Document:

exv4w2

Exhibit 4.2

 

 
Execution Copy

AMENDED AND RESTATED

INVESTOR RIGHTS AGREEMENT

DATED: SEPTEMBER 17, 2008

  
 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	SECTION 1 AGREEMENT GENERAL
	 	 	1	 
	 
	 	 	 	 
	1.1 Definitions
	 	 	1	 
	 
	 	 	 	 
	SECTION 2 REGISTRATION
	 	 	3	 
	 
	 	 	 	 
	2.1 Demand Registration
	 	 	3	 
	 
	 	 	 	 
	2.2 Piggyback Registrations
	 	 	5	 
	 
	 	 	 	 
	2.3 Form S-3 Registration
	 	 	6	 
	 
	 	 	 	 
	2.4 Expenses of Registration
	 	 	7	 
	 
	 	 	 	 
	2.5 Obligations of the Company
	 	 	7	 
	 
	 	 	 	 
	2.6 Termination of Registration Rights
	 	 	8	 
	 
	 	 	 	 
	2.7 Delay of Registration; Furnishing Information
	 	 	8	 
	 
	 	 	 	 
	2.8 Indemnification
	 	 	9	 
	 
	 	 	 	 
	2.9 Assignment of Registration Rights
	 	 	11	 
	 
	 	 	 	 
	2.10 Limitation on Subsequent Registration Rights
	 	 	11	 
	 
	 	 	 	 
	2.11 “Market Stand-Off” Agreement
	 	 	11	 
	 
	 	 	 	 
	2.12 SEC Compliance
	 	 	12	 
	 
	 	 	 	 
	SECTION 3 COVENANTS OF THE COMPANY
	 	 	12	 
	 
	 	 	 	 
	3.1 Basic Financial Information and Reporting
	 	 	12	 
	 
	 	 	 	 
	3.2 Inspection Rights
	 	 	14	 
	 
	 	 	 	 
	3.3 Taxes
	 	 	14	 
	 
	 	 	 	 
	3.4 Insurance
	 	 	15	 
	 
	 	 	 	 
	3.5 Compliance With Laws
	 	 	15	 
	 
	 	 	 	 
	3.6 Corporate Existence
	 	 	15	 
	 
	 	 	 	 
	3.7 Business Plan
	 	 	15	 
	 
	 	 	 	 
	3.8 Meetings of the Board of Directors
	 	 	15	 
	 
	 	 	 	 
	3.9 Confidentiality of Records
	 	 	15	 
	 
	 	 	 	 
	3.10 Reservation of Common Stock
	 	 	15	 
	 
	 	 	 	 
	3.11 Negative Covenants of the Company
	 	 	15	 
	 
	 	 	 	 
	3.12 Termination of Covenants
	 	 	18	 
	 
	 	 	 	 
	SECTION 4 MISCELLANEOUS
	 	 	18	 
	 
	 	 	 	 
	4.1 Governing Law; Venue
	 	 	18	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	4.2 Successors and Assigns
	 	 	18	 
	 
	 	 	 	 
	4.3 Severability
	 	 	18	 
	 
	 	 	 	 
	4.4 Amendment and Waiver
	 	 	18	 
	 
	 	 	 	 
	4.5 Delays or Omissions
	 	 	18	 
	 
	 	 	 	 
	4.6 Notices
	 	 	19	 
	 
	 	 	 	 
	4.7 Headings
	 	 	19	 
	 
	 	 	 	 
	4.8 Complete Agreement
	 	 	19	 
	 
	 	 	 	 
	4.9 Counterparts; Facsimile Copies
	 	 	19	 

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AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

     This AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this “Agreement”) is entered into
as of September 17, 2008, by and among GRAND CANYON EDUCATION, INC., a Delaware corporation
formerly known as Significant Education, Inc. (the “Company”); each person listed on
Schedule A hereto as an “Investor” (the “Investors”); each holder of Common Stock
set listed on Schedule A hereto as a “Common Stockholder” (the “Common
Stockholders”); and SPIRIT MANAGEMENT COMPANY, a Maryland corporation (“Spirit”).

RECITALS

     WHEREAS, the Company has agreed to provide to the Investors, the Common Stockholders and
Spirit registration rights, information rights, and other rights as set forth herein.

     NOW, THEREFORE, in consideration of the mutual promises, representations, warranties,
covenants and conditions set forth in this Agreement, the parties mutually agree as follows:

SECTION 1

AGREEMENT GENERAL

     1.1 Definitions. As used in this Agreement the following terms shall have the
following respective meanings:

     “Affiliate” of a Holder means any member, manager, general or limited partner of such
Holder or any other person, entity or investment fund controlling, controlled by or under common
control with such Holder.

     “Business Plan” has the meaning specified in Section 3.7 hereof.

     “Common Stock” means the Company’s Common Stock, par value $.01 per share, and any
other common equity securities issued by the Company, and any other shares of stock issued or
issuable with respect thereto (whether by way of stock dividend or stock split or in exchange for
or upon conversion of such shares or otherwise in connection with a combination of shares,
recapitalization, merger, consolidation, or other corporate reorganization).

     “DOE” shall mean the United States Department of Education.

     “Endeavour Directors” shall have the meaning specified in the Amended and Restated
Stockholders Agreement dated the date hereof by and among the Company and the other parties named
therein.

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

     “Form S-3” means such form under the Securities Act as in effect on the date hereof or
any successor registration form under the Securities Act subsequently adopted by the SEC which

 

 

permits inclusion or incorporation of substantial information by reference to other documents
filed by the Company with the SEC.

     “HLC” means the Higher Learning Commission of the North Central Association of
Colleges and Schools.

     “Holder” means any Common Stockholder, any Investor, Spirit or any holder of
Registrable Securities to whom the registration rights conferred by this Agreement to a Common
Stockholder or Spirit have been transferred in compliance with Section 2.9 hereof.

     “Initial Offering” means the Company’s first firm commitment underwritten public
offering of its Common Stock registered under the Securities Act.

     “Initiating Holders” has the meaning specified in Section 2.1 hereof.

     “Material Adverse Effect” means, when used in connection with the Company or any other
person, any event, circumstance, change or effect that is or is reasonably likely to be materially
adverse to the business (including, but not limited to, governmental and student relations and
their effect thereon), condition (financial or otherwise), assets, liabilities, or result of
operations of such person.

     “Qualified Public Offering” has the meaning specified in Section 2.1 hereof.

     “Registrable Securities” means (i) shares of Common Stock held by any Holder as of the
date of this Agreement, (ii) shares of Common Stock issued or issuable upon conversion of the
Shares, (iii) shares of Common Stock issued or issuable pursuant to the exercise of the Warrant,
and (iv) shares of Common Stock issued or issuable upon any stock split, stock dividend,
recapitalization or similar event with respect to the Common Stock covered by (i), (ii) and (iii)
above and any other securities issued in exchange of or replacement of such Common Stock. As to
any particular Registrable Securities, such securities shall cease to be Registrable Securities
when they have been distributed to the public pursuant to a public offering registered under the
Securities Act or sold to the public through a broker, dealer or market maker in compliance with
Rule 144 under the Securities Act (or any similar rule then in force).

     “Registration Expenses” shall mean all expenses incurred by the Company in complying
with Sections 2.1, 2.2 and 2.3, hereof, including, without limitation, all registration and filing
fees (exclusive of underwriting discounts and commissions), printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements of a single special
counsel for the Holders, blue sky fees and expenses and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company).

     “Regulatory Approvals” shall mean any licenses, permits, authorizations, approvals,
clearances, consents, certificates and other evidences of approvals or authority issued by any
Regulatory Entities.

     “Regulatory Entities” shall mean any person, entity or organization, whether
governmental, government chartered, private, or quasi-private, that engages in granting or

2

 

withholding Regulatory Approvals for and regulates post-secondary schools, their agents, or
employees in accordance with standards relating to the performance, operation, financial condition,
or academic standards of such schools, and the provision of financial assistance by and to such
schools, including but not limited to the DOE, the HLC, and any other approval, licensing, or
accrediting authority.

     “School” shall mean the single institution, with the Office of Postsecondary
Identification Number 00107400, including all of its locations and educational programs.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” shall mean the Securities Act of 1933, as amended.

     “Selling Expenses” shall mean all underwriting discounts, selling commissions and
stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of
counsel for any Holder (other than the fees and disbursements of counsel included in the
Registration Expenses).

