Document:

exv10w3

 

Exhibit 10.3

STOCKHOLDERS AGREEMENT

     THIS STOCKHOLDERS AGREEMENT (this “Agreement”) is entered into as of February 20, 2000 by and
among PREMIER SCHOOL.COM, INC., a Delaware corporation (the “Company”), KNOWLEDGE UNIVERSE
LEARNING, INC., a Delaware corporation (“KULI”), and WILLIAM J. BENNETT (“Bennett”).

RECITALS

     The parties hereto desire to enter into this Agreement for the purpose of regulating certain
aspects of their relationships with regard to each other and with the Company.

AGREEMENT

     NOW THEREFORE, in consideration of the mutual covenants herein contained and for other good
and valuable consideration, the parties agree as follows:

ARTICLE I.

DEFINITIONS

     As used herein, the following terms have the following meanings:

     1.1 Affiliate. The term “Affiliate” means with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls or is controlled by,
or is under common control with, that Person. The term “control” (including as used in the terms
“controlling,” “controlled by,” and “under common control with”) of a Person means the
possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities, by contract or
otherwise.

     1.2 Bennett Original Shares. The term “Bennett Original Shares” means the shares of
Common Stock originally issued to Bennett pursuant to the Stock Purchase Agreement dated as
of the date hereof between the Company and Bennett.

     1.3 Board. The term “Board” means the Board of Directors of the Company.

     1.4 Class A Common Stock. The term “Class A Common Stock” means the Class A Common Stock of the Company, par value $0.0001 per share.

     1.5 Class B Common Stock. The term “Class B Common Stock” means the Class B Common Stock of the Company, par value $0.0001 per share.

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     1.6 Commission. The term “Commission” means the United States Securities and
Exchange Commission.

     1.7 Common Stock. The term “Common Stock” means common stock of the
Company, par value $0.0001 per share, including the Class A Common Stock and/or the Class B
Common Stock.

     1.8 Fair Market Value. The term “Fair Market Value” per share means at any given
date that amount as determined in the business judgment of the Board based upon Fully-Diluted
Common Stock. The Company shall give Bennett a written explanation of how such value was
derived and if Bennett disagrees with the Fair Market Value as determined by the Board, then
Bennett shall so notify the Board in writing (the “Appraisal Notice”) within ten (10) business
days of the Company’s delivery of the written explanation to Bennett. Within fifteen (15) business
days of the delivery of the Appraisal Notice, the Board and Bennett shall each appoint a
professional appraiser to determine the Fair Market Value. Each appraiser shall have at least
five (5) years experience in appraising companies similar to the Company. The two appraisers shall
within the succeeding twenty (20) day period after their selection, attempt to reach agreement
on the Fair Market Value. If the appraisers reach such agreement, their agreement shall be final
and binding on the Company and Bennett. If the appraisers fail to agree, they shall within ten
(10) days thereafter select a third appraiser with the same qualification requirements, and the
three (3) appraisers shall establish Fair Market Value by majority vote within the succeeding twenty
(20) day period and such determination of Fair Market Value shall be final and binding on the
Company and Bennett. The aggregate fees and costs associated with all appraisers shall be paid
one-half by the Company and one-half by Bennett.

     1.9 Fully-Diluted Common Stock. The term “Fully-Diluted Common Stock” means all
of the issued and outstanding Common Stock, assuming conversion, exercise or exchange of all
outstanding convertible, exercisable or exchangeable securities, options, warrants and similar
instruments that are ‘In the money” (regardless of whether or not they are then convertible,
exercisable or exchangeable) into or for Common Stock.

     1.10 IPO. The term “IPO” means the first underwritten public offering of Common
Stock under the Securities Act that results in shares of Common Stock trading on a national
securities exchange or the NASDAQ National Market System.

     1.11 Permitted Transfer. The term “Permitted Transfer” means a transfer of Shares (a)
to the spouse or children of Bennett, or (b) to a trust for the benefit of Bennett and/or a
member or members of Bennett’s immediate family, or (c) pursuant to the will of Bennett or the laws
of descent and distribution, or (d) to the Company, or (e) to KULI or an Affiliate of KULI, or
(f) to any other Person with the prior written consent of the Board, which such consent the Board may
withhold in its sole and absolute discretion; provided, however, that a transfer shall
not constitute a Permitted Transfer unless (i) the transferee agrees to be bound by all of the obligations
under this Agreement in the same manner as Bennett or KULI, as the case may be, and the transferee

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executes and delivers to the Company a written agreement to such effect in form and substance
satisfactory to the Company, and (ii) the transfer is exempt from all registration and
qualification requirements of the Securities Act and applicable state securities laws and the
Company receives an opinion of counsel (which counsel and opinion are reasonably satisfactory to
the Company) or other evidence acceptable to the Company confirming that such transfer is so exempt
and otherwise does not violate federal or state securities laws.

     1.12 Person. The term “Person” means any individual, sole proprietorship, partnership,
joint venture, trust, incorporated organization, limited liability company, association,
corporation, institution, public benefit corporation, entity or government (whether federal, state, county,
city, municipal or otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

     1.13 Qualified Offeree. The term “Qualified Offeree” means only Persons who are
“accredited investors” as defined in Rule 501 promulgated under the Securities Act and have a
similar status under applicable state securities laws so that such Qualified Offeree can be an
offeree and purchaser in an offering of securities that is exempt from all registration and
qualification of the Securities Act and applicable state securities laws.

     1.14 Registrable Securities. The term “Registrable Securities” means shares of Class A
Common Stock (including those issued or issuable upon conversion, exercise or exchange of
Shares); provided, however, that a Registrable Security shall cease to be a
Registrable Security at such time that (i) the Registrable Security has been effectively registered under the
Securities Act and disposed of in accordance with the registration statement covering it, or (ii) can be sold
to the public pursuant to Rule 144(k) (or any similar provision then in force) under the Securities
Act.

     1.15 Restriction Expiration Date. The term “Restriction Expiration Date” means the
earlier of (a) the fifth anniversary of the date of this Agreement, and (b) the day after the
consummation of an IPO.

     1.16 Securities Act. The term “Securities Act” means the Securities Act of 1933, as
amended.

     1.17 Shares. The term “Shares” means shares of Common Stock, and securities
convertible into, or exercisable or exchangeable for shares of Common Stock.

     1.18
Transfer. The term “Transfer” means a voluntary or involuntary, direct or
indirect, sale, transfer, assignment, hypothecation, pledge or alienation of any Shares, or any right or interest therein, whether by operation of law or otherwise.

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ARTICLE II.

RIGHT OF REFUSAL

     2.1 General Restrictions on Transfer.

               (a) Prior
to the Restriction Expiration Date, Bennett shall not allow any
Transfer of his Shares to be consummated, except for (x) a Permitted Transfer, or (y) a
Transfer pursuant Article VI or VII hereof.

