Document:

exv4w1

Exhibit 4.1

EXECUTION COPY

VOTING AGREEMENT

     This VOTING AGREEMENT (this “Agreement”) is entered into as of July 23, 2010 by and
among K12 Inc., a Delaware corporation (“Parent”), Kayleigh Sub Two LLC, a Delaware limited
liability company and a wholly owned subsidiary of Parent (“LLC Merger Sub”), Kayleigh Sub
One Corp., a Delaware corporation and a wholly owned subsidiary of Parent (“Corporate Merger
Sub”), Learning Group LLC, a Delaware limited liability company and a stockholder of Parent
(“LG”), Learning Group Partners, a California general partnership and a stockholder of
Parent (“LGP”), Knowledge Industries LLC, a California limited liability company and a
stockholder of Parent (“KI”), Cornerstone Financial Group LLC, a California limited
liability company and a stockholder of Parent (“Cornerstone” and together with LG, LGP and
KI, each a “Stockholder” and collectively the “Stockholders”). Each of Parent, LLC
Merger Sub, Corporate Merger Sub and each of the Stockholders are sometimes referred to herein
individually as a “Party,” and collectively as the “Parties.”

RECITALS

     WHEREAS, in connection with the execution and delivery of this Agreement, Parent, LLC Merger
Sub, Corporate Merger Sub, KCDL Holdings LLC, a Delaware limited liability company
(“Seller”), and KC Distance Learning, Inc., a Delaware corporation (the “Company”),
are entering into an Agreement and Plan of Merger, dated as of the date hereof (as the same may be
amended from time to time, the “Merger Agreement”), providing for, among other things, the
merger of the Company with and into Corporate Merger Sub, with the Company continuing as the
surviving corporation in the merger (the “First Merger”), and immediately thereafter the
merger of the Company with and into LLC Merger Sub, with LLC Merger Sub continuing as the surviving
entity in the merger (the “Second Merger” and together with the First Merger, the
“Mergers”), upon the terms and subject to the conditions set forth in the Merger Agreement;

     WHEREAS, the Merger Agreement contemplates that Parent shall seek to obtain the Stockholder
Approval (as defined in the Merger Agreement) following the closing of the Mergers;

     WHEREAS, as a condition to their willingness to enter into the Merger Agreement, Parent, LLC
Merger Sub and Corporate Merger Sub have requested that each Stockholder makes certain
representations, warranties, covenants and agreements with respect to the shares of common stock,
par value $0.0001 per share, of Parent (the “Shares”) Beneficially Owned (as defined below)
by such Stockholder; and

     WHEREAS, in order to induce Parent, LLC Merger Sub and Corporate Merger Sub to enter into the
Merger Agreement, each Stockholder is willing to make certain representations, warranties,
covenants and agreements as provided herein.

     NOW, THEREFORE, in consideration of the premises contained herein and for other good and
valuable consideration, the receipt, sufficiency and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:

     1. Stockholder Shares. Each Stockholder represents and warrants to Parent, LLC Merger
Sub and Corporate Merger Sub that (a) Annex A to this Agreement sets forth the number

 

 

and
nature of ownership of Shares or any other capital stock of Parent (other than any shares of Series
A Special Stock acquired pursuant to the Merger Agreement) of which such Stockholder is the record
or Beneficial Owner (the “Stockholder Shares”) and number and nature of ownership of any
outstanding warrants, options or other derivative, convertible or exchangeable securities, whether
or not vested or exercisable, for Shares or any other capital stock of Parent with the right to
vote generally on matters submitted to a vote of Parent’s stockholders of which such Stockholder is
the record or Beneficial Owner (the “Derivative Securities”); (b) Stockholder lawfully
Beneficially Owns all of the Stockholder Shares and the Derivative Securities set forth on
Annex A as Beneficially Owned by it free and clear of all liens, claims, charges, security
interests or other encumbrances that would limit or affect its ability to perform its obligations
hereunder, and except as created pursuant to this Agreement, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character to which such Stockholder is
a party relating to the pledge, disposition or voting of any Shares, and there are no voting trusts
or voting agreements with respect to its Stockholder Shares or the Derivative Securities; (c) such
Stockholder has full power and authority to execute, deliver and perform its obligations under this
Agreement; and (d) this Agreement has been duly executed and delivered by such Stockholder and
constitutes a valid and binding obligation of such Stockholder in accordance with its terms,
subject in the case of this clause (d) to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar Legal Requirement (as defined in the Merger Agreement) affecting
creditors’ rights generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law). As used in this Agreement, a person shall “Beneficially Own” a security if such
person, directly or indirectly, through any contract, arrangement, understanding, relationship or
otherwise, would be deemed to beneficially own such security within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the terms
“Beneficially Owned” and “Beneficial Owner” shall have correlative meanings.

     2. Agreement to Vote Shares; Irrevocable Proxy.

          (a) Each Stockholder agrees to vote its Stockholder Shares and any New Shares (as defined in
Section 5), and to cause any holder of record of such Shares or New Shares to vote, (i) in
favor of the adoption of each matter constituting or in furtherance of the Stockholder Approval at
every meeting of the stockholders of Parent at which any such matter is considered and at every
adjournment or postponement thereof; (ii) against any action or agreement that would prevent,
impede, interfere with or adversely affect the receipt of the Stockholder Approval or any portion
thereof; and (iii) against any action or agreement that would result in a breach in any material
respect of any covenant or any other obligation of any party under the Merger Agreement or any
agreement contemplated thereby, including, without limitation, the Certificate of Designation of
the Series A Special Stock, par value $0.0001 per
share, of Parent (the “Series A Special Stock”) to be issued in connection with the
consummation of the First Merger.