     “Series A Preferred Stock” shall mean the Company’s Series A Convertible Preferred
Stock, par value $0.01 per share, and any other shares of stock issued or issuable with respect
thereto (whether by way of stock dividend or stock split or in exchange for or upon conversion of
such shares or otherwise in connection with a combination of shares, recapitalization, merger,
consolidation, or other corporate reorganization).

     “Series C Preferred Stock” shall mean the Company’s Series C Preferred Stock, par
value $0.01 per share, and any other shares of stock issued or issuable with respect thereto
(whether by way of stock dividend or stock split or in exchange for or upon conversion of such
shares or otherwise in connection with a combination of shares, recapitalization, merger,
consolidation, or other corporate reorganization).

     “Shares” shall mean shares of the Company’s Series A Preferred Stock and Series C
Preferred Stock.

     “Warrant” means the warrant to purchase Common Stock of the Company issued to Spirit,
dated June 2004, as amended and/or amended and restated from time to time and as adjusted in
accordance with that certain Notice of Adjustment dated August 12, 2005.

SECTION 2

REGISTRATION

     2.1 Demand Registration.

          (a) Subject to the conditions of this Section 2.1, if the Company shall receive a written
request from the Investors holding at least a majority of the Registrable Securities held by
Investors that the Company file a registration statement under the Securities Act covering the
registration of Registrable Securities and the aggregate offering price to the public of any such
offering would exceed $10,000,000 (a “Qualified Public Offering”), then the Company shall,
within thirty (30) days of the receipt thereof, give written notice of such request to all
Investors,

3

 

and subject to the limitations of this Section 2.1, use its reasonable commercial efforts to
effect, as soon as practicable, the registration under the Securities Act of all Registrable
Securities that the Investors request to be registered. The Investors requesting registration
pursuant to this Section 2.1 shall be referred to as the “Initiating Holders.”

          (b) If the Initiating Holders intend to distribute the Registrable Securities covered by their
request by means of an underwriting, they shall so advise the Company as a part of their request
made pursuant to this Section 2.1 and the Company shall include such information in the written
notice referred to in Section 2.1(a). In such event, the right of any Investor to include its
Registrable Securities in such registration shall be conditioned upon such Investor’s participation
in such underwriting and the inclusion of such Investor’s Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Investor) to the extent provided herein. All Investors proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by a majority in interest of
the Initiating Holders (which underwriter or underwriters shall be reasonably acceptable to the
Company). Notwithstanding any other provision of this Section 2.1, if the underwriter advises the
Company that marketing factors require a limitation of the number of securities to be underwritten
(including Registrable Securities), then the Company shall so advise all Investors whose
Registrable Securities would otherwise be underwritten pursuant hereto, and the number of shares
that may be included in the underwriting shall be allocated to such Investors on a pro rata basis
based on the number of Registrable Securities held by all such Investors (including the Initiating
Holders). Any Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.

          (c) The Company shall not be required to effect a registration pursuant to this Section 2.1:

          (i) after the Company has effected two (2) such registrations, and such registrations
have been declared or ordered effective;

          (ii) during the period starting with the date of filing of, and ending on the date
ninety (90) days following the effective date of the registration statement pertaining to
the Initial Offering; provided that the Company makes reasonable good faith efforts to cause
such registration statement to become effective;

          (iii) if, within thirty (30) days of receipt of a written request from Initiating
Holders pursuant to Section 2.1(a), the Company gives notice to the Investors of the
Company’s intention to make a Qualified Public Offering within ninety (90) days;

          (iv) if the Company shall furnish to the Investors requesting a registration statement
pursuant to this Section 2.1 a certificate signed by the Chairman of the Board stating that,
in the good faith judgment of a majority of the Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration statement to
be effected at such time, in which event the Company shall have the right to defer such
filing for a period of not more than sixty (60) days after receipt of

4

 

the request of the Initiating Holders; provided that such right to delay a request
shall be exercised by the Company not more than once in any twelve (12) month period; or

          (v) Until the Company has completed its Initial Offering or August 24, 2009, whichever
is sooner.

     2.2 Piggyback Registrations.

          (a) The Company shall notify all Holders of Registrable Securities in writing at least thirty
(30) days prior to the filing of any registration statement under the Securities Act for purposes
of a public offering of securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but excluding registration
statements relating to employee benefit plans or with respect to corporate reorganizations or other
transactions under Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of the Registrable Securities held by such
Holder. Each Holder desiring to include in any such registration statement all or any part of the
Registrable Securities held by it shall, within twenty (20) days after the receipt of the
above-described notice from the Company, so notify the Company in writing. Such notice shall state
the intended method of disposition of the Registrable Securities held by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration statement thereafter
filed by the Company, such Holder shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or registration statements as may
be filed by the Company with respect to offering of its securities, all upon the terms and
conditions set forth herein.

          (b) If the registration statement under which the Company gives notice under this Section 2.2
is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities.
In such event, the right of any such Holder to be included in a registration pursuant to this
Section 2.2 shall be conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their Registrable Securities through such underwriting
shall enter into an underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other provision of the
Agreement, if the underwriter and/or the Company determine in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated first, among the Investors, if any, seeking
registration under Section 2.1 hereof on a pro rata basis based on the total number of Registrable
Securities held by the Investors and second, to the Common Stockholders and Spirit, if any, seeking
registration under this Section 2.2 hereof on a pro rata basis based on the total number of
Registrable Securities held by the Common Stockholders and Spirit. No such reduction shall reduce
the securities being offered by the Company for its own account to be included in the registration
and underwriting, and in no event shall the amount of securities of the selling Holders included in
the registration be reduced below thirty percent (30%) of the total amount of securities included
in such registration, unless such offering is the Initial Offering and such registration does not
include shares of any other selling stockholder (other than the stockholder(s), if any, invoking
the demand registration), in which event any or all of the Registrable Securities of the Investors
may be excluded. In no event will shares of any

5

 

other selling stockholder be included in such registration that would reduce the number of
shares that may be included by Holders without the prior written consent of Holders of not less
than seventy-five percent (75%) of the Registrable Securities on an as-converted basis proposed to
be sold in the offering.

          (c) Upon an affirmative vote of a majority of the directors of the Company, the Company shall
have the right to terminate or withdraw any registration initiated by it under this Section 2.2
prior to the effectiveness of such registration whether or not any Holder has elected to include
securities in such registration. The Registration Expenses of such withdrawn registration shall be
borne by the Company in accordance with Section 2.4 hereof.

     2.3 Form S-3 Registration. Subject to the conditions of this Section 2.3 and after
the Company has completed its Initial Offering, in the event the Company receives from any Holder
or Holders of Registrable Securities a written request or requests that the Company effect a
registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration
statement and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:

          (a) promptly give written notice of the proposed registration, and any related qualification
or compliance, to all other Holders of Registrable Securities; and

          (b) as soon as practicable, use its reasonable commercial efforts to effect such registration
and all such qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder’s or Holders’
Registrable Securities as are specified in such request, together with all or such portion of the
Registrable Securities of any other Holder or Holders joining in such request as are specified in a
written request given within twenty (20) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.3:

          (i) if Form S-3 (or any successor or similar form) is not available for such offering
by the Holders or if the Company is not eligible to use such form;

          (ii) if the Holders propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than $1,000,000;

          (iii) if the Company shall furnish to the Holders a certificate signed by the Chairman
of the Board of Directors of the Company stating that, in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration statement for
a period of not more than sixty (60) days after receipt of the request of the Holder or
Holders under this Section 2.3; provided, that such right to delay a request shall be
exercised by the Company not more than twice in any twelve (12) month period; or

          (iv) after the Company has effected two (2) such registrations for Investors pursuant
to this Section 2.3 and two (2) such registrations for the Common

6

 

Stockholders and Spirit, collectively, pursuant to this Section 2.3, and such
registrations have been declared or ordered effective.

          (c) Subject to the foregoing, the Company shall file a Form S-3 registration statement
covering the Registrable Securities and other securities so requested to be registered as soon as
practicable after receipt of the request or requests of the Holders.

     2.4 Expenses of Registration. All Registration Expenses incurred in connection with
any registration, qualification or compliance pursuant to Section 2.1 or any registration under
Section 2.2 or Section 2.3 herein shall be borne by the Company. All Selling Expenses incurred in
connection with any registrations hereunder, shall be borne by the Holders of the securities so
registered pro rata on the basis of the number of shares so registered.