               (b) On and after the Restriction Expiration Date, Bennett shall not allow any Transfer of his Shares to be consummated, except for (x) a Permitted Transfer, or (y) a
Transfer pursuant Article VI or VII hereof, or (z) a bona fide sale of not more than twenty percent
(20%) of the number of Bennett Original Shares during any twelve (12) month period;
provided, however, that if Bennett desires to consummate a sale pursuant to clause (z) above
prior to the date of consummation of an IPO, as a condition to consummating any such sale Bennett shall, in
each case, first offer such Shares to KULI and the Company in accordance with the terms of
this Article II.

     2.2 Notice. Prior to consummating any proposed sale that is subject to clause (z) of
Section 2. 1(b) (and that is prior to the date of consummation of an IPO), Bennett shall give
KULI and the Company written notice (the “Notice”) of such proposed sale, which notice shall offer
to sell first to KULI and then to the Company the number of Shares proposed to be sold by Bennett
(the “Offered Shares”) at the same price per share and upon the same terms and conditions as
Bennett has received in a bona fide offer to purchase such Shares from an unrelated third
party (the “Proposed Purchaser”). The Notice shall set forth: (i) the name and address of the
Proposed Purchaser, (ii) the amount and form of consideration and terms and conditions of payment to be
made by such Proposed Purchaser, and (iii) that the Proposed Purchaser has been informed of
the right of first refusal provided for in this Article II and has agreed to act in accordance
with the terms hereof. Anything contained herein to the contrary notwithstanding, in the event the
proposed consideration for the purchase of the Offered Shares involves a form other than cash,
KULI or the Company may substitute for such non-cash consideration an equivalent amount of
cash as determined in the good faith business judgment of the Board.

     2.3 Option to Purchase. KULI shall have the option, for a period of fifteen (15)
business days following receipt of the Notice, to acquire all (but not less than all) of the
Offered Shares at the same price per share and upon the same terms and conditions as specified in the
Notice. Such option shall be exercised by delivery of written notice of the
exercise of the option to Bennett. In the event that KULI does not exercise such option to acquire all of the Offered
Shares within such fifteen (15) business day period, then the Company shall have the right for
a period of five (5) business days after the expiration of the fifteen (15) business day period
to acquire all (but not less than all) of the Offered Shares at the same price per share and upon
the same terms and conditions as specified in the Notice. Such option shall be exercised by
delivery

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of written notice of the exercise of the option to Bennett. In the event that KULI and the Company
do not exercise the options described above within the periods described above (or exercise the
option but fail to close as provided in Section 2.4), then Bennett shall have the right for a
period of 60 days after the expiration of the five (5) business day period described above or such
failure to close (or, if sooner, after written waiver by KULI and the Company of their options to
purchase), to sell to the Proposed Purchaser the Offered Shares but only at the same price per
share and upon the same terms and conditions as set forth in the Notice; provided,
however, that as a condition to the transfer of the Offered Shares to the Proposed
Purchaser (a) the transfer must be exempt from all registration and qualification requirements of
the Securities Act and applicable state securities laws and the Company shall receive an opinion of
counsel reasonably acceptable to the Company that such transfer is so exempt and otherwise does not
violate federal or state securities laws, and (b) such Proposed Purchaser agrees to be bound by all
of the obligations under this Agreement in the same manner as Bennett and such Proposed Purchaser
executes and delivers to the Company a written agreement to such effect in form and substance
satisfactory to the Company. Any Shares that continue to be held by Bennett after such 60-day
period shall remain subject to the restriction on transfer contained in Section 2.1 hereof.

     2.4 Closing. In the event that KULI or the Company elect to acquire the Offered
Shares from Bennett pursuant to this Article II, the closing of such acquisition shall take
place within ten (10) business days after the notice of such election. At the closing, Bennett shall
deliver to KULI or the Company, as applicable, the certificates representing the Offered
Shares (duly endorsed for transfer and free and clear of all liens, claims and encumbrances) against
delivery by KULI or the Company of the consideration for the Shares being acquired in
immediately available funds to the extent such consideration is payable in cash.

     2.5 Conversion of Shares. Anything contained herein to the contrary notwithstanding,
in the event some or all of the Offered Shares consist of Class B Common Stock (or Shares that
are exercisable for or convertible into Class B Common Stock), the Company and/or KULI shall
have the right to require as a condition to any Transfer of such Offered Shares that they be
converted into Class A Common Stock (or Shares that are exercisable for or convertible into
Class A Common Stock) without any change in the amount of consideration payable therefor.

     2.6 Company Effecting Transfers. The Company agrees not to effect any Transfer of
Shares by Bennett until it has received evidence reasonably satisfactory to it that this
Article II has been complied with. Any attempt to consummate a Transfer in violation of this Article II shall
constitute a material breach of this Agreement and shall be null and void and of no force or
effect.

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ARTICLE II.

PURCHASE RIGHT

     3.1 General. If at any time the Company proposes to issue to KULI or any of its
Affiliates any of the Company’s equity securities (the “Securities”), then the Company shall
give written notice to Bennett of such proposed issuance and offer to sell to Bennett at the same
price and for the same consideration (or its cash equivalent) Bennett’s pro rata portion of the
Securities. Bennett’s pro rata portion of the Securities shall be equal to a fraction the
numerator of which shall be the number of shares of Common Stock owned by Bennett (and all transferees
of Bennett in Permitted Transfers) and the denominator of which shall be the aggregate number
of shares of Common Stock owned by Bennett (and all transferees of Bennett in Permitted
Transfers) and KULI (and its Affiliates). Bennett shall have ten (10) business days from the
receipt of such written notice to accept such offer and purchase his pro rata portion of the
Securities. In the event that the purchase price for the Securities exceeds $10,000, KULI or
the Company will loan Bennett the amount of the purchase price on commercially reasonable terms to
be mutually agreed upon by KULI and Bennett including, without limitation, (a) the pledge to
KULI (or the Company, as applicable) by Bennett of all of his Shares in the Company (including
the Securities being purchased) to secure his obligation to repay such loan, (b) an agreement
by KULI (or the Company, as applicable) that such loan shall be without recourse other than
against the Shares, and (c) interest on such loan shall accrue at a variable rate per annum equal to
one-half percent (1/2%) plus the “reference rate” announced from time to time by Bank of America
NT&SA in San Francisco, California.