          (b) Each Stockholder hereby revokes any and all previous proxies granted with respect to its
Stockholder Shares. Each Stockholder hereby appoints Parent and any designee of Parent, and each
of them individually, as its proxies and attorneys-in-fact, with full power of substitution and
resubstitution, to vote or act by written consent during the term of this

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Agreement with respect to
its Stockholder Shares and any New Shares in accordance with, and only for the limited purposes
expressly set forth in, Section 2(a) if and only if Parent or its designee determines in
good faith that such Stockholder (i) has failed to vote (whether by proxy, in person or by written
consent and with written notice from Parent prior to the holding of such vote), or (ii) has
attempted to vote, in either case in a manner which is inconsistent with the terms of this
Agreement; provided, however, that no prior notice, consent or period for objection
is require to exercise such proxy. This proxy is given to secure the performance of the duties of
such Stockholder under this Section 2. The proxy and power of attorney granted hereunder
by each such Stockholder shall be irrevocable during the term of this Agreement, shall be deemed to
be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any
and all prior proxies granted by such Stockholder. The power of attorney granted by each such
Stockholder herein is a durable power of attorney and shall survive the dissolution, bankruptcy,
death or incapacity of such Stockholder. The proxy and power of attorney granted hereunder shall
terminate upon the termination of this Agreement.

          (c) Parent and its designees may not exercise the irrevocable proxy described in clause (b)
above on any other matter except as provided above. Each Stockholder shall retain at all times the
right to vote the Stockholder Shares in such Stockholder’s sole discretion and without any other
limitation on all matters other than those set forth in clause (a) above that are at any time or
from time to time presented for consideration to Parent’s stockholders generally.

     3. No Voting Trusts or Other Arrangements. Each Stockholder agrees that it will not,
and will not permit any entity under Stockholder’s control to, (i) deposit any of the Stockholder
Shares or Derivative Securities in a voting trust, (ii) grant any proxies with respect to the
Stockholder Shares or Derivative Securities other than pursuant to Section 2, or (iii)
subject any of the Stockholder Shares or Derivative Securities to any arrangement with respect to
the voting of the Stockholder Shares or Derivative Securities other than agreements entered into
with Parent, Corporate Merger Sub or LLC Merger Sub.

     4. No Solicitations; Exclusivity. Each Stockholder agrees that it will not, and will
not permit any person or representative under Stockholder’s control or taking action at its
discretion or direction to, (a) solicit proxies or become a “participant” in a “solicitation” (as
such terms are defined in Regulation 14A under the Exchange Act) in opposition to or competition
with the receipt of the Stockholder Approval or otherwise encourage or assist any party in taking
or planning any action which would impede, interfere with or attempt to discourage the timely
consummation of the Mergers or the timely receipt of the Stockholder Approval; (b) directly or
indirectly encourage, initiate or cooperate in a stockholders’ vote or action by consent of
Parent’s stockholders in opposition to or in competition with the timely consummation of the
Mergers or the timely receipt of the Stockholder Approval; or (c) become a member of a “group” (as
such
term is used in Rule 13d-5 under the Exchange Act) with respect to any voting securities of
the Company for the purpose of opposing or competing with the timely receipt of the Stockholder
Approval.

     5. Additional Purchases; Further Assurances.

          (a) Each Stockholder agrees that all Shares that Stockholder purchases, acquires the right to
vote or share in the voting of, or otherwise acquires Beneficial Ownership of

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after the execution
of this Agreement, whether by the exercise of the Derivative Securities or otherwise (“New
Shares”), shall be subject to the terms of this Agreement to the same extent as if they
constituted Stockholder Shares.

          (b) From time to time, as and when requested by any Party and at such Party’s expense, any
other Party shall execute and deliver, or cause to be executed and delivered, all such documents
and instruments and shall take, or cause to be taken, all such further or other actions as the
requesting Party may reasonably deem necessary or desirable to evidence and effectuate the
transactions and agreements contemplated by this Agreement.

     6. SEC Filings; Consent. Each Stockholder consents and authorizes Parent and their
respective Affiliates to (a) publish and disclose in the Proxy Statement (as defined in the Merger
Agreement), any Current Report of the Company on Form 8-K and any other documents required to be
filed with the Securities and Exchange Commission or any regulatory authority in connection with
the Merger Agreement, this Agreement or the solicitation of votes related to the Stockholder
Approval, Stockholder’s identity and ownership of the Shares and the nature of its commitments
arrangements and understandings under this Agreement; provided, that prior to the
publication or disclosure of such information, Parent shall consult with the Stockholders regarding
such publication or disclosure and give the Stockholders a reasonable opportunity to review and
comment thereon in each case to the extent practicable or permitted by law; and (b) file this
Agreement as an exhibit to any required filing with the Securities and Exchange Commission or any
regulatory authority relating to any such matter.

     7. Termination. This Agreement shall terminate upon the written agreement of the
Parties to terminate this Agreement or automatically upon the earliest to occur of (a) the receipt
of the Stockholder Approval; (b) the date on which the Merger Agreement is terminated; or (c) 18
months from the effective date of this Agreement. No termination hereof shall relieve any Party
from liability for any breach of this Agreement occurring prior to the date of termination.

     8. Notices. All notices, requests, demands, claims 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; when transmitted if transmitted by facsimile
(with written confirmation of transmission); the Business 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 five Business Days after the date mailed by certified or registered mail, postage
prepaid, if sent by certified or registered mail, return receipt requested. In each case notice
shall be sent to:

     Notices to Parent, Corporate Merger Sub or LLC Merger Sub, to:

K12 Inc.