     2.5 Obligations of the Company. Whenever required by the provisions of this Agreement
to effect the registration of any Registrable Securities, the Company shall, as expeditiously as
reasonably possible:

          (a) Prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use all reasonable efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto.

          (b) Subject to Section 2.7 hereof, prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration statement.

          (c) Furnish to the Holders such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition of Registrable Securities owned
by them.

          (d) Use all reasonable efforts to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.

          (e) In the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of
such offering. Each Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.

          (f) Notify each Holder of Registrable Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such

7

 

registration statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.

          (g) Cause all such Registrable Securities to be listed on each securities exchange or
automated quotation system on which similar securities issued by the Company are then listed.

          (h) Promptly provide a transfer agent and registrar for all such Registrable Securities not
later than the effective date of the registration statement.

          (i) Furnish, at the request of a majority of the Holders participating in the registration, on
the date that such Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to underwriters in an
underwritten public offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders requesting
registration addressed to the underwriters, if any, and if permitted by applicable accounting
standards, to the Holders requesting registration of Registrable Securities.

          (j) Promptly following the effectiveness of such registration statement, notify each Holder of
such Registrable Securities of the effectiveness of such registration statement and thereafter,
notify each Holder of such Registrable Securities of any request by the SEC for the amending or
supplementing of such registration statement or prospectus.

     2.6 Termination of Registration Rights. All registration rights granted under this
Section 2 shall terminate on, and be of no further force and effect after, August 24, 2015, unless
otherwise set forth herein.

     2.7 Delay of Registration; Furnishing Information.

          (a) No Holder shall have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.

          (b) It shall be a condition precedent to the obligations of the Company to take any action
pursuant to Section 2.1, 2.2 or 2.3 that the selling Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them and the intended method
of disposition of such securities as shall be required to effect the registration of their
Registrable Securities.

8

 

          (c) If the Company shall notify a Holder pursuant to Section 2.5(f) of this Agreement that a
prospectus required to be delivered includes an untrue statement of material fact or omit to state
a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, the Holders shall not make any sales of
Registrable Securities using such prospectus; provided, however, that the Company must furnish the
Holder with a prospectus that may be used to sell Registrable Securities within thirty (30) days
after notifying the Holder pursuant to Section 2.5(f) hereof, and provided further, that the
Company may not delay the Holder’s ability to sell Registrable Securities pursuant to this Section
2.7(c) for more than sixty (60) days in any twelve month period.

     2.8 Indemnification. In the event any Registrable Securities are included in a
registration statement under Sections 2.1, 2.2 or 2.3:

          (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder,
the partners, managers, officers, directors and legal counsel of each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the
following statements’ omissions or violations (each a “Violation”) by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the offering covered by such
registration statement; and the Company will reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises solely out of or is based solely
upon a Violation which occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder, partner, officer, director,
underwriter or controlling person of such Holder.

          (b) To the extent permitted by law, each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration qualifications or compliance is
being effected, indemnify and hold harmless the Company, each of its directors, its officers, and
legal counsel and each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under such registration
statement or any of such other Holder’s partners, directors or officers or any person who controls
such Holder, against any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder may

9

 

become subject under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of
or are based upon any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information furnished by such
Holder under an instrument duly executed by such Holder (or its authorized agent) and stated to be
specifically for use in connection with such registration; and each such Holder will reimburse any
legal or other expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director or controlling
person of such other Holder in connection with investigating or defending any such loss, claim,
damage, liability or action if it is finally judicially determined that there was such a Violation;
provided, however, in no event shall any indemnity under this Section 2.8 exceed the net proceeds
from the offering received by such Holder.

          (c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the
commencement of any action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this Section 2.8,
deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of the commencement of
any such action, if materially prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section 2.8, but the
omission so to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this Section 2.8.

          (d) If the indemnification provided for in this Section 2.8 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages
or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or liability 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 Violation(s) that resulted in
such loss claim, damage or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be determined by a
court of law by reference to, among other things, whether the 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; provided, that in
no event shall any contribution by a Holder hereunder exceed the proceeds from the offering
received by such Holder.

10

 

          (e) The obligations of the Company and Holders under this Section 2.8 shall survive completion
of any offering of Registrable Securities in a registration statement. No indemnifying party, in
the defense of any such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. No indemnifying party shall be
liable to any indemnified party in respect of any amounts due in settlement of any claim or
litigation without the prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld.

     2.9 Assignment of Registration Rights. The rights to cause the Company to register
Registrable Securities pursuant to this Section 2 may be assigned by a Investor to a transferee or
assignee of Registrable Securities; provided, however, (a) the transferor shall, within fifteen
(15) days after such transfer, furnish to the Company written notice of the name and address of
such transferee or assignee and the securities with respect to which such registration rights are
being assigned, and (b) such transferee shall agree in writing to be subject to all rights and
restrictions applicable to Investors set forth in this Agreement, and such transferee or assignee
shall thereby become an “Investor” for purposes of this Agreement. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may not be assigned by any Common
Stockholder or Spirit to a transferee or assignee of Registrable Securities; provided,
however, that any Common Stockholder or Spirit may elect to transfer its rights pursuant to
this Section 2 to any other Common Stockholder or an Affiliate of such Common Stockholder or
Spirit, if (a) the transferor shall, within fifteen (15) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned, and (b) such transferee shall
agree in writing to remain subject to all rights and restrictions applicable to the Common
Stockholders set forth in this Agreement, and such transferee or assignee shall thereby become a
“Common Stockholder” for purposes of this Agreement.

     2.10 Limitation on Subsequent Registration Rights. After the date of this Agreement,
the Company shall not, without the prior written consent of the Investors of at least fifty percent
(50%) of the Registrable Securities held by Investors and the prior written consent of the Holders
of at least fifty percent (50%) of the Registrable Securities held by Holders, enter into any
agreement with any holder or prospective holder of any securities of the Company that would grant
such holder registration rights senior to those granted to the Investors hereunder.

     2.11 “Market Stand-Off” Agreement. If requested by the Company or the representative
of the underwriters of Common Stock (or other securities) of the Company, each Holder shall not
sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held
by such Holder (other than those included in the registration) for a period specified by the
representative of the underwriters not to exceed one hundred eighty (180) days following the
effective date of a registration statement of the Company filed under the Securities Act, provided
that

          (a) such agreement shall apply only to the Company’s Initial Offering; and

11

 

          (b) all officers and directors of the Company and holders of at least one percent (1%) of the
Company’s voting securities enter into similar agreements.

     The obligations described in this Section 2.11 shall not apply to a registration relating
solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated
in the future, or a registration relating solely to a Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares of Common Stock (or other securities) subject to the foregoing
restriction until the end of said one hundred eighty (180) day period.

     2.12 SEC Compliance. After the earliest of (i) the closing of the sale of securities
of the Company pursuant to a registration statement, (ii) the registration by the Company of a
class of securities under Section 12 of the Exchange Act, or (iii) the issuance by the Company of
an offering circular pursuant to Regulation A under the Securities Act, the Company agrees to:

          (a) make and keep current public information about the Company available, as those terms are
understood and defined in Rule 144 promulgated under the Securities Act;

          (b) use its best efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act (at any time after
it has become subject to such reporting requirements); and

          (c) furnish to any Holder of Registrable Securities upon request (i) a written statement by
the Company as to its compliance with the reporting requirements of Rule 144 and of the Securities
Act and the Exchange Act (at any time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as such holder may reasonably request to avail itself of any
similar rule or regulation of the SEC allowing it to sell any such securities without registration.

SECTION 3

COVENANTS OF THE COMPANY

     3.1 Basic Financial Information and Reporting.

          (a) The Company will maintain true books and records of account in which full and correct
entries will be made of all its business transactions pursuant to a system of accounting
established and administered in accordance with generally accepted accounting principles and which
shall be true and correct in all material respects and will set aside on its books all such proper
accruals and reserves as shall be required under generally accepted accounting principles.

          (b) So long as any Investor or its Affiliates shall own any Shares, as soon as practicable
after the end of each fiscal year of the Company, and in any event within ninety (90) days
thereafter, the Company will furnish the Investors a consolidated balance sheet of the Company, as
at the end of such fiscal year, and a consolidated statement of income and a consolidated statement
of cash flows of the Company, for such year, all prepared in accordance with generally accepted
accounting principles and setting forth in each case in comparative form

12

 

the figures for the previous fiscal year, all in reasonable detail. Such financial statements
shall be accompanied by a report and opinion thereon by independent public accountants of regional
standing that is familiar with DOE regulatory and audit issues selected by the Company’s Board of
Directors, and a Company-prepared comparison to the Company’s operating plan for such year.