     3.2 Exemptions. The purchase right granted by Section 3.1 shall not apply to: (i) the
issuance of Common Stock in connection with the initial organization of the Company, (ii) the
issuance of Class A Common Stock upon conversion of shares of Class B Common Stock, (iii)
any issuance of Securities in connection with an IPO, (iv) any issuance of Securities in
connection with a merger, consolidation, transfer of assets or other business combination involving the
Company, (v) any issuance of Securities pursuant to an employee benefit plan of the Company,
or (vi) any issuance of Securities upon conversion or exercise of any Securities issued in
compliance with the provisions of Section 3.1 or issued in a transaction exempt from the provisions of
Section 3.1.

     3.3 Qualified Offeree. Anything contained herein to the contrary notwithstanding, no
Person (other than KULI or an Affiliate thereof) that is a transferee of Shares from Bennett
shall be entitle to participate in the purchase right granted by Section 3.1 unless such Person is a
transferee in a Permitted Transfer and a Qualified Offeree.

     3.4 Termination of Purchase Right. The purchase right provided under this Article III
shall terminate upon the earlier of: (a) effective immediately prior to, and shall no longer
be applicable after, the closing of an IPO, or (b) the date that Bennett (together with any
transferee

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of Bennett in a Permitted Transfer) no longer owns at least ninety percent (80%) of the Bennett
Original Shares.

ARTICLE IV.

REGISTRATION RIGHTS

     4.1 Piggyback Registration Rights. If at any time after an IPO, the Company
proposes to register any shares of Class A Common Stock with the Commission under the Securities
Act as a result of the exercise of demand registration rights by any stockholder of the Company and
the registration form to be used permits the registration of Registrable Securities (a “Piggyback
Registration”), then the Company (i) will give written notice to all holders of Registrable
Securities who are entitled to participate in such Piggyback Registration (collectively, “Holders”)
of its intention to effect such a registration, and (ii) will, subject to Section 4.2 below, use
commercially reasonable efforts to include in such Piggyback Registration all Registrable
Securities with respect to which the Company has received written requests for inclusion therein
within 15 days after the date of the Company’s notice.

     4.2 Cutback. If the managing underwriter or underwriters, if any, advise the
selling Holders in writing that in its or their reasonable opinion or, in the case of a Piggyback
Registration not being underwritten, the Company shall reasonably determine, that the number or kind of securities proposed to be sold in such registration is inconsistent with that which can be
sold in such registration without having an adverse effect on the offering, then the Company shall
have the right to exclude or reduce the number of Registrable Securities requested to be included
in such registration by the Holders pursuant to Section 4.1 above (pro rata based on the number of
Registrable Securities that each such Holder shall have requested to include therein pursuant to
Section 4.1 above).

     4.3 Selection of Underwriters. If any Piggyback Registration is an underwritten
offering, the Company will (i) select a managing underwriter or underwriters to administer the
offering, and (ii) determine the terms under which such underwriting shall take place.

     4.4 Restrictions on Public Sale. Upon the request of the Company and the managing
underwriter or underwriters, each of KULI and Bennett agree not to, directly or indirectly,
effect any public sale or distribution of Shares, including a sale pursuant to Rule 144 under the
Securities Act, during the 180-day period (or such shorter period as may be agreed to by the
managing underwriter or underwriters) beginning on the effective date of a registration
statement filed by the Company under the Securities Act.

     4.5 Participation in Registrations. No Holder may participate in any underwritten
registration hereunder unless such Holder (i) agrees to sell its Registrable Securities on the
basis provided in any underwriting arrangements approved by the Company, and (ii) accurately
completes in a timely manner and executes all questionnaires, powers of attorney, underwriting

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agreements and other documents customarily required under the terms of such underwriting
arrangements. No Holder may participate in any registration hereunder unless such Holder enters
into an indemnification agreement relating thereto containing standard and customary provisions.
The Company shall pay all expenses incident to its registration obligations in this Article IV,
other than the costs or expenses of any selling stockholder for underwriters’ commissions,
brokerage fees or transfer taxes. The Company agrees to reimburse the Holders for the reasonable
fees of one counsel for all Holders up to $25,000.

ARTICLE V.

PUT RIGHT

     5.1 Exercise of Put. If the Company has not consummated an IPO by the fifth
anniversary of the date of this Agreement, Bennett shall have the one time right, exercisable
either during the sixty (60) day period commencing upon such fifth anniversary date or during a sixty
(60) day period occurring on the same dates in any subsequent year (the “Put Period”), to
require the Company to purchase all of the Bennett Original Shares (the “Put Shares”). The Put Right
shall be exercised by Bennett giving the Company written notice of exercise during the Put
Period (the “Put Notice”). The amount payable by the Company for the purchase of each Put Share shall
be equal to its Fair Market Value as of the last day of the Company’s fiscal quarter ended
immediately prior to the Company’s receipt of the Put Notice (the “Put Price”).

     5.2 Payment/Deferral of Put Right. Upon exercise of the Put Right, the Put Price shall
be paid to Bennett by the Company, against delivery of the certificates representing the Put
Shares (duly endorsed for transfer and free and clear of any and all liens, claims and encumbrances),
by cashier’s check or wire transfer from funds legally available therefore within thirty (30)
days after the later of: (a) the Company’s receipt of the Put Notice, or (b) the final determination of
Fair Market Value. Notwithstanding the foregoing, the Company shall have the right to defer the
purchase of the Put Shares for up to one year after the first Put Period (the “Deferral
Period”) and if an IPO has been consummated by the end of the Deferral Period, the Company shall not be
required to purchase the Put Shares.

     5.3 Termination of Put Right. The Put Right provided under this Article V shall
terminate effective immediately prior to, and shall no longer be applicable after, the closing
of an IPO.

ARTICLE VI.

DRAG-ALONG RIGHTS

     6.1 General In the event that KULI proposes to Transfer all of the shares of
Common Stock owned by KULI to any Person(s) (a “Drag-Along Transferee”) other than an Affiliate of
KULL KULI shall have the right to require Bennett to Transfer to the Drag-Along

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Transferee all of the Shares owned by Bennett on the same terms and conditions that KULI is
transferring its Shares (the “Drag-Along Right”). To exercise the Drag-Along Right, KULI shall give
Bennett written notice setting forth: (x) the amount of consideration and the other terms and
conditions offered by the Drag-Along Transferee, and (y) the date, location and other provisions
with respect to the closing of the transaction (the “Drag-Along Closing”). At the Drag-Along
Closing, Bennett shall deliver to the Drag-Along Transferee the certificates representing all of
his Shares (duly endorsed for transfer and free and clear of any and all liens, claims and
encumbrances) against delivery of the consideration for such Shares.

     6.2 Termination of Drag Along Right. The Drag-Along Right provided under this
Article VI shall terminate effective immediately prior to, and shall no longer be applicable after,
the closing of an IPO.

ARTICLE VII.