2300 Corporate Park Drive

Herndon, Virginia 20171

Attn: General Counsel

Fax: (703) 483-7496

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with a copy, which shall not constitute notice, to:

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attn: David Fox

         William B. Sorabella

Fax: (212) 446-6460

     Notices to any Stockholder, to:

the name of such Stockholder

c/o Maron & Sandler

1250 Fourth Street, Suite 550

Santa Monica, California 90401

Attn: Stanley E. Maron

Fax: (310) 570-4901

with a copy, which shall not constitute notice, to:

Latham & Watkins LLP

355 South Grand Ave.

Los Angeles, California 90071

Attn: Thomas C. Sadler

Fax: (213) 891-8763

Any Party may change the address to which notices, requests, demands, claims, and other
communications required or permitted hereunder are to be delivered by giving the other Party(ies)
notice in the manner herein set forth.

     9. Miscellaneous.

          (a) Expenses. All expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the Party incurring such expenses.

          (b) Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced as a result of any rule of law, or public policy, all other
terms and other provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions contemplated by this Agreement is
not affected in any manner materially adverse to any Party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that the transactions contemplated by this
Agreement are fulfilled to the greatest extent possible.

          (c) Assignment; Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective heirs, successors and permitted

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assigns,
but neither this Agreement nor any of the rights or obligations hereunder may be assigned (whether
by operation of law, through a change in control or otherwise) (i) by Parent, LLC Merger Sub or
Corporate Merger Sub without the prior written consent of LG; provided, however,
that LLC Merger Sub or Corporate Merger Sub may assign their rights and obligations under this
Agreement in whole to any other subsidiary of Parent having the same corporate form in connection
with a similar assignment of such Party’s rights under the Merger Agreement without the consent of
any other Party hereto and/or (ii) by any Stockholder without the prior written consent of Parent.

          (d) Entire Agreement. This Agreement, along with the Merger Agreement and the other
agreements contemplated thereby, constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements or representations by or between the Parties,
written or oral, to the extent that they relate in any way to the subject matter hereof.

          (e) Amendment and Waiver.

               (i) This Agreement may not be amended except in a written instrument executed by the Parties;
provided, however, that the agreement of any other Stockholder shall not be
required to change the rights or obligations of any Stockholder if such Stockholder agrees in a
writing executed by such Stockholder and Parent, Corporate Merger Sub and LLC Merger Sub. Any
extension, waiver or consent of any provision hereof shall only be valid if set forth in an
instrument in writing signed by the party or parties hereto to be bound thereby. No amendment,
supplement, modification or waiver of this Agreement shall be binding unless executed in writing by
the Party to be bound thereby.

               (ii) Except where a specific period for action or inaction is provided herein, neither the
failure nor any delay on the part of any Party in exercising any right, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any Party of
any such right, power or privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise of any other such right,
power or privilege. The failure of a Party to exercise any right conferred herein within the time
required shall cause such right to terminate with respect to the transaction or circumstances
giving rise to such right, but not to any such right arising as a result of any other transactions
or circumstances.

          (f) Governing Law; Consent to Jurisdiction. All matters relating to the
interpretation, construction, validity and enforcement of this Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any
other jurisdiction) that would cause the application of laws of any jurisdiction other than the
State of Delaware. Each of the Parties hereby irrevocably and unconditionally submits, for itself
and its assets and properties, to the exclusive jurisdiction of any Delaware State court in New
Castle County, or Federal court of the United States of America, sitting within New Castle County
in the State of Delaware, and any respective appellate court, in any action or proceeding arising
out of or relating to this Agreement, the agreements delivered in connection with this Agreement,
or the transactions contemplated hereby or thereby, or for recognition or enforcement of any
judgment relating thereto, and each of the Parties hereby irrevocably and

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unconditionally (i)
agrees not to commence any such action or proceeding except in such courts; (ii) agrees that any
claim in respect of any such action or proceeding may be heard and determined in such Delaware
State court or, to the extent permitted by law, in such Federal court; (iii) waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or hereafter have to
the laying of venue of any such action or proceeding in any such Delaware State or Federal court;
and (iv) waives, to the fullest extent permitted by law, the defense of lack of personal
jurisdiction or an inconvenient forum to the maintenance of such action or proceeding in any such
Delaware State or Federal court. Each of the Parties hereby agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. Each of the Parties hereby irrevocably
consents to service of process in the manner provided for notices in Section 8. Nothing in
this Agreement shall affect the right of any Party to serve process in any other manner permitted
by applicable law.

          (g) Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH
WAIVERS; (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS; (C) IT MAKES SUCH
WAIVERS VOLUNTARILY; AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9(g).

          (h) Specific Performance. Each of the Parties acknowledges and agrees that the other
Parties would be irreparably damaged in the event that any of the terms or provisions of this
Agreement are not performed in accordance with their specific terms or otherwise are breached.
Therefore, notwithstanding anything to the contrary set forth in this Agreement, each of the
Parties hereby agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of any of the terms or provisions of this Agreement and to enforce
specifically the performance by such first Party under this Agreement, and each Party hereby agrees
to waive the defense in any such suit that the other Parties have an adequate remedy at law and to
interpose no opposition, legal or otherwise, as to the propriety of injunction or specific
performance as a remedy, and hereby agrees to waive any requirement to post any bond in connection
with obtaining such relief. The equitable remedies described in this Section 9(h) shall be
in addition to, and not in lieu of, any other remedies at law or in equity that the Parties may
elect to pursue.

