section 5, all “amounts” may include
Indemnity Escrow Shares valued as set forth in Section 1(b) hereof.

     6. Compensation and Expenses. In consideration for its services as Escrow Agent, the
Escrow Agent shall be entitled to receive the compensation set forth in Schedule B hereto, as well
as the reimbursement of all reasonable out-of-pocket costs and expenses actually incurred by the
Escrow Agent in the performance of its duties hereunder. Parent and the Equityholders shall each
pay half of such compensation and expenses related to the Working Capital Escrow Account and Parent
and Pace shall each pay half of such compensation and expenses related to the Indemnity Escrow
Account. Any fees or expenses owed by the Equityholders or Pace, as the case may be, shall be, in
Pace’s sole discretion, either paid by Pace in cash or deducted from the relevant Escrow Accounts;
provided that, Escrow Agent shall provide reasonable notice to Pace and the Parent prior to
deducting any payments from the Indemnity Escrow Account or the Working Capital Escrow Account, as
applicable; provided, further, that any reimbursement for reasonable out-of-pocket costs and
expenses actually incurred by the Escrow Agent described in Section 20(d) shall be borne solely by
Parent; provided, further, that the Escrow Agent shall provide an itemized schedule showing the
amount of its compensation and reimbursed costs breaking out separately those costs described in
Section 20(d). In the event that amounts are not available in the applicable escrow account to pay
amounts owing by Equityholders or Pace, such amounts will be payable by Parent.

     7. Fractional Shares. No fractional shares of Parent Common Stock shall be retained
in or released from the Escrow Account pursuant to this Agreement. In connection with any
release of Working Capital Escrow Shares or Indemnity Escrow Shares from the Escrow

 

 

Account, Parent
and the Escrow Agent shall be permitted to “round down” or to follow such other rounding procedures
as Parent reasonably determines to be appropriate in order to avoid retaining any fractional shares
in the Escrow Account and in order to avoid releasing any fractional shares from the Escrow
Account.

     8. Stock Splits. All numbers contained in, and all calculations required to be made
pursuant to, this Agreement with respect to the Working Capital Escrow Shares and Indemnity Escrow
Shares shall be adjusted as appropriate to reflect any stock split, stock dividend,
reclassification, recapitalization or similar event after the date hereof; provided, however, that
the Escrow Agent shall have received notice of such stock split, stock dividend, reclassification,
recapitalization or similar event and shall have received the appropriate number of additional
shares of Parent Common Stock or other property. In the event of any such stock split, stock
dividend, reclassification, recapitalization or similar event, Parent shall deliver to Pace and the
Escrow Agent a notice setting forth the new number of Escrow Shares held in the Escrow Fund.
Unless and until the Escrow Agent receives the certificates representing additional shares of
Parent Common Stock or other property, the Escrow Agent may assume without inquiry that no such
stock or other property has been or is required to be issued with respect to Working Capital Escrow
Shares or Indemnity Escrow Shares.

     9. Stock Transfer. [Reserved.]

     10. Exculpation and Indemnification.

          (a) The obligations and duties of the Escrow Agent are confined to those specifically set
forth in this Agreement. In the event that any of the terms and provisions of any other agreement
between any of the parties hereto conflict or are inconsistent with any of the terms and provisions
of this Agreement, the terms and provisions of this Agreement shall govern and control in all
respects. Except as set forth herein, the Escrow Agent shall not be subject to, nor be under any
obligation to ascertain or construe the terms and conditions of any other instrument, whether or
not now or hereafter deposited with or delivered to the Escrow Agent or referred to in this
Agreement, nor shall the Escrow Agent be obligated to inquire as to the form, execution,
sufficiency, or validity of any such instrument nor to inquire as to the identity, authority, or
rights of the person or persons executing or delivering same.

          (b) The Escrow Agent shall not be personally liable for any act that it may do or omit to do
hereunder in good faith and in the exercise of its own best judgment. Any act done or omitted to
be done by the Escrow Agent pursuant to the advice of its attorneys shall be deemed conclusively to
have been performed or omitted in good faith by the Escrow Agent.