TAG-ALONG RIGHTS

     7.1 General. In the event that KULI proposes to sell any of the shares of Common
Stock owned by KULI to any Person(s) (a “Tag-Along Transferee”) other than an Affiliate of
KULI, Bennett shall have the right to require the Tag-Along Transferee to purchase
from Bennett that number of shares of Common Stock owned by Bennett equal to the total number of shares of Common Stock owned by Bennett multiplied by a fraction the numerator of which is the number
of shares of Common Stock to be sold by KULI and the denominator of which is the total number
of shares of Common Stock owned by KULI (“Tag-Along Right”). All shares of Common Stock
purchased from Bennett pursuant to this Section 7.1 shall be paid for at the same price per
share and on the same terms and conditions that KULI is selling its shares.

     7.2 Notice. KULI shall give Bennett a written notice (the “KULI Tag-Along Notice”)
in connection with any sale that is subject to Section 7.1 setting forth: (i) the number of
shares of Common Stock proposed to be sold by KULI, and (ii) the proposed amount and form of
consideration and terms and conditions of payment to be made by such proposed purchaser.

     7.3 Exercise of Tag-Along Right. The Tag-Along Right shall be exercised by Bennett
by giving written notice to KULI (the “Tag-Along Notice”) within 20 days following his receipt
of KULI Tag-Along Notice. If the total number of shares of Common Stock proposed to be sold
to the Tag-Along Transferee by KULI and Bennett exceeds the number of shares of Common
Stock that the Tag-Along Transferee is willing to purchase, the number of shares of Common
Stock to be sold by KULI and Bennett shall be reduced pro rata based on the total number of shares of Common Stock offered for sale by KULI and Bennett. If no Tag-Along Notice is
received by KULI during the 20-day period referred to above, KULI shall have the right, for
the 90-day period after the expiration of the 20-day period referred to above, to transfer to the
Tag-Along Transferee the shares of Common Stock proposed to be sold on terms and conditions no
more favorable to KULI than those stated in the related KULI Tag-Along Notice; provided, that

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in the event government approvals or consents are required in connection with the closing, such
closing may occur not later than 90 days after the receipt of all such governmental approvals and
consents required in connection therewith. Any sale to a proposed purchaser not made within the
applicable period referred to above or which is proposed to be made on terms more favorable to KULI
than those set forth in KULI Tag-Along Notice may only be made after again complying with
provisions of this Article VII with respect to such proposed transfer.

     7.4 Termination of Tag-Along Right. The Tag-Along Right provided under this
Article VII shall terminate effective immediately prior to, and shall no longer be applicable
after, the closing of an IPO.

ARTICLE VIII.

OTHER COVENANTS

     8.1 Repurchase of Shares from Bennett Upon Termination of Employment. At any
and all times following the termination of Bennett’s employment with the Company for any
reason, the Company shall have the right and option to purchase (the “Repurchase Option”) all
or any portion of the Shares owned by Bennett (and/or any transferee of Bennett pursuant to a
Permitted Transfer). If the Company elects to exercise the Repurchase Option in whole or in
part, it shall give written notice of such election (the “Repurchase Notice”) to Bennett (or
Bennett’s estate, if applicable). If Bennett’s employment with the Company is terminated by
the Company pursuant to Section 3.6 Bennett’s Employment
Agreement (i.e., without “cause”) or
Bennett terminates his employment with the Company pursuant to Section 3.7 of Bennett’s
Employment Agreement (i.e., for “good reason”), the purchase price for each Share purchased by
the Company shall be Fair Market Value. In all other events, the purchase price
will be Bennett’s original cost for each “unvested” Share and Fair Market Value
for each “vested” Share. For
purposes of the Repurchase Option, Bennett shall be deemed to be
“vested” in one-sixth of the
Shares on each six month anniversary date of the issuance of such Shares. The purchase price
for any Shares purchased by the Company shall be paid to Bennett (or Bennett’s
transferee or estate, as applicable) in cash within thirty (30) days after the later of: (i) the date of the
Repurchase Notice, or (ii) the final determination of Fair Market Value. The Company may exercise the
Repurchase Option from time to time following the termination of Bennett’s employment as the
Company deems appropriate. As used herein, “Bennett’s Employment Agreement” means the
Employment Agreement dated as of the date hereof between the Company and Bennett.

     8.2 Redemption of Series A Preferred Stock. Pursuant to Section E(5) of Article VII
of the Certificate of Incorporation of the Company, KULI has the right to require the Company
to redeem all of the outstanding shares of Series A Preferred Stock at any time after December
31, 2004 if the Company has not consummated a “Qualified IPO” (as defined in the Certificate of
Incorporation) by such date (the “Redemption Rights”). So long as Bennett (together with any
transferee of Bennett in a Permitted Transfer) continues to hold at least eighty percent (80%)
of

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the Bennett Original Shares, KULI agrees that it (and its transferees) will exercise the Redemption
Rights in any year only during the period from January 1 through the last day of February.

     8.3 Termination of Certain Other Covenants. Section 8,2 of this Article VIII shall
terminate effective immediately prior to, and shall no longer be applicable after, the closing
of an IPO.

     8.4 Voting Agreement. Bennett and KULI agree to vote or not vote, as the case may
be, their Shares in order to effectuate the provisions of Bennett’s Employment Agreement for
so long as Bennett is employed with the Company thereunder.

ARTICLE IX.

MISCELLANEOUS

     9.1 Legend. In addition to any legends required by federal or state securities laws, the certificates representing the Shares shall bear the following legend:

“The securities represented by this certificate are subject to certain
restrictions on transfer and other provisions set forth in a Stockholders
Agreement dated as of February 20, 2000. A copy of such Agreement may be
obtained from the Company upon request.”

     Each of the parties hereto agrees that absent (i) an effective registration statement under
the Securities Act and qualification under applicable state securities laws or (ii) compliance with
Rule 144 under the Securities Act, such party will not effect any Transfer of Shares unless such
Transfer is exempt from all registration and qualification requirements of the Securities Act and
applicable state securities laws. Upon the Company’s request, any party proposing to make such a
disposition shall provide the Company with an opinion of counsel (which counsel and opinion are
reasonably satisfactory to the Company) or other evidence acceptable to the Company confirming that
such disposition is exempt from all registration and qualification requirements of the Securities
Act and applicable state securities laws and otherwise does not violate federal or state securities
laws.