          (c) So long as any Investor or its Affiliates shall own any Shares, the Company will furnish
the Investors, as soon as practicable after the end of each calendar month and in any event within
thirty (30) days thereafter, (i) historical financial statements of the Company, including a
consolidated balance sheet of the Company as of the end of each month, and a consolidated statement
of income and a consolidated statement of cash flows of the Company for such month and for the
current fiscal year to date prepared in accordance with generally accepted accounting principles,
and (ii) a projected statement of cash flows of the Company for the next twelve (12) months
prepared in accordance with generally accepted accounting principles, with the exception that no
notes need be attached to such statements and year-end audit adjustments may not have been made.

          (d) So long as any Investor or its Affiliates shall own any Shares, the Company will furnish
to the Investors (i) no later than thirty (30) days prior to the beginning of each fiscal year, a
copy of the Business Plan, and as soon as available, any subsequent revisions or supplements
thereto, (ii) all material correspondence with the Company’s lenders within ten (10) business days
after the date of such correspondence, and (iii) as soon as practicable after the end of each
month, and in any event within thirty (30) days thereafter, a consolidated balance sheet of the
Company as of the end of each such month, and a consolidated statement of income and a consolidated
statement of cash flows of the Company for such month and for the current fiscal year to date,
including a comparison to plan figures for such period, prepared in accordance with generally
accepted accounting principles consistently applied, with the exception that no notes need be
attached to such statements and year-end audit adjustments may not have been made.

          (e) So long as any Investor or its Affiliates shall own any Shares, the Company will furnish
to the Investors, reasonably promptly in advance of any meeting of the Board of Directors, copies
of the materials provided to the Board members for any such meeting.

          (f) So long as any Investor or its Affiliates shall own any Shares, the Company will furnish
to the Investors, promptly upon receipt thereof, any written report, so-called “management letter,”
and any material written communication submitted to the Company by its independent public
accountants relating to the business, prospects or financial condition of the Company.

          (g) So long as any Investor or its Affiliates shall own any Shares, the Company will furnish
to the Investors, promptly upon receipt thereof, any written report and any material written
communication submitted to the Company by any Regulatory Entity, including, but not limited to, any
assertion by any Regulatory Entity that the Company or the School is not in material compliance
with the terms of its Regulatory Approval or with any laws, regulations or requirements
administered by such Regulatory Entity.

13

 

          (h) So long as any Investor or its Affiliates shall own any Shares, the Company will furnish
to the Investors, promptly upon the occurrence or commencement thereof, notice of (i) all actions,
suits and proceedings before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, affecting the Company which, if successful, could
have a Material Adverse Effect on the Company; (ii) all material defaults by the Company (whether
or not declared) under any agreement for money borrowed (unless waived or cured within applicable
grace periods); (iii) all material defaults by the Company or third party under any contract,
agreement or arrangement which are material to the Company and its subsidiaries, taken as a whole,
or to the business or operations of the Company.

          (i) So long as any Investor or its Affiliates shall own any Shares, the Company will furnish
to the Investors, promptly upon sending, making available or filing the same, all reports and
financial statements as the Company shall send or make available generally to the stockholders of
the Company as such.

          (j) So long as any Investor or its Affiliates shall own any Shares, the Company will furnish
to the Investors as soon as reasonably practicable, (but in any event at least one (1) Business Day
prior to release), a draft of any press release of the Company pertaining to any significant
development with regard to the Company’s operations, management or financial condition.

          (k) So long as any Investor or its Affiliates shall own any Shares, the Company will provide
to the Investors such other information with regard to the business, properties or the condition or
operations, financial or otherwise, of the Company, as Endeavour may from time to time reasonably
request.

          (l) So long as any Common Stockholder or its Affiliates shall own any shares of Common Stock,
the Company will provide to the Common Stockholders copies of information provided to the Investors
or their Affiliates under this Section 3.1.

     3.2 Inspection Rights. The Investors shall have the right to visit and inspect any of
the properties of the Company or any of its subsidiaries, and to discuss the affairs, finances and
accounts of the Company or any of its subsidiaries with its officers, and to review such
information as is reasonably requested all at such reasonable times and as often as may be
reasonably requested.

     3.3 Taxes. The Company will pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any properties belonging
to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid,
might become a lien or charge upon any properties of the Company, provided that the Company shall
not be required to pay any such tax, assessment, charge, levy or claim which is being contested in
good faith and by proper proceedings if the Company shall have set aside on its books adequate
reserves with respect thereto.

14

 

     3.4 Insurance. The Company will obtain and maintain with financially sound and
reputable insurers directors and officers’ liability insurance in a reasonable amount determined by
the Board of Directors.

     3.5 Compliance With Laws. The Company will comply with all applicable laws, rules,
regulations and orders of any governmental authority, the noncompliance with which could have a
Material Adverse Effect on the Company.

     3.6 Corporate Existence. The Company will at all times preserve and keep in full
force and effect its corporate existence, and rights and franchises material to the business of the
Company, and will qualify to do business as a foreign corporation in any jurisdiction where the
failure to do so would have a Material Adverse Effect on the Company.

     3.7 Business Plan. Prior to the end of each fiscal year, the Company will prepare and
submit to its Board of Directors for its approval prior to such year end an operating plan and
budget, cash flow projections and profit and loss projections, all itemized in reasonable detail
for the immediately following year (collectively referred to herein as the “Business
Plan”).

     3.8 Meetings of the Board of Directors. The directors shall schedule regular meetings
not less frequently than once every quarter, unless otherwise determined by the Board of Directors,
provided, however, that the Endeavour Directors or the holders of a majority of the
outstanding shares of Series A Preferred Stock shall have the right to call additional meetings of
the Board of Directors by giving at least twenty-four (24) hour notice in the form and manner set
forth in the Company’s Bylaws. The Company shall reimburse directors for all reasonable direct out
of pocket expenses incurred in attending such meetings.

     3.9 Confidentiality of Records. The Investors each agree to use, and to use its best
efforts to ensure that its authorized representatives use, the same degree of care as each uses to
protect its own confidential information to keep confidential any information furnished to it which
the Company identifies as being confidential or proprietary (so long as such information is not in
the public domain), except that each of the Investors may disclose such proprietary or confidential
information to any partner, subsidiary or parent of it for the purpose of evaluating its investment
in the Company as long as such partner, subsidiary or parent is advised of the confidentiality
provisions of this Section 3.9 and agrees to comply with this Section 3.9.

     3.10 Reservation of Common Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the conversion of the Shares, all Common Stock
issuable from time to time upon such conversion.

     3.11 Negative Covenants of the Company.

          (a) Without limiting any other covenants and provisions hereof, the Company covenants and
agrees that it shall comply with each of the provisions of this Section 3.11(a) until the
consummation of the Initial Offering unless failure to comply with any such covenant is waived by
at least a majority of the then outstanding shares of Series A Preferred Stock, voting as a
separate class:

15

 

          (i) The Company shall not redeem, purchase or otherwise acquire for value (or pay into
or set aside for a sinking fund for such purpose) or declare and pay or set aside funds for
the payment of any dividend with respect to, any share or shares of capital stock, purchase,
redeem, retire, or otherwise acquire for value any of its capital stock (or rights, options
or warrants to purchase capital stock) now or hereafter outstanding, return any capital to
its stockholders as such, or make any distribution of assets to is stockholders as such.

          (ii) The Company shall not authorize or issue, or obligate itself to authorize or
issue, (A) additional shares of Series A Preferred Stock or Series C Preferred Stock, (B)
any new class or series of stock, or any other securities convertible into equity securities
of the Company, ranking on parity with or senior to the Series A Preferred Stock and Series
C Preferred Stock in right of redemption, liquidation preference, dividends, or right of
voting; or (C) any shares of Common Stock (or rights, options or warrants to purchase Common
Stock) if such issuance (or exercise of such right, option or warrant) would result in the
Company having more than 18,000 shares of Common Stock issued and outstanding (such number
to be adjusted in respect of any stock split, stock dividend, combination, recapitalization
or the like).

          (iii) The Company shall not amend, restate, modify or alter the rights, preferences and
privileges of the Series A Preferred Stock or Series C Preferred Stock.