          (c) In the event the Escrow Agent is notified of any dispute, disagreement or legal action
between Parent and Pace and any third party relating to or arising in connection with the escrow,
the Escrow Account, or the performance of the Escrow Agent’s duties under this Agreement, the
Escrow Agent will not be required to determine the controversy or to take any action regarding it.
The Escrow Agent may hold all documents and funds and may wait for settlement of any such
controversy by final appropriate legal proceedings, arbitration, or other
means as, in the Escrow Agent’s discretion, it may require. In such event, the Escrow Agent will

 

 

not be liable for interest or damage. Furthermore, the Escrow Agent may, at its option, file an
action of interpleader requiring the parties to answer and litigate any claims and rights among
themselves. The Escrow Agent is authorized, at its option, to deposit with the Clerk of the Court
all documents and funds held in escrow, except all costs, expenses, charges, and reasonable
attorneys’ fees incurred by the Escrow Agent due to the interpleader action and which shall be
split equally between Parent and Pace. Upon initiating such action, the Escrow Agent shall be
fully released and discharged of and from all obligations and liability imposed by the terms of
this Agreement.

          (d) Parent and Pace hereby agree, jointly and severally, to indemnify and hold the Escrow
Agent, and its directors, officers, employees, and agents, harmless from and against all costs,
damages, judgments, attorneys’ fees (whether such attorneys shall be regularly retained or
specifically employed), expenses, obligations and liabilities of every kind and nature which the
Escrow Agent, and its directors, officers, employees, and agents, may incur, sustain, or be
required to pay in connection with or arising out of this Agreement, unless the aforementioned
results from the Escrow Agent’s fraud, gross negligence or willful misconduct, and to pay the
Escrow Agent on demand the amount of all such costs, damages, judgments, attorneys’ fees, expenses,
obligations, and liabilities. The costs and expenses of enforcing this right of indemnification
also shall be split equally between Parent and Pace. The foregoing indemnities in this paragraph
shall survive the resignation or substitution of the Escrow Agent or the termination of this
Agreement.

     11. Notices. All notices, consents and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given when (a) delivered by hand, (b)
sent by telecopier (with receipt confirmed), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by Express Mail, Federal
Express or other express delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and telecopier numbers
as a party may designate as to itself by notice to the other parties):

	 	(a)	 	If to Parent, to:

Blackboard Inc.

1899 L Street, NW

5th Floor

Washington, DC 20036

Facsimile: (202) 466-7195

Attention: Matthew H. Small

	 	 	 	with a copy (which shall not constitute notice) to:

Dewey & LeBoeuf LLP

260 Franklin Street

Boston, MA 02110

Facsimile: 617-897-9000

Attention: Terrence W. Mahoney

 

 

	 	(b)	 	If to Pace, to:

Pace Holdings, LLC

c/o Kinderhook Industries LLC

888 Seventh Avenue, Suite 1600

New York, NY 10106

Attention: Managing Member

Facsimile: (212) 201-6790

Attention: Robert Michalik

	 	 	 	with copies (which shall not constitute notice) to:

Kirkland & Ellis LLP

Citigroup Center

153 East 53rd Street

New York, NY 10022-4611

Facsimile: (212) 446-4900

Attention: W. Brian Raftery

	 	 	 	and

Latham & Watkins LLP

12636 High Bluff Drive

San Diego, California 92130

Facsimile: (858) 523-5450

Attention: Scott N. Wolfe, Esq.

	 	(c)	 	If to the Escrow Agent:

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Facsimile: (718) 765-8718

Attention: Barry Rosenthal

     12. Jurisdiction. Each of the parties to this Agreement irrevocably and
unconditionally (i) agrees that any suit, action or other legal proceeding arising out of this
Agreement shall be brought in any state court of general jurisdiction located in New York, New York
(or, if no such court has jurisdiction or accepts jurisdiction, in any United States District Court
located in New York, New York); (ii) consents to the jurisdiction of any such court in any such
suit, action or proceeding; and (iii) waives any objection that such party may have to the laying
of venue of any such suit, action or proceeding in any such court. Each of the parties to this
Agreement hereby agrees that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each of the parties to this Agreement hereby irrevocably consents to

 

 

service of process in the manner provided for notices in Section 11. Nothing in this Agreement
shall affect the right of any party to this Agreement to serve process in any other manner
permitted by applicable law.