     9.2 Transferees; Additional Restrictions on Transfer. Each transferee (other than KULI or an Affiliate thereof) of Shares from Bennett or a subsequent transferee shall take
such Shares subject to the same restrictions that existed in the hands of the transferor. Unless
the Company and KULI otherwise consent in writing in their sole and absolute discretion, no
transferee of Shares from Bennett or a subsequent transferee, other than a transferee
receiving Shares in a Permitted Transfer, shall be entitled to the benefits provided to Bennett
hereunder, including, without limitation, the Purchase Right provided under Article III hereof, the Put
Rights provided in Article V hereof or the Tag-Along Rights provided in Article VII hereof; provided,
however, that any transferee or subsequent transferee shall be entitled to the benefits of the

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registration rights provided under Article IV hereof. Shares sold to the public pursuant to an
effective registration statement or pursuant to Rule 144 under the Securities Act shall no longer
be subject to any of the provisions of this Agreement, and the Company agrees to remove the legend
described in Section 9.1 above upon such sale.

     9.3 [Intentionally Omitted]

     9.4 Specific Performance. Etc. In addition to being entitled to exercise all rights
provided herein, in the Company’s Certificate of Incorporation or granted by law, including recovery of damages, each party to this Agreement will be entitled to specific performance of
its rights under this Agreement. Each party agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at
law would be adequate.

     9.5 Notices. All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be deemed to have
been duly given when received if personally delivered; upon confirmation of transmission if
transmitted by telecopy, electronic or digital transmission method; the day after it is sent,
if sent for next day delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail, return receipt requested.
If notice is given in multiple fashions, the date of first effective notice shall control. In
each case notice shall be sent to:

If to the Company, addressed to:

PremierSchool.com, Inc.

844 Moraga Drive

Los Angeles, California 90049

Fax:(310) 440-3690

Attention: Board of Directors

With a copy (not itself constituting notice) to:

Maron & Sandier

844 Moraga Drive

Los Angeles, California 90049

Fax: (310) 440-3690

Attention: David S. Kyman, Esq.

12

 

If to KULI addressed to:

Knowledge Universe Learning, Inc.

844 Moraga Drive

Los Angeles, California 90049

Fax: (310) 440-3690

Attention: Chief Executive Officer

With a copy (not itself constituting notice) to:

Maron & Sandler

844 Moraga Drive

Los Angeles, California 90049

Fax: (310) 440-3690

Attention: David S. Kyman, Esq.

If to Bennett, addressed to:

William J. Bennett

Empower America

1701 Pennsylvania, N.W., Suite 900

Washington, D.C. 20006-5805

With a copy (not itself constituting notice) to:

Williams & Connolly

725 Twelfth Street, N.W.

Washington, District of Columbia 20005-5901

Fax: (202) 434-5029

Attention: Robert B. Barnett, Esq.

or to such other place and with such other copies as any party may designate by written notice to
the others.

     9.6 Entire Agreement; Amendments and Waivers. This Agreement constitutes the
entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or written, of the parties
hereto relating to the subject matter hereof. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers of or
consents to departures from the provisions hereof may not be given unless approved in writing by
the Company, KULI and Bennett. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver
by the party taking such action. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any preceding or

13

 

succeeding breach and no failure by any party to exercise any right or privilege hereunder shall be
deemed a waiver of such party’s rights to exercise the same at any subsequent time or times
hereunder.

     9.7 Further Assurances. Upon the terms and subject to the conditions contained
herein, each party to this Agreement agrees to cooperate with each other party and to execute
any documents, instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out the transactions contemplated by this Agreement.

     9.8 Termination. If not terminated sooner pursuant to the terms hereof, Article III of
this Agreement (regarding the Purchase Right), Article IV of this Agreement (regarding
Registration Rights), Article V of this Agreement (regarding Put Right), Article VI of this
Agreement (regarding Drag-Along Rights), Article VII of this Agreement (regarding Tag-Along
Rights) and Section 8.2 (regarding Other Covenants) shall terminate and cease to be of any
further force or effect upon the earlier of: (a) the Company’s merger with and into another
corporation or other entity (other than KULI or an Affiliate thereof) where, upon consummation
of the merger, the holders of the Company’s voting stock immediately prior to the merger will
hold less than 50% of the voting stock of the surviving corporation immediately after the
merger, or (b) the Company’s merger with and into another corporation (other than KULI or an Affiliate
thereof) where, in connection with the merger, the Shares are exchanged exclusively for cash
and/or shares of capital stock or other securities that are publicly traded on the New York
Stock Exchange, American Stock Exchange or Nasdaq National Market.

     9.9
Recapitalizations, Exchange, Etc. Affecting the Company’s Stock. The provisions
of this Agreement shall apply, to the full extent set forth herein with respect to the Shares,
to any and all shares of capital stock of the Company that may be
issued in respect of, in exchange
for, or in substitution of the Shares and shall be appropriately adjusted for any stock dividends,
splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof

     9.10 Arbitration; Governing Law. This Agreement has been made and executed under,
and will be construed and interpreted in accordance with, the internal laws of the State of
Delaware, without regard to principles of conflict of laws. Any dispute, controversy or claim
arising out of this Agreement or the performance, breach or termination thereof shall be
settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The place of arbitration shall be in Wilmington, Delaware. The
arbitration shall be conducted by a neutral arbitrator appointed by the American Arbitration
Association. The arbitrator shall be entitled to award any appropriate remedy including, but
not limited to, monetary damages, specific performance, and all other forms of legal and equitable
relief; provided, however, that the arbitrator shall not be entitled to award
punitive damages. Judgment upon the award rendered may be entered in any court having jurisdiction. The
prevailing party shall be entitled to be awarded all costs of arbitration including, but not
limited to, attorneys’ fees. The arbitrator shall be charged with determining the prevailing party. To the
extent practicable, all information resulting from or otherwise pertaining to any dispute
shall be

14

 

nonpublic and handled by the parties and their respective agents in such a way as to prevent the
public disclosure of such information. Notwithstanding the foregoing, either party shall have the
right to seek and obtain court ordered specific performance, injunctive and other equitable
remedies in connection with any actual or threatened breach of this Agreement.

     9.11 Multiple Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

     9.12 Headings. The headings of the Article and Sections herein are inserted for
convenience of reference only and are not intended to be part of or to affect the meaning
or interpretation of this Agreement.

     9.13 Interpretation of Agreement. Each of the parties has had the opportunity to be
represented by counsel in the negotiation and preparation of this Agreement. The parties agree
that this Agreement is to be construed as jointly drafted. Accordingly, this Agreement will be
construed according to the fair meaning of its language, and the rule of construction that
ambiguities are to be resolved against the drafting party will not be employed in the
interpretation of this Agreement.

     9.14 Expenses. Except as set forth in Section 5.9 of that certain Stock Purchase
Agreement between Bennett and Company dated as of even date herewith, each party hereto shall
pay its own legal, accounting, out-of-pocket and other expenses incident to this Agreement and
to any action taken by such party in preparation for carrying this Agreement into effect.