          (iv) The Company shall not merge or consolidate with any other corporation, or sell,
assign, license, lease or otherwise dispose of or voluntarily part with the control of
(whether in one transaction or in a series of transactions) all, or any significant portion,
of its assets (whether now owned or hereinafter acquired), including without limitation
sales of the Company’s intellectual property and technology, or consent to any liquidation,
dissolution or winding up of the Company, or effect any transaction or series of
transactions in which the holders of the Company’s voting interests prior to such
transaction or series of transactions hold less than 50% of the voting interests of the
Company following such transaction or series of transactions.

          (v) The Company shall not increase or decrease the number of directors constituting the
Company’s Board of Directors.

          (vi) The Company shall not amend, restate, modify or alter the bylaws or the
Certificate of Incorporation of the Company in a manner which adversely affects the rights
and preferences of the holders of the Series A Preferred Stock and Series C Preferred Stock.

          (vii) The Company shall not enter into any transaction or amend any existing agreement
with any officer or director of the Company or holder of any shares of capital stock of the
Company, or any member of their respective immediate families or any corporation or other
entity directly or indirectly controlled by one or more of such officers, directors or
stockholders or members of their immediate families except for compensation arrangements
approved by the Board of Directors and entered into in the ordinary course of business and
consistent with past practice.

16

 

          (viii) The Company shall not enter into a line of business that does not relate to its
operation of a regionally accredited higher or post-secondary education business or enact
material changes to its current programs or operations, unless such material changes are
described in the Business Plan, or an amendment or supplement thereto, and approved by the
Board of Directors.

          (b) Without limiting any other covenants and provisions hereof, the Company covenants and
agrees until the consummation of the Initial Offering, that unless the following action is approved
by the Endeavour Directors, the Company shall not:

          (i) Enter into or amend, restate, modify or alter any agreement or arrangement with any
governmental authority or any contract, agreement or arrangement valued at more than
$250,000 or which obligates the Company to make aggregate expenditures in excess of
$250,0000 (each, a “Material Contract”);

          (ii) Make, enter into or amend any contract, agreement or arrangement which obligates
the Company to make, any capital expenditure in any single transaction in excess of
$250,000, or in the aggregate amount per year in excess of $500,000;

          (iii) Incur indebtedness for borrowed money (excluding trade debt, debt pursuant to
revolving credit facilities approved by the Board, or other debt incurred in the ordinary
course of business) in any single transaction in excess of $250,000, or in the aggregate
amount per year in excess of $500,000;

          (iv) Acquire or sell, or enter into or amend any contract, agreement or arrangement
which obligates the Company to acquire or sell, any equity interest in any subsidiary;

          (v) Grant, enter into or amend any contract, agreement or arrangement which obligates
the Company to grant, any lien or security interest on any material asset of the Company;

          (vi) Hire or terminate any officer of the Company or any other employee or consultant
with gross annual compensation in excess of $150,000 or increase the compensation of any
such officer, employee or consultant in excess of that compensation customarily paid to
management in companies of similar size, or similar maturity, and in similar business, all
as reasonably determined by the Endeavour Directors;

          (vii) Retain or terminate the Company’s auditor;

          (viii) Retain or terminate any accounting, legal or lobbying organization providing
services to the Company;

          (ix) Approve any Business Plan; or

          (x) Issue any press release pertaining to any significant development with regard to
the Company’s operations, management or financial condition.

17

 

     3.12 Termination of Covenants. All covenants of the Company contained in this Section
3 shall expire and terminate on the effective date of the registration statement pertaining to the
Initial Offering.

SECTION 4

MISCELLANEOUS

     4.1 Governing Law; Venue. This Agreement shall be governed by and construed under the
laws of the State of Delaware (without regard to the conflicts of laws rules of such State). The
parties agree and consent to the jurisdiction of the state and federal courts located in Delaware
and acknowledge that such courts shall constitute proper and convenient forums for the resolution
of any actions between the parties hereto with respect to the subject matter hereof, and agree that
such courts shall be the sole and exclusive forums for the resolution of any actions between the
parties hereto with respect to the subject matter hereof.

     4.2 Successors and Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be
enforceable by each person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written notice of the
transfer of any Registrable Securities specifying the full name and address of the transferee, the
Company may deem and treat the person listed as the holder of such shares in its records as the
absolute owner and holder of such shares for all purposes, including the payment of dividends or
any redemption price.

     4.3 Severability. If any provision of this Agreement is deemed or held to be illegal,
invalid or unenforceable, this Agreement shall be considered divisible and inoperative as to such
provision to the extent it is deemed to be illegal, invalid or unenforceable, and in all other
respects this Agreement shall remain in full force and effect; provided, however, that if any
provision of this Agreement is deemed or held to be illegal, invalid or unenforceable there shall
be added hereto automatically a provision as similar as possible to such illegal, invalid or
unenforceable provision and be legal, valid and enforceable. Further, should any provision
contained in this Agreement ever be reformed or rewritten by any judicial body of competent
jurisdiction, such provision as so reformed or rewritten shall be binding upon all parties hereto.

     4.4 Amendment and Waiver. Any amendment, change or modification of this Agreement
shall be void unless in writing and signed by all parties hereto. No failure or delay by any party
hereto in exercising any right, power or privilege hereunder (and no course of dealing between or
among any of the parties) shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a wavier of any subsequent or other
default. No single or partial exercise of any such right, power or privilege shall preclude the
further or full exercise thereof.

     4.5 Delays or Omissions. It is agreed that no delay or omission to exercise any
right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the
Company under this Agreement shall impair any such right, power, or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance or any acquiescence

18

 

therein, or of any similar breach, default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent, or approval of any kind or character on any
Holder’s part of any breach, default or noncompliance under the Agreement or any waiver on such
Holder’s part of any provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under
this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative.

     4.6 Notices. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when personally delivered, or three business days after
deposit in the United States mail, first-class, postage prepaid and one business day after deposit
with a reputable overnight courier service, or by facsimile (with proof of transmission), upon
transmission, addressed to the respective parties hereto at the addresses indicated by the
Company’s records, or at such address or to the attention of such other person as the recipient
party has specified by prior written notice to the other parties hereto.

     4.7 Headings. The descriptive section headings are for convenience of reference only
and shall not control or affect the meaning or construction of any provision of this Agreement.

     4.8 Complete Agreement. This Agreement and the other agreements referred to herein,
constitute the entire agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements and understandings,
whether oral or written, express or implied, with respect to the subject matter hereof.

     4.9 Counterparts; Facsimile Copies. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together shall constitute one
instrument. Signatures sent to the other parties by facsimile shall be binding as evidence of
acceptance of the terms hereof by such signatory party.

[Signature page follows]

19

 

     IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights Agreement as of the
date set forth in the first paragraph hereof.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	GRAND CANYON EDUCATION, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Brent Richardson	 	 
	 

	 	Name:
	 	 

Brent Richardson
	 	 
	 

	 	Its:
	 	Executive Chairman	 	 
	 
	 	 	 	 	 	 
	 	 	SERIES A PREFERRED STOCKHOLDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	ENDEAVOUR CAPITAL FUND IV, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Endeavour Capital IV, LLC	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ D. Mark Dorman	 	 
	 

	 	Name:
	 	 

D. Mark Dorman
	 	 
	 

	 	Its:
	 	Principal	 	 
	 
	 	 	 	 	 	 
	 	 	ENDEAVOUR ASSOCIATES FUND IV, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Endeavour Capital IV, LLC	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ D. Mark Dorman
 

D. Mark Dorman
	 	 
	 

	 	Its:
	 	Principal	 	 
	 
	 	 	 	 	 	 
	 	 	ENDEAVOUR CAPITAL PARALLEL FUND, IV, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Endeavour Capital IV, LLC	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ D. Mark Dorman
 

D. Mark Dorman
	 	 
	 

	 	Its:
	 	Principal	 	 

Signature Page — Amended and Restated Investor Rights Agreement

 

 

	 	 	 	 	 	 	 
	 	 	220 GCU, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	220 GCU GP, L.P	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	220 Management, LLC	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Charles M. Preston III	 	 
	 

	 	Name:
	 	 

Charles M. Preston III
	 	 
	 

	 	Its:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	COMMON STOCKHOLDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	RICH CROW LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Brent Richardson
 

Brent Richardson
	 	 
	 

	 	Its:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 	 	MASTERS ONLINE, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Brent Richardson	 	 
	 

	 	Name:
	 	 

Brent Richardson
	 	 
	 

	 	Its:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 	 	220 EDUCATION, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	220 Management, LLC	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Charles M. Preston III	 	 
	 

	 	Name:
	 	 