     13. Service of Process. Process in any action or proceeding referred to in Section 12
may be served on any party anywhere in the world, whether within or without the State of New York.

     14. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original instrument and all of which together shall constitute a
single agreement.

     15. Captions. The captions in this Agreement are for convenience of reference only
and shall not be given any effect in the interpretation of this Agreement.

     16. No Waiver. The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any
waiver must be in writing.

     17. Exclusive Agreement; Amendment. This Agreement supersedes all prior agreements
among the parties with respect to its subject matter, is intended (with the documents referred to
herein) as a complete and exclusive statement of the terms of the agreement among the parties with
respect thereto and cannot be changed or terminated except by a written instrument executed by
Parent, Pace and the Escrow Agent.

     18. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and to be performed
entirely within such State.

     19. Automatic Succession. Any bank or corporation into which the Escrow Agent may be
merged or with which it may be consolidated, or any bank or corporation to whom the Escrow Agent
may transfer a substantial amount of its Escrow business, shall be the successor to the Escrow
Agent without the execution or filing of any paper or any further act on the part of any of the
parties, anything herein to the contrary notwithstanding.

     20. Taxes.

          (a) Pace shall vote both the Working Capital Escrow Shares and the Indemnity Escrow Shares for
so long as any such Shares are held in the Escrow Account.

          (b) All cash dividends, interest and other income earned or realized on the amounts in the
Escrow Account (“Earnings”) shall be accounted for by the Escrow Agent separately from the
amount originally deposited in the Escrow Account, and Earnings shall be treated as having been
received by Pace for United States federal and state income tax purposes.
Unless otherwise required by applicable Law, the parties hereto agree that, for United States

 

 

federal and state income tax purposes, Pace shall report Earnings as its income and shall report
related expenses as its expenses. The Escrow Agent annually shall file information returns with
the United States Internal Revenue Service (“IRS”) and shall issue an IRS Form 1099 (or any
successor form) relating to such Earnings to and in the name of Pace.

          (c) The Escrow Agent may require each of Pace and Parent to provide the Escrow Agent on or
prior to the date hereof with an IRS Form W-9 or applicable Form W-8, and any other forms and
documents that the Escrow Agent may reasonably request to complete such information returns and
payee statements (collectively, the “Tax Reporting Documentation”), and the Escrow Agent
shall provide copies of any such forms and documents to Parent and Pace. The parties hereto
understand that if such Tax Reporting Documentation is not provided to the Escrow Agent, then the
Escrow Agent may be required by the Code to withhold a portion of any stated interest, imputed
interest or other payments made to Pace or to Parent. To the extent that amounts are so withheld
by the Escrow Agent, such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to Pace or Parent, as the case may be, in respect of whom such deduction and
withholding was made by the Escrow Agent.

          (d) The Escrow Agent shall be entitled to reimbursement for all reasonable out-of-pocket costs
paid to outside consultants to compute the amount, if any, of imputed interest as provided in
Section 20(c).

     21. Disbursements of Earnings.  Notwithstanding anything contained herein to the
contrary, within 15 days after the end of each calendar month, any Earnings in cash that were
earned on the Indemnity Escrow Account during such calendar month shall be paid by the Escrow Agent
to Pace.

[Signature page to follow]

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the date
first above written.

	 	 	 	 	 
	 	BLACKBOARD INC.

 	 
	 	By:  	/s/ Matthew Small
 	 
	 	Name:  	Matthew Small 	 	 
	 	Title:  	Chief Legal Officer 	 	 
	 
	 	PACE HOLDINGS, LLC

 	 
	 	By:  	/s/ Robert E. Michalik
 	 
	 	Name:  	Robert E. Michalik 	 	 
	 	Title:  	Vice President 	 	 
	 
	 	AMERICAN STOCK TRANSFER & TRUST COMPANY

as Escrow Agent

 	 
	 	By:  	 /s/ Herbert J. Limmer	 
	 	Name:  	 Herbert J. Limmer	 
	 	Title:  	 Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}]]