     9.15 Provisions Severable. Every provision of this Agreement is intended to be
severable from every other provision of this Agreement. If any provision of this Agreement is
held to be void or unenforceable, in whole or in part, such provision shall be deemed to be
reformed to the minimum extent necessary so that such provision as reformed may and shall be
legally enforceable. If any provision of this Agreement is held to be void or unenforceable,
in whole or in part, and cannot be reformed and made enforceable as provided in the immediately
preceding sentence, the remaining provisions will remain in full force and effect.

     9.16 Cumulative Remedies. All rights and remedies of either party hereto are
cumulative of each other and of every other right or remedy such party may otherwise have at
law or in equity, and the exercise of one or more rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of other rights or remedies.

15

 

     IN WITNESS WHEREOF, the parties have executed this Stockholder Agreement as of the day and
year first written above.

	 	 	 	 	 
	 	“Company” 

PREMIERSCHOOL.COM, INC.,

a Delaware Corporation

 	 
	 	By:  	/s/ Ronald. J. Packard
 	 
	 	 	Ronald. J. Packard 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	“KULI”

KNOWLEDGE UNIVERSE LEARNING, INC. 

a Delaware Corporation

 	 
	 	By:  	/s/ Ronald. J. Packard
 	 
	 	 	Ronald. J. Packard 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	“Bennett”

 	 
	 	/s/ William J. Bennett
 	 
	 	William J. Bennett 	 
	 	 	 
	 

16exv10w4

 

Exhibit 10.4

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY APPLICABLE STATE SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE SHARES OF CAPITAL STOCK

OF

K12 INC.

April 9, 2001

     This certifies that MOLLUSK HOLDINGS, LLC, a California limited liability company (together
with its successors and assigns, the “Holder”), for value received, is entitled, subject to the
adjustments and to the other terms set forth below, to purchase from K12 INC., a Delaware
corporation (the “Company”), at any time after the date hereof and until 5:00 P.M. (California
time) on the Expiration Date, that number of Warrant Shares equal to the quotient of: (A) the
Warrant Coverage Amount, divided by (b) the Exercise Price.

     This Warrant is subject to the following terms and conditions:

     1. Definitions. As used herein, the following terms shall have the
meaning as defined below:

     “CNB Loan” means the Company’s $6 Million Credit Facility with City National Bank.

     “Exercise Price” means (a) the lowest price per share paid for the Company’s Preferred Stock
in the Private Placement, or (b) at the option of the Holder, if the Company does not raise at
least $35 Million by July 1, 2001 from the sale of Preferred Stock in the Private Placement, the
lowest price per share paid for any equity securities of the Company while any portion of the CNB
Loan remains unpaid. The Exercise Price shall be equitably adjusted for any stock dividends,
splits, reverse splits, recapitalizations and the like occurring after the date hereof.

1

 

     “Expiration Date” means the earlier of (a) April 8, 2008, or (b) two years after the
Company consummates a Qualified IPO.

     “Private Placement” means the Company’s private placement of Preferred Stock that is pending
as of the original issue date of this Warrant.

     “Maximum Amount” means 6,240,000.

     “Qualified IPO” means an underwritten initial public offering of shares of common stock by the
Company that (a) is at a per share price to the public of at least 150% of the Exercise Price, (b)
results in gross proceeds to the Company of at least $35 Million, and (c) results in such shares
being listed for trading on a national securities exchange or being authorized for trading on the
Nasdaq National Market System; provided, however, that if there is a “qualified
initial public offering” type of provision that is applicable to the Warrant Shares for purposes of
triggering an automatic conversion of such shares and if such provision would result in a later
Expiration Date if it was applicable to this Warrant, then such provision shall be deemed to be
applicable to this Warrant and substituted for the definition of Qualified IPO in this Warrant.

     “Warrant Coverage Amount” means (a) 12.5% of the Maximum Amount if the CNB Loan is repaid in
full and terminated on or before fifty (50) days after the date of original issuance of this
Warrant, or (b) 25 % of the Maximum Amount if (x) the CNB Loan has not been repaid in full and
terminated on or before fifty (50) days after the date of original issuance of this Warrant, and/or
(y) the Company defaults under the CNB Loan.

     “Warrant Shares” means (a) shares of the Company’s Preferred Stock that the Company sells in
the Private Placement, or (b) at the option of the Holder, if the Company does not raise at least
$35 Million by July 1, 2001 from the sale of Preferred Stock in the Private Placement, any class or
series of equity securities that the Company issues while any portion of the CNB Loan remains
unpaid.

     2. Exercise; Issuance of Certificates; Payment for Shares.

     2.1 This Warrant is exercisable at the option of Holder at any time and from time to time
after the date hereof and until 5:00 P.M. (California time) on the Expiration Date for all or any
portion of the Warrant Shares that may be acquired hereunder.

     2.2 This Warrant shall be exercised upon surrender to the Company of this Warrant together
with a completed and executed Subscription Agreement in the form attached hereto as Exhibit A, and
upon payment of the Exercise Price for the number of Warrant Shares for which this Warrant is being
exercised. Payment for Warrant Shares may be made in any one or a combination of the following
forms at the option of Holder: (i) by cashier’s check or wire

2

 

transfer in the amount of the Exercise Price, (ii) by the surrender to the Company of
securities of the Company and/or any subsidiary of the Company having a Fair Value equal to the
Exercise Price, (iii) by forgiveness of any indebtedness owed by the Company and/or any subsidiary
of the Company in the amount of the Exercise Price, and/or (iv) by the surrender to the Company of
that portion of this Warrant having a Fair Value equal to the amount of the Exercise Price. For
purposes of clause (iv) above, the Fair Value of this Warrant (or portion hereof) as of a given
date shall mean such amount as determined by Holder using Black-Scholes valuation methodology.

     2.3 In lieu of exercising this Warrant as provided is Section 2.2 above, Holder may from time
to time at Holder’s option convert this Warrant, in whole or in part, into a number of Warrant
Shares determined by dividing (A) the aggregate Fair Value of such shares otherwise issuable upon
exercise of this Warrant minus the aggregate Exercise Price of such shares by (B) the Fair
Value of one such share.

     2.4 For purposes of Sections 2.2(ii) and 2.3 above, the Fair Value of securities of as of a
given date shall mean: (i) the average closing price of such securities on the principal exchange
(or NASDAQ NMS) on which such securities are then trading, if any (or as reported on any composite
index which includes such principal exchange), on the twenty most recent trading days immediately
prior to such date; or (ii) if such securities are not traded on an exchange (or NASDAQ NMS) but
are quoted on NASDAQ Small Cap or a successor quotation system, the average mean between the
closing bid and asked prices for such securities, on the twenty most recent trading days
immediately prior to such date as reported by NASDAQ Small Cap or such successor quotation system;
or (iii) if such securities are not publicly traded on an exchange (or NASDAQ NMS) or quoted on
NASDAQ Small Cap or a successor quotation system, the Fair Value shall mean such amount as mutually
agreed upon by the Company and Holder. In the event that the Company and Holder cannot reach
agreement on Fair Value under clause (iii) above, the Fair Value shall be determined by an
investment banking firm mutually agreed upon by the Company and Holder with the Company paying all
of the fees, costs and expenses of such investment banking firm and otherwise associated with
determining the Fair Value.