          (i) References. The headings and subheadings contained in this Agreement and the
annexes hereto are solely for the purpose of reference, are not part of the agreement of

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the
parties hereto, and shall not in any way affect the meaning or interpretation of this Agreement or
any exhibit hereto. All references to days or months shall be deemed references to calendar days
or months. All references to “$” or “dollars” shall be deemed references to United States dollars.
Unless the context otherwise requires, any reference to a “Section” or “Annex” shall be deemed to
refer to a section of this Agreement or an annex to this Agreement, as applicable. Any reference
to any federal, state, county, local or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, including any successor thereto, unless the context
requires otherwise. For all purposes of and under this Agreement, (i) the word “including” shall
be deemed to be immediately followed by the words “without limitation”; (ii) words (including
defined terms) in the singular shall be deemed to include the plural and vice versa; (iii) words of
one gender shall be deemed to include the other gender as the context requires; (iv) “or” is not
exclusive; and (v) the terms “hereof,” “herein,” “hereto,” “herewith” and any other words of
similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole
(including the annexes hereto) and not to any particular term or provision of this Agreement,
unless otherwise specified. Any reference to “written” or comparable expressions includes a
reference to facsimile transmission or comparable means of communication but shall not refer to
e-mail or other electronic communication.

          (j) Representation by Counsel. Each Party represents and agrees with each other that
it has been represented by or had the opportunity to be represented by, independent counsel of its
own choosing, and that it has had the full right and opportunity to consult with its respective
attorney(s), that to the extent, if any, that it desired, it availed itself of this right and
opportunity, that it or its authorized officers (as the case may be) have carefully read and fully
understand this Agreement in its entirety and have had it fully explained to them by such Party’s
respective counsel, that each is fully aware of the contents thereof and its meaning, intent and
legal effect, and that it or its authorized officer (as the case may be) is competent to execute
this Agreement and has executed this Agreement free from coercion, duress or undue influence.

          (k) Mutual Drafting. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.

          (l) Counterparts; Facsimile and Electronic Signatures. This Agreement may be executed
in multiple counterparts, any one of which need not contain the signatures of more than one Party,
but all such counterparts taken together shall constitute one and the same instrument. This
Agreement or any counterpart may be executed and delivered by facsimile copies or delivered by
electronic communications by portable document format (.pdf), each of which shall be deemed an
original instrument.

{Remainder of page intentionally left blank.}

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

	 	 	 	 	 
	 	Parent

K12 INC.

 	 
	 	By:  	/s/ Howard D. Polsky
 	 
	 	 	Name:  	Howard D. Polsky 	 
	 	 	Title:  	General Counsel and Secretary 	 
	 
	 	LLC Merger Sub

KAYLEIGH SUB TWO LLC

 	 
	 	By:  	/s/ Harry T. Hawks
 	 
	 	 	Name:  	Harry T. Hawks 	 
	 	 	Title:  	President and Treasurer 	 
	 
	 	Corporate Merger Sub

KAYLEIGH SUB ONE CORP.

 	 
	 	By:  	/s/ Harry T. Hawks
 	 
	 	 	Name:  	Harry T. Hawks 	 
	 	 	Title:  	President and Treasurer 	 
	 

{Signature Page to Voting Agreement}

 

 

	 	 	 	 	 
	 	LG

LEARNING GROUP LLC

 	 
	 	By:  	/s/ Stanley E. Maron
 	 
	 	 	Name:  	Stanley E. Maron 	 
	 	 	Title:  	Secretary 	 
	 
	 	LGP

LEARNING GROUP PARTNERS

 	 
	 	By:  	/s/ Stanley E. Maron
 	 
	 	 	Name:  	Stanley E. Maron 	 
	 	 	Title:  	Secretary 	 
	 
	 	LI

KNOWLEDGE INDUSTRIES LLC

 	 
	 	By:  	/s/ Stanley E. Maron
 	 
	 	 	Name:  	Stanley E. Maron 	 
	 	 	Title:  	Secretary 	 
	 
	 	Cornerstone

CORNERSTONE FINANCIAL GROUP LLC

 	 
	 	By:  	/s/ Stanley E. Maron
 	 
	 	 	Name:  	Stanley E. Maron 	 
	 	 	Title:  	Secretary 	 
	 

{Signature Page to Voting Agreement}

 

 

Annex A

Stockholder Shares and Derivative Securities

	 	 	 
	Holder	 	Shares
	 
	 	 
	Learning Group LLC

	 	4,665,083 shares of common stock
	 
	 	 
	Learning Group Partners

	 	399,171 shares of common stock
	 
	 	 
	Knowledge Industries LLC

	 	82,503 shares of common stock
	 
	 	 
	Cornerstone Financial Group LLC

	 	83,874 shares of common stockexv4w2

Exhibit 4.2

Execution Version

STOCKHOLDERS AGREEMENT

BY AND AMONG

K12 INC.,

KCDL HOLDINGS LLC,

LEARNING GROUP LLC,

LEARNING GROUP PARTNERS,

KNOWLEDGE INDUSTRIES LLC,

AND

CORNERSTONE FINANCIAL GROUP LLC

DATED AS OF JULY 23, 2010

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	1. Definitions
	 	 	1	 
	2. Standstill
	 	 	9	 
	3. Lock Up; Transfer Restrictions
	 	 	10	 
	4. Registration Rights
	 	 	12	 
	5. Number and Availability of Authorized Shares
	 	 	20	 
	6. Redemption; Failure to Redeem
	 	 	20	 
	7. Representations and Warranties
	 	 	23	 
	8. Amendment and Waiver
	 	 	23	 
	9. Severability
	 	 	24	 
	10. Entire Agreement
	 	 	24	 
	11. Successors and Assigns
	 	 	24	 
	12. Counterparts
	 	 	24	 
	13. Specific Performance
	 	 	24	 
	14. Notices
	 	 	25	 
	15. Delivery by Facsimile or Email
	 	 	25	 
	16. Governing Law; Consent to Jurisdiction
	 	 	26	 
	17. Waiver of Jury Trial
	 	 	26	 
	18. Business Days
	 	 	27	 
	19. Mutual Drafting
	 	 	27	 
	20. Interpretation
	 	 	27	 
	21. No Third Party Beneficiaries
	 	 	27	 
	22. Responsibility for Compliance
	 	 	27	 
	23. Effectiveness
	 	 	28	 