Charles M. Preston III
	 	 
	 

	 	Its:
	 	Managing Director	 	 

Signature Page — Amended and Restated Investor Rights Agreement

 

 

	 	 	 	 	 	 	 
	 	 	220-SIGED, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	220 Education, LP	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	220 Management, LLC	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Charles M. Preston III	 	 
	 

	 	Name:
	 	 

Charles M. Preston III
	 	 
	 

	 	Its:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	SIGNIFICANT VENTURES, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael Clifford	 	 
	 

	 	Name:
	 	 

Michael Clifford
	 	 
	 

	 	Its:
	 	Chairman	 	 
	 
	 	 	 	 	 	 
	 	 	SV ONE, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	SV One GP, LP	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	SV Holdings, LLC	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Charles M. Preston III	 	 
	 

	 	Name:
	 	 

Charles M. Preston III
	 	 
	 

	 	Its:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	CAREY FAMILY TRUST	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jack Carey	 	 
	 

	 	Name:
	 	 

Jack Carey
	 	 
	 

	 	Its:
	 	Trustee	 	 

Signature Page — Amended and Restated Investor Rights Agreement

 

 

	 	 	 	 	 	 	 
	 	 	LAVACA SIGED, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Bryan W. Lee	 	 
	 

	 	Name:
	 	 

Bryan W. Lee
	 	 
	 

	 	Its:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 	 	BLANCHARD EDUCATION, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas McKee	 	 
	 

	 	Name:
	 	 

Thomas McKee
	 	 
	 

	 	Its:
	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	SPIRIT:	 	 
	 
	 	 	 	 	 	 
	 	 	SPIRIT MANAGEMENT COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael T. Bennett	 	 
	 

	 	Name:
	 	 

Michael T. Bennett
	 	 
	 

	 	Its:
	 	Senior Vice President	 	 

Signature Page — Amended and Restated Investor Rights Agreement

 

 

SCHEDULE A

Investors

Endeavour Capital Fund IV, L.P.

Endeavour Associates Fund IV, L.P.

Endeavour Capital Parallel Fund, IV, L.P.

220 GCU, L.P.

Common Stockholders

Rich Crow LLC

Masters Online, LLC

220 Education, LP

220-SigEd, LP

Significant Ventures, LLC

SV One, LP

Carey Family Trust

Lavaca SigEd, LLC

Blanchard Education, LLCexv10w1

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

(Executive Chairman)

     This Executive Employment Agreement (the “Agreement”) is entered into on September 10,
2008, by and between Grand Canyon Education, Inc., a Delaware corporation (the “Company”),
and Brent D. Richardson (“Executive”).

     The parties agree as follows:

     1. Employment. The Company hereby employs Executive, and Executive hereby accepts
such employment, upon the terms and conditions set forth herein.

     2. Duties.

          2.1 Position. Executive is employed as Executive Chairman and shall have the duties
and responsibilities assigned by the Company’s Board of Directors as may be reasonably assigned
from time to time. Executive shall perform faithfully and diligently all duties assigned to
Executive. The Company reserves the right to modify Executive’s position and duties at any time in
its sole and absolute discretion, except that any material diminution in Executive’s duties shall
be subject to Section 7.3(ii) below.

          2.2 Board. Executive shall serve as a member and Chairman of the Board of Directors,
subject to the review and recommendation of the Company’s Nominating and Corporate Governance
Committee.

          2.3 Best Efforts/Full-time. Executive will expend Executive’s best efforts on behalf
of the Company, and will abide by all policies and decisions made by the Company, as well as all
applicable federal, state and local laws, regulations or ordinances. Executive will act in the
best interest of the Company at all times. Executive shall devote Executive’s full business time
and efforts to the performance of Executive’s assigned duties for the Company, unless Executive
notifies the Company in advance of Executive’s intent to engage in other paid work and receives the
Company’s express written consent to do so. Notwithstanding the foregoing, Executive will be
permitted to serve as an outside director on the board of directors for corporate, civic, nonprofit
or charitable entities, so long as Executive obtains the consent of the Company and provided such
entities are not competitive with the Company and subject to the provisions of section 9 below.

          2.4 Work Location. Executive’s principal place of work shall be located in Phoenix,
Arizona, or such other location as the Company may direct from time to time.

     3. Term.

          3.1 Initial Term. The employment relationship pursuant to this Agreement shall be for
an initial term commencing on September 10, 2008 (the “Effective Date”) and continuing for
a period of four (4) years following such date (“Initial Term”), unless sooner terminated
in accordance with section 7 below.

          3.2 Renewal. On expiration of the Initial Term specified in subsection 3.1 above,
this Agreement will automatically renew for subsequent one (1) year terms (each a “Renewal
Term”) unless either party provides thirty (30) days’ advance written notice to the

1

 

other that the Company or Executive does not wish to renew the Agreement for subsequent
Renewal Term. In the event either party gives notice of nonrenewal pursuant to this subsection
3.2, this Agreement will expire at the end of the then current term. The Initial Term and each
subsequent Renewal Term are referred to collectively as the “Term”.

     4. Compensation.

          4.1 Base Salary. As compensation for Executive’s performance of Executive’s duties
hereunder, the Company shall pay to Executive an initial Base Salary at the rate of Two-Hundred
Ninety-Seven Thousand Five-Hundred Dollars ($297,500.00) per year payable in accordance with the
normal payroll practices of the Company, less required deductions for state and federal withholding
tax, social security and all other employment taxes and payroll deductions. In the event
Executive’s employment under this Agreement is terminated by either party, for any reason,
Executive will earn the Base Salary prorated to the date of termination, except as otherwise set
forth herein. Executive’s Base Salary shall be reviewed annually by the Compensation Committee of
the Company’s Board of Directors (the “Compensation Committee”).

          4.2 Incentive Compensation. Executive will be eligible to earn incentive compensation
in the form of an annual bonus for each fiscal year of the Company as determined by the
Compensation Committee. The Compensation Committee will base such determination upon both the
Company’s achievement of overall performance metrics for the year and Executive’s achievement of
individual performance metrics as agreed upon by the Compensation Committee and the Executive.
Bonus amounts, if any, are to be awarded annually and payment shall be made within two and one-half
months following the end of the applicable Company fiscal year.

     5. Customary Fringe Benefits. Executive will be eligible for all customary and usual
fringe benefits generally available to senior management of the Company, subject to the terms and
conditions of the Company’s benefit plan documents. The Company reserves the right to change or
eliminate fringe benefits on a prospective basis, at any time, effective upon notice to Executive.

     6. Business Expenses. Executive will be reimbursed for all reasonable, out-of-pocket
business expenses incurred in the performance of Executive’s duties on behalf of the Company. To
obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation
and will be reimbursed in accordance with the Company’s policies. Any reimbursement Executive is
entitled to receive shall (a) be paid no later than the last day of Executive’s tax year following
the tax year in which the expense was incurred, (b) not be affected by any other expenses that are
eligible for reimbursement in any tax year, and (c) not be subject to liquidation or exchange for
another benefit.

     7. Termination of Executive’s Employment.

          7.1 Termination for Cause by Company. Although the Company anticipates a mutually
rewarding employment relationship with Executive, the Company may terminate Executive’s employment
immediately at any time for Cause. For purposes of this Agreement, “Cause” is defined as:
(a) acts or omissions constituting gross negligence, recklessness or willful misconduct on the part
of Executive with respect to Executive’s obligations or otherwise relating to the business of the
Company; (b) Executive’s material breach of this Agreement, including, without limitation, any
breach of Section 8, Section 9, or Section 11; (c) Executive’s

2

 

breach of the Company’s Employee Nondisclosure and Assignment Agreement; (d) Executive’s
conviction or entry of a plea of nolo contendere for fraud, misappropriation or embezzlement, or
any felony or crime of moral turpitude; (e) Executive’s inability to perform the essential
functions of Executive’s position, with or without reasonable accommodation, due to a mental or
physical disability; (f) Executive’s willful neglect of duties as determined in the sole and
exclusive discretion of the Board of Directors, provided that Executive has received written notice
of the action or omission giving rise to such determination and has failed to remedy such situation
to the satisfaction of the Board of Directors within thirty (30) days following receipt of such
written notice, unless Executive’s action or omission is not subject to cure, in which case no such
notice shall be required, or (g) Executive’s death. In the event Executive’s employment is
terminated in accordance with this subsection 7.1, Executive shall be entitled to receive only
Executive’s Base Salary then in effect, prorated to the date of termination, and all fringe
benefits through the date of termination. All other Company obligations to Executive pursuant to
this Agreement will be automatically terminated and completely extinguished. Executive will not be
entitled to receive the Severance Package described in subsection 7.2 below. Any termination
pursuant to this subsection 7.1 shall be evidenced by a resolution or written consent of the Board
of Directors of the Company, and the Company shall provide Executive with a copy of such resolution
or written consent, certified by the Secretary of the Company, upon Executive’s written request.