     2.5 The Company agrees that any Warrant Shares issued under this Warrant shall be deemed to be
issued to Holder as the record owner of such shares as of the close of business on the date on
which this Warrant shall have been surrendered (subject to payment being made for such Warrant
Shares as provided herein). Certificates for the Warrant Shares so purchased, together with any
other securities or property to which Holder is entitled upon such exercise, shall be delivered to
Holder by the Company or its transfer agent at the Company’s expense within a reasonable time after
the rights represented by this Warrant have been exercised and payment for the Warrants Shares has
been made. Each certificate so delivered shall be in such denominations as may be requested by
Holder and shall be registered in the name of Holder or such other name as shall be designated by
Holder. If, upon exercise of this Warrant, fewer

3

 

than all of the Warrant Shares subject to this Warrant are purchased prior to the Expiration Date
of this Warrant, one or more new Warrants substantially in the form of, and on the terms in, this
Warrant will be issued for the remaining number of Warrant Shares not purchased upon such
exercise.

     3. Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees
that all Warrant Shares that may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof. The Company covenants
that it will reserve and keep available a sufficient number of its authorized but unissued shares
for issuance upon exercise or conversion of this Warrant. The Company will take all action as may
be necessary to assure that such Warrant Shares may be issued as provided herein without violation
of any applicable law or regulation.

     4. Adjustment of Exercise Price and Number of Warrant Shares. The Exercise Price and
the number of Warrant Shares shall be subject to adjustment from time to time upon the occurrence
of certain events described in this Section 4.

          4.1 Subdivision or Combination of Shares and Stock Dividend. In the event that, after
the date of this Warrant, the Company subdivides its outstanding shares into a greater number of
shares or declares a dividend upon its shares payable solely in shares, the Exercise Price in
effect immediately prior to such subdivision or declaration shall automatically be proportionately
reduced and the number of Warrant Shares shall automatically be proportionately increased.
Conversely, in case the outstanding shares of the Company shall be combined into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination shall be
proportionately increased, and the number of Warrant Shares shall be proportionately reduced.

          4.2 Notice of Adjustment. Promptly after any adjustment of the Exercise Price or any
increase or decrease in the number of Warrant Shares, the Company shall give written notice thereof,
by first class mail, postage prepaid, addressed to the registered holder of this Warrant at the
address of such holder as shown on the books of the Company. The notice shall be signed by the
Company’s chief financial officer and shall state the effective date of the adjustment and the
Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number
of Warrant Shares, setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.

          4.3 Other Notices. If at any time:

               (a) the Company shall declare any dividend upon its shares;

4

 

               (b) the Company shall offer for subscription pro rata to the holders of its
shares any additional shares of stock of any class or other rights;

               (c) there shall be any capital reorganization or reclassification of the capital stock of the
Company; or consolidation or merger of the Company with, or sale of all
or substantially all of its assets to, another corporation;

               (d) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the
Company; or

               (e) there shall be a public offering of Company securities;

               then, in any one or more of said cases, the Company shall give to the registered
holder of this Warrant, by the means specified in Section 9 herein, (i) at least twenty
(20) days’ prior written notice of the date on which the books of the Company shall close or
a record shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, and (ii) in the case
of any such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or public offering, at least twenty (20) days’ prior written
notice of the date when the same shall take place. Any notice given in accordance with the
foregoing clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on or after which the holders of shares shall be entitled
thereto. Any notice given in accordance with the foregoing clause (ii) shall also specify
the date on or after which the holders of shares shall be entitled to exchange their
shares for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up,
conversion or public offering, as the case may be.

          4.4 Changes in Shares. In case at any time following the date of this
Warrant, the Company shall be a party to any transaction (including, without limitation, a
merger, consolidation, or sale of all or substantially all of the Company’s assets or
recapitalization of shares) in which the previously outstanding shares shall be changed
into, converted or exchanged for other securities of the Company or stock or other
securities of another corporation or interests in a non-corporate entity or other property
(including cash) or any combination of any of the foregoing (each such transaction being
herein called a “Transaction” and the date of consummation of a Transaction being herein
called a “Consummation Date”), then, as a condition to the consummation of such
Transaction, lawful and adequate provisions shall be made so that Holder, upon the
exercise or conversion hereof at any time on or after the Consummation Date of such
Transaction, shall be entitled to receive, and this Warrant shall thereafter represent the
right to receive, in lieu of the shares issuable upon such exercise or conversion prior to
such Consummation Date, the highest amount of securities or other property to which Holder
would actually have been entitled as a

5

 

shareholder if Holder had exercised this Warrant immediately prior to the consummation
of such Transaction. The provisions of this Section 5.4 shall similarly apply to
successive Transactions.

          5. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise or conversion of the Warrant shall be made without charge to Holder for any issue
tax in respect thereof.

          6. No Voting or Dividend Rights; Limitation of Liability. Nothing contained
in this Warrant shall be construed as conferring upon Holder hereof the right to vote or
to consent or to receive notice as a shareholder in respect of meetings of shareholders
for the election of directors of the Company or any other matters or any rights whatsoever
as a shareholder of the Company, until, and only to the extent that, this Warrant shall
have been exercised or converted. Except for the adjustment to the Exercise Price pursuant
to Section 4.1 in the event of a dividend on the shares payable in shares, no dividends or
interest shall be payable or accrued in respect of this Warrant or the Warrant Shares
purchasable hereunder until, and only to the extent that, this Warrant shall have been
exercised or converted. No provisions hereof, in the absence of affirmative action by
Holder to purchase Warrant Shares, and no mere enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for the
Exercise Price or as a shareholder of the Company whether such liability is asserted by
the Company or by its creditors.

          7. Representations and Warranties by the Company. The Company hereby
represents and warrants to Holder as follows: The Company has all necessary corporate
power and authority, and has taken all corporate action necessary, to execute and delivery
this Warrant and to perform its obligations hereunder. The execution and delivery of this
Warrant by the Company has been duly approved by the Board of Directors of the Company. No
other corporate proceedings on the part of the Company are necessary to authorize this
Warrant. This Warrant has been duly executed and delivered by the Company and is a legal,
valid and binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors’ rights generally and subject
to the general principles of equity.