 

 

STOCKHOLDERS AGREEMENT

     THIS STOCKHOLDERS AGREEMENT (this “Agreement”) is made as of July 23, 2010 by and
among K12 Inc., a Delaware corporation (the “Company”), KCDL Holdings LLC, a Delaware
limited liability company (“Holdings”), Learning Group LLC, a Delaware limited liability
company (“LG”), Learning Group Partners, a California general partnership (“LGP”),
Knowledge Industries LLC, a California limited liability company (“KI”), and Cornerstone
Financial Group LLC, a California limited liability company (“Cornerstone” and
collectively, with LG, LGP and KI, the “Stockholders”). The Company, Holdings, LG and the
Stockholders are referred to herein each individually as a “Party” and collectively as the
“Parties”.

     WHEREAS, in connection with the execution and delivery of this Agreement, the Company,
Kayleigh Sub Two LLC, a Delaware limited liability company, Kayleigh Sub One Corp., a Delaware
corporation, Holdings and KC Distance Learning, Inc., a Delaware corporation (“KCDL”), are
entering into the Agreement and Plan of Merger, dated as of the date hereof (the “Merger
Agreement”), pursuant to which each share of common stock, par value $0.0001 per share, of KCDL
issued and outstanding immediately prior to the Effective Time (as defined below) is to be
converted into the right to receive shares of Series A Special Stock, $0.0001 par value per share,
of the Company (“Series A Special Stock”) on the terms and subject to the conditions set
forth therein;

     WHEREAS, the Series A Special Stock shall be convertible into shares of Company Common Stock
(as defined below) from and after the receipt of the Stockholder Approval (as defined below) and
shall have the other rights, preferences and privileges set forth in the Certificate of
Designations (as defined below);

     WHEREAS, the Knowledge Universe Group (as defined below), of which Holdings is a part,
Beneficially Owns (as defined below) shares of Company Common Stock (as defined below);

     WHEREAS, as a condition to each Party’s willingness to enter into the Merger Agreement, the
Parties have agreed to enter into this Agreement to establish certain arrangements with respect to
the Series A Special Stock and Company Common Stock Beneficially Owned or that will be Beneficially
Owned by the Stockholders following the Closing Date; and

     WHEREAS, the Merger Agreement contemplates that this Agreement will be executed concurrently
with the execution of the Merger Agreement and will become effective simultaneously with the
execution and delivery thereof.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties
to this Agreement hereby agree as follows:

     1. Definitions. As used in this Agreement, the following terms shall have the respective
meanings ascribed to them in this Section 1:

 

 

     “Acquisition” means (i) any direct or indirect acquisition or purchase, in a single
transaction or a series of transactions, by a Person (including the Company) or Group of (A) 35% or
more of the assets (including capital stock of the Subsidiaries of the Company or the Company’s
successor) of the Company, its successors and its and their Subsidiaries, taken as a whole, or (B)
35% or more of the outstanding shares of Company Common Stock; (ii) any tender offer or exchange
offer that, if consummated, would result in any Person or Group owning, directly or indirectly, 35%
or more of the outstanding shares of Company Common Stock; or (iii) any merger, consolidation,
business combination, recapitalization, liquidation, dissolution, binding share exchange or similar
transaction involving the Company, its successors or its and their Subsidiaries pursuant to which
any Person or Group (or the stockholders or other equity owners of any Person or members of a
Group) or the Company, respectively, would own, directly or indirectly, 35% or more of any class of
any class of voting stock or securities convertible into or exercisable for voting stock of the
Company or such Person, respectively, or of the surviving entity in a merger or the resulting
direct or indirect parent of the Company or such Person, respectively, or such surviving entity.

     “Acquisition Proposal” means any inquiry, proposal or offer relating to an
Acquisition.

     “Affiliate” of any particular Person means any other Person that directly or through
one or more intermediaries is controlling, controlled by or under common control with such
particular Person. For the purposes of this definition, “control” means the possession, directly
or indirectly, of the power to direct, or cause the direction of, the management and policies of a
Person whether through the ownership of voting securities, contract or otherwise. For the
avoidance of doubt, for purposes of this Agreement, from and after the date hereof, neither the
Company nor any of its Subsidiaries (including the Surviving Entity) shall be deemed an Affiliate
of Holdings or any of its Affiliates.

     “Agreement” has the meaning set forth in the preamble hereto.

     “Beneficially Own” with respect to any securities shall mean having “beneficial
ownership” of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act). The
terms “Beneficially Own,” “Beneficially Owned,” “Beneficially Owning” and
“Beneficial Ownership” shall have correlative meanings. For purposes of determining
Beneficial Ownership, shares of Company Common Stock into which shares of Series A Special Stock
may be convertible, irrespective of any condition to such conversion set forth in the Certificate
of Designations that may be in effect, shall be deemed Beneficially Owned by the holder of such
share of Series A Special Stock.