          7.2 Termination Without Cause by Company/Severance. The Company may terminate
Executive’s employment under this Agreement without Cause at any time upon written notice to
Executive. In the event of such termination, Executive will receive Executive’s Base Salary then
in effect, prorated to the date of termination of employment. In addition, Executive will receive
a “Severance Package” that shall include (a) a severance payment equivalent to twelve (12)
months of Executive’s Base Salary then in effect on the date of termination, payable in accordance
with the Company’s regular payroll cycle commencing with the first payroll date occurring on or
after the 60th day following the date of Executive’s termination of employment, and (b) payment by
the Company of the premiums required to continue Executive’s group health care coverage for a
period of twelve (12) months following Executive’s termination, under the applicable provisions of
the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), provided that Executive
timely elects to continue and remains eligible for these benefits under COBRA, and does not become
eligible for health coverage through another employer during this period. Executive will only
receive the Severance Package if Executive: (i) complies with all surviving provisions of this
Agreement as specified in subsection 14.8 below; and (ii) executes a full general release,
releasing all claims, known or unknown, that Executive may have against the Company arising out of
or any way related to Executive’s employment or termination of employment with the Company, and
such release has become effective in accordance with its terms prior to the 60th day following the
termination date. All other Company obligations to Executive will be automatically terminated and
completely extinguished.

          7.3 Voluntary Resignation by Executive for Good Reason/Severance. Executive may
voluntarily resign Executive’s position with the Company for Good Reason at any time on thirty (30)
days’ advance written notice to the Company. In the event of Executive’s resignation for Good
Reason, Executive will be entitled to receive Executive’s Base Salary then in effect, prorated to
the date of termination of employment, and the Severance Package described in subsection 7.2 above,
provided Executive complies with all of the conditions described in subsection 7.2 above. All
other Company obligations to Executive pursuant to this Agreement will be automatically terminated
and completely extinguished. Executive will be deemed to have resigned for Good Reason if
Executive voluntarily terminates his employment

3

 

with the Company within ninety (90) days following the first occurrence of a condition
constituting Good Reason. “Good Reason” means the occurrence of any of the following
conditions without Executive’s written consent, which condition(s) remain(s) in effect thirty (30)
days after Executive provides written notice to the Company of such condition(s): (i) a material
reduction in Executive’s Base Salary as then in effect prior to such reduction, other than as part
of a salary reduction program among similar management employees, (ii) a material diminution in
Executive’s authority, duties or responsibilities as an employee of the Company as they existed
prior to such change, or (iii) a relocation of Executive’s principal place of work which increases
Executive’s one-way commute distance by more than fifty (50) miles. Executive will be deemed to
have given consent to any condition(s) described in this subsection if Executive does not provide
written notice to the Company of his intent to exercise his rights pursuant to this subsection
within thirty (30) days following the first occurrence of such condition(s).

          7.4 Voluntary Resignation by Executive Without Good Reason. Executive may voluntarily
resign Executive’s position with the Company without Good Reason at any time on thirty (30) days’
advance written notice to the Company. In the event of Executive’s resignation without Good
Reason, Executive will be entitled to receive only Executive’s Base Salary, prorated to the date of
termination of employment, and all fringe benefits through the date of termination. All other
Company obligations to Executive pursuant to this Agreement will be automatically terminated and
completely extinguished. In addition, Executive will not be entitled to receive the Severance
Package described in subsection 7.2 above.

          7.5 Termination After a Change in Control.

               (a) Severance Payment; Option Vesting Acceleration. If, upon or within twelve (12)
months after a Change in Control (as that term is defined below), Executive’s employment is
terminated by the Company other than for Cause (as defined in subsection 7.1 above) or Executive
resigns for Good Reason (as defined in subsection 7.3 above), then (i) Executive shall be entitled
to receive (A) Executive’s Base Salary, prorated to the date of termination of employment, and (B)
the Severance Package described in subsection 7.2 above, provided Executive complies with all of
the conditions described in subsection 7.2 above, and (ii) to the extent not yet vested, any stock
options or equity grants granted to Executive by the Company shall vest in full as of the date of
such termination of employment, provided Executive complies with the conditions described in
subsection 7.2 above.

               (b) Parachute Payments. If, due to the benefits provided under subsection 7.5(a) and
any other payments or benefits, Executive would be subject to any excise tax pursuant to Section
4999 of the Internal Revenue Code of 1986, as amended (the “Code”) due to characterization
of any such amounts as excess parachute payments pursuant to Section 280G of the Code, the amounts
payable under subsection 7.5(a) will be reduced (to the least extent possible) in order to avoid
any “excess parachute payment” under Section 280G(b)(1) of the Code.

               (c) Change in Control. A Change in Control is defined as any one of the following
occurrences:

                    (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934 (the “Exchange Act”)), becomes the “beneficial owner” (as such term is defined
in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the total fair market value or total combined
voting power of the Company’s then-outstanding securities

4

 

entitled to vote generally in the election of directors; provided, however, that a Change in
Control shall not be deemed to have occurred if such degree of beneficial ownership results from
any of the following: (A) an acquisition of securities by any person who on the Effective Date is
the beneficial owner of more than fifty percent (50%) of such voting power, (B) any acquisition of
securities directly from the Company, including, without limitation, pursuant to or in connection
with a public offering of securities, (C) any acquisition of securities by the Company, (D) any
acquisition of securities by a trustee or other fiduciary under an employee benefit plan of the
Company, or (E) any acquisition of securities by an entity owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their ownership of the voting
securities of the Company; or

                    (ii) the sale or disposition of all or substantially all of the Company’s assets (other than a
sale or disposition to one or more subsidiaries of the Company), or any transaction having similar
effect is consummated; or

                    (iii) the Company is party to a merger or consolidation that results in the holders of voting
securities of the Company outstanding immediately prior thereto failing to continue to represent
(either by remaining outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation; or

                    (iv) the dissolution or liquidation of the Company.

          7.6 Termination of Employment Upon Nonrenewal. In the event either party decides not
to renew this Agreement for a subsequent term in accordance with subsection 3.2 above, this
Agreement will expire, Executive’s employment with the Company will terminate and Executive will
only be entitled to Executive’s Base Salary then in effect paid through the last day of the then
current term. All other Company obligations to Executive pursuant to this Agreement will be
automatically terminated and completely extinguished. Executive will not be entitled to receive
the Severance Package described in subsection 7.2 above, but shall be subject to the surviving
provisions of this Agreement as set forth in section 14.8 below.

          7.7 Resignation of Board or Other Positions. Executive agrees that should Executive’s
employment terminate for any reason, Executive will immediately resign all other positions
(including board membership) Executive may hold on behalf of the Company.

          7.8 Application of Section 409A.

               (a) Notwithstanding anything set forth in this Agreement to the contrary, no amount payable
pursuant to this Agreement on account of Executive’s termination of employment with the Company
which constitutes a “deferral of compensation” within the meaning of the Treasury Regulations
issued pursuant to Section 409A of the Code (the “Section 409A Regulations”) shall be paid
unless and until Executive has incurred a “separation from service” within the meaning of the
Section 409A Regulations. Furthermore, if Executive is a “specified employee” within the meaning
of the Section 409A Regulations as of the date of Executive’s separation from service, no amount
that constitutes a deferral of compensation which is payable on account of Executive’s separation
from service shall be paid to Executive before the date (the “Delayed Payment Date”) which
is first day of the seventh month after the date of Executive’s separation from service or, if
earlier, the date of Executive’s death following such separation from service. All such amounts
that would, but for this subsection, become

5

 

payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment
Date.

               (b) The Company intends that income provided to Executive pursuant to this Agreement will not
be subject to taxation under Section 409A of the Code. The provisions of this Agreement shall be
interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the
Code. However, the Company does not guarantee any particular tax effect for income provided to
Executive pursuant to this Agreement. In any event, except for the Company’s responsibility to
withhold applicable income and employment taxes from compensation paid or provided to Executive,
the Company shall not be responsible for the payment of any applicable taxes incurred by Executive
on compensation paid or provided to Executive pursuant to this Agreement.