          8. Investment Representations; Restrictions on Transferability of
Securities.

               8.1 Investment Representations. By accepting this Warrant Certificate,
Holder represents that it is acquiring this Warrant (and will be acquiring any Warrant
Shares purchased upon exercise or conversion of this Warrant) for its own account, not as
nominee or agent, for investment and not with a view to, or for resale in connection with,
any distribution or public offering thereof in violation of the Securities Act of 1933, as
amended (the “Act”).

6

 

               8.2 Restrictions on Transferability. This Warrant and the Warrant Shares
have not been registered under the Act and shall not be transferable in the absence of
registration under the Act, or an exemption therefrom under said Act.

               8.3 Restrictive Legend. Each certificate representing the Warrant Shares
or any other securities issued in respect of the Warrant Shares shall be stamped or
otherwise imprinted with legends in substantially the following form (in addition to any
legend required under applicable state securities laws):

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY APPLICABLE
STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS.

     9. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the same is sought.

     10. Notices. Any notice, request or other document required or permitted to
be given or delivered to Holder or the Company shall be delivered or shall be sent by
certified or registered mail, postage prepaid, to Holder at its address as shown on the
books of the Company or if to the Company at the address indicated therefor in the first
paragraph of this Warrant. If Holder’s address is outside of the United States, Holder
shall first be given notice by telecopy, in addition to being provided with notice as set
forth in the preceding sentence.

     11. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of all or
substantially all of the Company’s assets. All of the obligations of the Company relating to
the shares issuable upon the exercise or conversion of this Warrant shall survive the
exercise or conversion and termination of this Warrant. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and assigns of the
holder hereof.

     12. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of the State of
California.

7

 

     13. Lost Warrants or Ordinary Share Certificates. The Company represents and
warrants to Holder that upon receipt of an affidavit reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant or any stock certificate
deliverable upon the exercise or conversion hereof and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity agreement reasonably satisfactory to
the Company, or in the case of any such mutilation, upon surrender and cancellation of
this Warrant or such stock certificate, the Company at its expense will make and deliver a
new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate.

     14. Fractional Shares. The Company shall not be required to issue fractional
shares upon exercise or conversion of this Warrant. The Company may, in lieu of issuing
any fractional share, pay Holder entitled to such fraction a sum in cash equal to the fair
market value of any such fractional interest as it shall appear on the public market, or
if there is no public market for such shares, then as shall be reasonably determined by the
Company.

     15. Arbitration. Any dispute, controversy or claim arising out of this
Warrant Certificate or the performance, breach or termination thereof shall be settled by
binding arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The place of arbitration shall be in Los Angeles, California. The
arbitration shall be conducted by a neutral arbitrator appointed by the American
Arbitration Association. The arbitrator shall be entitled to award any appropriate remedy
including, but not limited to, monetary damages, specific performance, and all other forms
of legal and equitable relief. Judgment upon the award rendered may be entered in any
court having jurisdiction. The prevailing party shall be entitled to be awarded all costs
of arbitration including, but not limited to, attorneys’ fees. The arbitrator shall be
charged with determining the prevailing party. To the extent practicable, all information
resulting from or otherwise pertaining to any dispute shall be nonpublic and handled by the
Company, Holder and their respective agents in such a way as to prevent the public
disclosure of such information. Notwithstanding the foregoing, each of the Company and
Holder shall have the right to seek and obtain court ordered specific performance,
injunctive and other equitable remedies in connection with any actual or threatened breach
of this Warrant Certificate.

          IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer effective as of the above written date.

	 	 	 	 	 
	 	K12 INC. 

 	 
	 	By:  	/s/ Ronald J. Packard
 	 
	 	 	Ronald J. Packard,  	 
	 	 	Chief Executive Officer 	 

8

 

	 	 	 	 	 

Exhibit A 

K12 INC.

WARRANT

FORM OF SUBSCRIPTION AGREEMENT

(To be signed and delivered

upon exercise or conversion of Warrant)

K12 Inc.

8000 Westpark Drive, Suite 604

McLean, Virginia 22102

Attention: Chief Financial Officer

     The undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to acquire thereunder,
                                             shares of                                               stock (the “Stock”), of
K12 INC. (the “Company”), and subject to the following paragraph, herewith makes payment
of $                             therefor in the form of:

                                                                     
                                                                              
                                                                              

     The undersigned requests that the certificates for such shares be issued in the name
of                                     , and delivered to,                                  , whose
address is:                                                             .

     If the exercise or conversion of this Warrant is not covered by a registration
statement effective under the Securities Act of 1933, as amended (the
“Act”), the
undersigned represents that:

          (i) the undersigned is acquiring such Stock for investment and not with a
view to the distribution thereof in violation of the Act;

          (ii) the undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the undersigned’s
investment in the Stock;

A-1

 

          (iii) the undersigned has received all of the information the undersigned has
requested from the Company and considers necessary or appropriate for deciding whether to
purchase the shares of Stock;

          (iv) the undersigned has the ability to bear the economic risks of his, her or
its prospective investment;

          (v) the undersigned is able, without materially impairing its financial
condition, to hold the shares of Stock for an indefinite period of time and to suffer
complete loss on his, her or its investment;

          (vi) the undersigned understands and agrees that (A) the undersigned may be
unable to readily liquidate his, her or its investment in the shares of Stock and that the
shares must be held indefinitely unless a subsequent disposition thereof is registered or
qualified under the Act and applicable state securities or Blue Sky laws or is exempt from
such registration or qualification, and that the Company is not required to register the
same or to take any action or make such an exemption available except to the extent
provided in the within Warrant or other applicable agreement to which the Company and the
undersigned are parties, and (B) the exemption from registration under the Act afforded by
Rule 144 promulgated by the Securities and Exchange Commission (“Rule 144”) depends upon
the satisfaction of various conditions by the undersigned and the Company and that, if
applicable, Rule 144 affords the basis for sales under certain circumstances in limited
amounts, and that if such exemption is utilized by the undersigned, such conditions must
be fully complied with by the undersigned and the Company, as required by Rule 144;
and

          (vii) the
address set forth below is the true and correct address of the
undersigned’s residence.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	(Name)  	 
	 	
 	 
	 	(Address) 	 
	 
	 	
 	 
	 
	 	
 	 
	 
	 	
 	 
	 

A-2

 

     If said number of shares shall not be all the shares exchangeable or purchasable
under the within Warrant, a new Warrant is to be issued in the name of the undersigned
for the balance remaining of the shares purchasable thereunder.

     DATED:                     

	 	 	 	 	 
	 	
 	 
	 	 	 
	 	
 	 
	 	(signature)  	 
	 	
 	 
	 	(print name)	 
	 	
 	 
	 	(print title)	 
	 

A-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]