     “Block Transferee” has the meaning set forth in Section 3(b)(i).

     “Board” has the meaning set forth in Section 2(d).

     “Business Day” means any day other than a Saturday, Sunday, a legal holiday under the
laws of the State of New York or a day on which banking institutions located in New York are
authorized or required by law to close.

2

 

     “Certificate of Designations” means the certificate of designations of the Series A
Special Stock.

     “Closing Date” has the meaning set forth in the Merger Agreement.

     “Collection Costs” has the meaning set forth in Section 6(c).

     “Company” has the meaning set forth in the preamble hereto.

     “Company Common Stock” means the common stock of the Company, par value $0.0001 per
share, and any other common stock of the Company that may be issued from time to time.

     “Constructive Transfer” shall mean, with respect to any Voting Security, (i) a short
sale with respect to such security, (ii) entering into or acquiring an offsetting derivative
contract with respect to such security, (iii) entering into or acquiring a futures or forward
contract to deliver such security or (iv) entering into any other hedging or other derivative
transaction that has the effect of materially changing the economic benefits and risks of ownership
but, in the case of each of (i) through (iv), only to the extent that any of the foregoing results,
or would result upon settlement, in a transfer of voting power with respect to such a Voting
Security.

     “Cornerstone” has the meaning set forth in the preamble hereto.

     “Covered Security” means the Series A Special Stock, any equity securities issued as a
dividend or distribution thereon, and any equity securities of the Company issued upon conversion
or exercise of any of the foregoing, including any shares of Company Common Stock issued upon
conversion, if any, of the Series A Special Stock.

     “De Minimis Transfers” means Transfers not to exceed an aggregate of 100,000 shares of
Series A Special Stock and/or shares of Company Common Stock.

     “Demand Notice” has the meaning set forth in Section 4(a)(i).

     “Demand Offering” has the meaning set forth in Section 4(a)(i).

     “Effective Time” has the meaning set forth in the Merger Agreement.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder.

     “Excluded Distribution” means any distribution or dividend of Series A Special Stock
or
Company Common Stock by any Knowledge Universe Stockholder to any member, partner or other
equity holder that is not an Affiliate of any Knowledge Universe Stockholder, but only if such
distribution or dividend occurs after January 1, 2011.

     “Governmental Entity” means any (a) province, region, state, county, city, town,
village, district or other jurisdiction; (b) federal, provincial, regional, state, local,
municipal, foreign or other governmental or transnational institution; (c) governmental authority
or instrumentality of

3

 

any nature (including any governmental or administrative agency, branch,
bureau, department or other entity and any court or other tribunal); (d) official of any of the
foregoing; or (e) applicable national securities exchange or national quotation system on which
securities issued are listed or quoted.

     “Group” has the meaning assigned to it in Section 13(d)(3) of the Exchange Act.

     “Holdings” has the meaning set forth in the preamble hereto.

     “Indebtedness” means any indebtedness of the Company or its Subsidiaries, whether or
not contingent, (i) in respect of borrowed money or (ii) evidenced by bonds, notes, debentures or
similar instruments. In addition, the term “Indebtedness” includes all (A) Indebtedness of others
secured by a lien on any asset of the specified Person (whether or not such Indebtedness is assumed
by the specified Person), (B) to the extent not otherwise included, any guarantee by the specified
Person of any Indebtedness of any other Person, and (C) except in connection with a merger,
acquisition or other similar transaction the consummation of which does not adversely affect the
Company’s obligations under Section 6(a) below, (x) Indebtedness of any other Person
existing at the time such other Person is merged with or into or became a Subsidiary of such
specified Person, and (y) Indebtedness secured by a lien encumbering any asset acquired by such
specified Person.

     “Indemnified Party” has the meaning set forth in Section 4(f)(iii).

     “Indemnifying Party” has the meaning set forth in Section 4(f)(iii).

     “Inspectors” has the meaning set forth in Section 4(b)(i)(9).

     “KCDL” has the meaning set forth in the preamble hereto.

     “Knowledge Universe Group” means (i) Holdings, (ii) LG, (iii) Knowledge Universe
Learning Group LLC, (iv) LGP, (v) Hampstead Associates, L.L.C., (vi) Cornerstone, (vii) KI, (viii)
Ridgeview Associates, LLC and (ix) any other Affiliate of any of the foregoing.

     “Knowledge Universe Stockholders” means Stockholders who are members of the Knowledge
Universe Group.

     “KI” has the meaning set forth in the preamble hereto.

     “Law” means any applicable foreign, United States federal, state or local law, rule or
regulation.

     “LG” has the meaning set forth in the preamble hereto.

     “LGP” has the meaning set forth in the preamble hereto.

     “Lock Up Period” means the 180 calendar days following the Closing Date.

     “Losses” has the meaning set forth in Section 4(f)(i).

4

 

     “Merger Agreement” has the meaning set forth in the recitals hereto.

     “Mergers” has the meaning set forth in the Merger Agreement.

     “NYSE” means the New York Stock Exchange.

     “Parent Indemnified Parties” has the meaning set forth in the Merger Agreement.

     “Party” has the meaning set forth in the preamble hereto.

     “Permitted Transferee” means with respect to any Stockholder, as applicable, (i) a
spouse or lineal descendant (whether natural or adopted), sibling, parent, heir, executor,
administrator, testamentary trustee, lifetime trustee or legatee of such Stockholder, or any
corporation, partnership, limited liability company or other entity all of the beneficial ownership
interests of which are held by one or more of the foregoing Persons, (ii) any trust, the trustees
of which include only Persons named in clause (i) and the beneficiaries of which include only the
Stockholder and one or more Persons named in clause (i), and the beneficiary or beneficiaries
authorized or entitled to receive distributions from any such trust, or (iii) any other Affiliate
of the Stockholder.