     8. No Violation of Rights of Third Parties. Executive represents and warrants to the
Company that Executive is not currently a party, and will not become a party, to any other
agreement that is in conflict with, or will prevent Executive from complying with, with this
Agreement. Executive further represents and warrants to the Company that Executive’s performance
of all of the terms of this Agreement as an employee of the Company does not and will not breach
any agreement to keep in confidence any proprietary information, knowledge, or data acquired by
Executive in confidence or trust prior to Executive’s employment with the Company. Executive
acknowledges and agrees that the representations and warranties in this Section 8 are a material
part of this Agreement.

     9. Other Covenants. Executive hereby makes the following covenants, each of which
Executive acknowledges and agrees are a material part of this Agreement:

          9.1 During the Term of Executive’s employment with the Company, Executive will not (a) breach
any agreement to keep in confidence any confidential or proprietary information, knowledge or data
acquired by Executive prior to Executive’s employment with Company, or (b) disclose to the Company,
or use or induce the Company to use, any confidential or proprietary information or material
belonging to any previous employer or any other third party. Executive acknowledges that the
Company has specifically instructed Executive not to breach any such agreement or make any such
disclosures to the Company.

          9.2 During the Term of Executive’s employment with the Company, Executive will not engage in
any work or activity, paid or unpaid, that creates an actual conflict of interest with the Company.
Such work shall include, but is not limited to, directly or indirectly competing with the Company
in any way, or acting as an officer, director, employee, consultant, stockholder, volunteer,
lender, or agent of any business enterprise of the same nature as, or which is in direct
competition with, the business in which the Company is now engaged or in which the Company becomes
engaged during the term of Executive’s employment with the Company, as may be determined by the
Company in its sole discretion. If the Company believes such a conflict exists during the term of
this Agreement, the Company may ask Executive to choose to discontinue the other work or activity
or resign employment with the Company.

          9.3 During the Term of Executive’s employment with the Company and after the termination
thereof, neither Executive nor the Company will disparage each other, or the Company’s products,
services, agents or employees.

6

 

          9.4 During the Term of Executive’s employment with the Company and after the termination
thereof, at the Company’s expense and upon its reasonable request, Executive will cooperate and
assist the Company in its defense or prosecution of any disputes, differences, grievances, claims,
charges, or complaints between the Company and any third party, which assistance will include
testifying on the Company’s behalf in connection with any such matter or performing any other task
reasonably requested by the Company in connection therewith.

     10. Confidentiality and Proprietary Rights. Executive agrees to read, sign and abide
by the Company’s Employee Nondisclosure and Assignment Agreement, which is provided with this
Agreement and incorporated herein by reference.

     11. Non-Competition; Nonsolicitation of Company’s Employees. Executive acknowledges
that in the course of his employment with the Company he will serve as a member of the Company’s
senior management and will become familiar with the Company’s trade secrets and with other
confidential and proprietary information and that his services will be of special, unique and
extraordinary value to the Company. Executive further acknowledges that the Company’s business, a
substantial portion of which is conducted online, is national in scope and that the Company, in the
course of such business, recruits students and faculty throughout the United States, works with
vendors throughout the United States, and competes with other companies located throughout the
United States. Therefore, in consideration of the foregoing, Executive agrees that, during the
Term, and during the twelve-month (12) month period following the Term, he shall not directly or
indirectly anywhere within the United States of America (a) own (except ownership of less than 1%
of any class of securities which are listed for trading on any securities exchange or which are
traded in the over-the-counter market), manage, control, participate in, consult with, render
services for, be employed by, or in any manner engage in the operation of (i) a for-profit,
post-secondary education institution, or (ii) any other business of the Company in which Executive
had significant involvement prior to Executive’s separation; (b) solicit funds on behalf of, or for
the benefit of, any for-profit, post-secondary education institution (other than the Company) or
any other entity that competes with the Company; (c) solicit individuals who are current or
prospective students of the Company to be students for any other for-profit, post-secondary
education institution; (d) induce or attempt to induce any employee of the Company to leave the
employ of the Company, or in any way interfere with the relationship between the Company and any
employee thereof, or (e) induce or attempt to induce any student, customer, supplier, licensee or
other business relation of the Company to cease doing business with, or modify its business
relationship with, the Company, or in any way interfere with or hinder the relationship between any
such student, customer, supplier, licensee or business relation and the Company.

     12. Injunctive Relief. Executive acknowledges that Executive’s breach of the
covenants contained in sections 9-11 hereof (collectively “Covenants”) would cause
irreparable injury to the Company and agrees that in the event of any such breach, the Company
shall be entitled to seek temporary, preliminary and permanent injunctive relief without the
necessity of proving actual damages or posting any bond or other security in addition to any other
relief to which the Company may be entitled and other remedies Company may exercise under this
Agreement or otherwise.

7

 

     13. Insurance; Indemnification.

          13.1 During the Term of Executive’s employment hereunder, Executive will be covered by the
Company’s director and officer insurance policy to the same extent as all other senior executive
officers of the Company

          13.2 Following the execution of this Agreement, the Company will execute and deliver a
director and officer indemnification agreement with Executive in a form approved by the Board of
Directors for the senior executive officers of the Company.

     14. General Provisions.

          14.1 Successors and Assigns. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the
Company. Executive shall not be entitled to assign any of Executive’s rights or obligations under
this Agreement.

          14.2 Waiver. Either party’s failure to enforce any provision of this Agreement shall
not in any way be construed as a waiver of any such provision, or prevent that party thereafter
from enforcing each and every other provision of this Agreement.

          14.3 Attorneys’ Fees. In the event of a dispute involving the interpretation or
enforcement of this Agreement, a court shall award attorneys’ fees and costs to the prevailing
party.

          14.4 Severability. In the event any provision of this Agreement is found to be
unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the
extent necessary to allow enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a
deemed modification is not satisfactory in the judgment of such court, the unenforceable provision
shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not
be affected thereby.

          14.5 Interpretation; Construction. The headings set forth in this Agreement are for
convenience only and shall not be used in interpreting this Agreement. This Agreement has been
drafted by legal counsel representing the Company, but Executive has participated in the
negotiation of its terms. Furthermore, Executive acknowledges that Executive has had an
opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired,
and, therefore, the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of this Agreement.

          14.6 Governing Law; Forum. This Agreement will be governed by and construed in
accordance with the laws of the United States and the State of Arizona . Each party consents to
the jurisdiction and venue of the state or federal courts in Phoenix, Arizona, if applicable, in
any action, suit, or proceeding arising out of or relating to this Agreement, and agrees that the
state or federal courts in Phoenix, Arizona shall have exclusive jurisdiction over any dispute
arising between the parties related to this Agreement or Executive’s employment with the Company.

8

 

          14.7 Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery
when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by
telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or
(d) by certified or registered mail, return receipt requested, upon verification of receipt.
Notice shall be sent to the addresses set forth under the signatures below, or such other address
as either party may specify in writing.

          14.8 Survival. Sections 9 (“Other Covenants”), 10 (“Confidentiality and Proprietary
Rights”), 11 (“Non-Competition; Nonsolicitation”), 12 (“Injunctive Relief”), 13 (“Insurance;
Indemnification”), 14 (“General Provisions”) and 15 (“Entire Agreement”) of this Agreement shall
survive termination of Executive’s employment with the Company.

     15. Entire Agreement. This Agreement, including the Employee Nondisclosure and
Assignment Agreement incorporated herein by reference, constitutes the entire agreement between the
parties relating to this subject matter and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements, whether written or oral. This agreement may be amended
or modified only with the written consent of Executive and the Board. No oral waiver, amendment or
modification will be effective under any circumstances whatsoever.

THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY
PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN
BELOW.

	 	 	 	 	 
	 	BRENT D. RICHARDSON

 	 
	Dated: September 10, 2008 	By:  	/s/ Brent D. Richardson
 	 
	 
	 	 	Address:  	 	 
	 	 	  	 	 
	 

	 	 	 	 	 
	 	GRAND CANYON EDUCATION, INC.

 	 
	Dated: September 10, 2008 	By  	/s/ Brian E. Mueller
 	 
	 	 	Name:  	Brian E. Mueller 	 
	 	 	Title:  	Chief Executive Officer
	 
	 
	 	 	Address:  	
  3300 West Camelback Road

Phoenix, Arizona 85017 	 
	 

9

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