     “Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a Governmental Entity or any department, agency or political subdivision thereof.

     “Proceeding” means an action, claim, suit, investigation or proceeding (including,
without limitation, and investigation or partial proceeding, such as a deposition), whether
commenced or known to the Company to be threatened.

     “Prospectus” means the prospectus included in any Registration Statement (including,
without limitation, a prospectus that discloses information previously omitted from a prospectus
filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated
pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to any such prospectus,
including post-effective amendments, and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such prospectus.

     “Records” has the meaning set forth in Section 4(b)(i)(9).

     “Redemption Default” has the meaning set forth in Section 6(b)(i).

     “Redemption Default Payment” has the meaning set forth in Section 6(b)(i).

     “Redemption Default Period” has the meaning set forth in Section 6(b)(i).

     “Registrable Securities” means all (i) shares of Company Common Stock issued or
issuable pursuant to the conversion of Series A Special Stock or paid as a dividend or stock split
with respect thereto, or (ii) if all shares of Company Common Stock have been issued upon

5

 

conversion of the Series A Special Stock, shares of Company Common Stock held by any Stockholder
who is member of the Knowledge Universe Group prior to the Closing Date in an amount not greater
than the amount of shares of Company Common Stock contemplated by clause (i) then held by members
of the Knowledge Universe Group; provided, however, that as to any Company Common
Stock constituting Registrable Securities, such stock will cease to be Registrable Securities when
(x) they have been effectively registered or qualified for sale by a Prospectus filed under the
Securities Act and disposed of in accordance with the Registration Statement covering therein, (y)
they have been sold to the public pursuant to Rule 144 or Rule 145 promulgated pursuant to the
Securities Act or other exemption from registration under the Securities Act, or (z) they have been
acquired by the Company or any of its Subsidiaries. For avoidance of doubt, in no event shall the
amount of Registrable Securities exceed the number of shares of Company Common Stock issued to be
issuable pursuant to the conversion of Series A Special Stock or paid as a dividend or stock split
with respect thereto.

     “Registration Statement” means any registration statement of the Company that covers
Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including pre- and post-effective
amendments, and all exhibits and all material incorporated by reference in such registration
statement.

     “Schedule of Stockholders” means the list of Stockholders set forth on the schedule of
stockholders, attached as Exhibit A hereto.

     “SEC” means the United States Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended from time to time, and
the rules promulgated thereunder.

     “Series A Redemption Price” has the meaning set forth in the Certificate of
Designations.

     “Series A Special Stock” has the meaning set forth in the recitals hereto.

     “Shelf Registration”
has the meaning set forth in the Merger Agreement.

     “Standstill Termination Date” means the earliest to occur of (i) the first anniversary
of the Closing Date; (ii) the fifth Business Day after the date on which the Board publicly
announces its intention to solicit an Acquisition Proposal with respect to the Company (other than
an issuance of securities), or publicly approves, accepts, authorizes or recommends to the Company
stockholders the approval of an Acquisition Proposal with respect to the Company (other than an
issuance of securities), but only if prior to such fifth Business Day the Company has not offered
to Stockholders who are members of the Knowledge Universe Group that they may make a confidential
proposal to the Board regarding the same form of Acquisition Proposal, which the Stockholders will
agree to not disclose to any other Person (other than their Affiliates); and (iii) the fifth
Business Day after the date on which the Company publicly announces that it has entered into a
definitive agreement with any party (other than a wholly-owned Subsidiary) providing for an
Acquisition Proposal with respect to the Company, but only if prior to such fifth Business Day the
Company has not offered to Stockholders who are members of the Knowledge

6

 

Universe Group that they
may make a confidential proposal to the Board regarding the same form of Acquisition Proposal,
which the Stockholders will agree to not disclose to any other Person (other than their
Affiliates).

     “Stockholder Approval” has the meaning set forth the Merger Agreement.

     “Stockholders” has the meaning set forth in the preamble hereto. Each Stockholder is
individually referred to as a “Stockholder”. A Stockholder shall also include any counter-party
who has entered into a Supplemental Stockholders Agreement as a contemplated hereby.

     “Subsidiary” or “Subsidiaries” means, with respect to any Person of which (i)
if a corporation, a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company,
partnership, association or other business entity (other than a corporation), a majority of
partnership or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination
thereof and for this purpose, a Person or Persons owns a majority ownership interest in such a
business entity (other than a corporation) if such Person or Persons shall be allocated a majority
of such business entity’s gains or losses or shall be or control any managing director or general
partner of such business entity (other than a corporation).

     “Supplemental Stockholders Agreement” means an agreement with the Company that is
substantially identical to this Agreement, but which binds the counter-party thereto only to
such restrictions and obligations, and which entitles such counter-party thereto only to those
rights, which apply to such counter-party based on such Person’s identity and status contemplated
hereby (including as a Block Transferee or Permitted Transferee), the Transfer giving rise to such
Supplemental Stockholders Agreement and the date on which such Transfer occurs. A Supplemental
Stockholders Agreement shall only be deemed to have been executed for purposes of this Agreement
when it has been executed and delivered by the Company and such counter-party.

     “Surviving Entity” has the meaning set forth in the Merger Agreement.

     “Suspension Event” means any of the following: (i) the post-effective receipt from
the SEC of any request for amendments or supplements to, additional information in respect of, or
other comments to, any Registration Statement or Prospectus included therein; (ii) the issuance by
the SEC, any state securities commission or any other Governmental Entity of any stop order or
other order or injunction suspending the effectiveness of the Registration Statement, or the
initiation of any proceedings for that purpose; (iii) the receipt by the Company or its legal
counsel of any notification with respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) (A) the occurrence or existence of any pending corporate development with respect to
the Company or (B) the happening of any event that, in either case, requires the Company to make
changes in a Registration Statement or Prospectus in order that such Registration Statement or
Prospectus does not contain an untrue statement of a material fact nor omit to state

7

 

a material
fact required to be stated therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not misleading; or (v) the
good faith determination by the Board that it would be seriously detrimental to the Company for
sales of Registrable Securities pursuant to the Registration Statement or the activities with
respect thereto to be undertaken for a certain period of time.

     “Suspension Period” has the meaning set forth in Section 4(d)(i).

     “Total Voting Power” means, at any time, the total number of votes then entitled to be
cast by the holders of the outstanding shares of Series A Special Stock, Company Common Stock and
any other Voting Securities; provided, however, that, solely for purposes of
computing the Total Voting Power, (A) shares of Series A Special Stock shall be considered
outstanding Voting Securities and (B) any other securities convertible into or exercisable or
exchangeable for Voting Securities shall be considered outstanding Voting Securities to the extent
that such underlying security(ies) would be Beneficially Owned at that time.

     “Transaction Document” has the meaning set forth in the Merger Agreement.

     “Transfer” means a sale, transfer, hypothecation, negotiation, pledge, assignment,
encumbrance, grant of any option, warrant or other right to purchase, or otherwise disposition, or
entering into any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, of the economic consequence of ownership of the Series A Special
Stock or Company Common Stock. For purposes of Section 3(c), a Transfer shall also include
a Constructive Transfer.

     “Transfer Restriction Termination Date” means the earlier of the (a) first
(1st) anniversary of the Closing Date and (b) the date on which the aggregate number of
shares of Company Common Stock Beneficially Owned by the Knowledge Universe Stockholders or any
other Stockholder who has executed a Supplemental Stockholders Agreement pursuant to Section
3, individually or in the aggregate, is less than ten percent (10%) of the Total Voting Power
as of such date.

     “Underwriter” means, with respect to any Underwritten Offering, a securities dealer
who purchases any Registrable Securities as a principal in connection with a distribution of such
Registrable Securities and not as part of such dealer’s market-making activities.

     “Underwritten Offering” means a public offering of securities registered under the
Securities Act in which an Underwriter, placement agent or other intermediary participates in the
distribution of such securities.

     “Voting Agreement” means the Voting Agreement, dated as of the date hereof, by and
among the Company, LG and certain other members of the Knowledge Universe Group.

     “Voting Securities” means any securities of the Company entitled, in the ordinary
course, to vote generally in the election of directors and not solely upon the occurrence and
during the continuation of certain specified events.

8

 

     2. Standstill. Except as expressly provided in this Agreement or as otherwise requested or
consented to by the Company in writing, each Knowledge Universe Stockholder and each Block
Transferee who has executed a Supplemental Stockholders Agreement (including a Permitted Transferee
thereof) covenants and agrees that, from and after the date hereof until the Standstill Termination
Date, such Stockholder shall not, and shall cause each of its Affiliates not to, directly or
indirectly:

     (a) acquire, offer to acquire, or agree to acquire, by purchase, gift or otherwise, directly
or indirectly, the Beneficial Ownership of any additional securities of the Company such that,
after giving effect to such acquisition, the Knowledge Universe Stockholders and any Block
Transferee who has executed a Supplemental Stockholders Agreement pursuant to Section 3,
individually or in the aggregate, would have Beneficial Ownership equal to or greater than
thirty-five percent (35%) of the Total Voting Power (including after giving effect to the shares of
Company Common Stock Beneficially Owned by the Knowledge Universe Group as of the date hereof),
except pursuant to a stock split, stock dividend, rights offering, recapitalization,
reclassification or similar transaction;

     (b) make, or in any way participate, directly or indirectly, in any “solicitation” of
“proxies” to vote (as such terms are defined in Rule 14a-1 under the Exchange Act), or consent of,
any holders of any securities of the Company, except as provided in the Merger Agreement;

     (c) form, join, encourage or in any way participate in the formation of, any “person” or
“group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to any Voting
Securities, except (i) to the extent any such group could be deemed formed with respect to this
Agreement or any conduct by Stockholders contemplated hereunder and/or (ii) for any “group”
consisting solely of the Knowledge Universe Stockholders, Permitted Transferees and/or any “person”
that is a member of the Knowledge Universe Group;

     (d) seek election to or seek to place a representative on the board of directors of the
Company (the “Board”) or seek removal of any member of the Board;

     (e) enter into or agree, offer, propose or seek to enter into, or otherwise be involved in or
part of, directly or indirectly, any Acquisition involving the Company or any of its Subsidiaries;

     (f) disclose or announce any intention, plan or arrangement to do any of the activities
contemplated by this Section 2;

     (g) seek or request to have the Company waive, amend or modify, or otherwise consent to any
action inconsistent with, any of the provisions contained in this Section 2; or

9

 

     (h) actively assist or finance any Person (including any other Stockholder other than such
Stockholders’ Affiliates) to do, or enter into any arrangements or understandings with any other
Person (including any other Stockholder other than such Stockholders’ Affiliates) with respect to,
any of the activities contemplated by this Section 2;

provided, however, (i) none of the foregoing shall prohibit or in any way limit (A)
any discussions or other communications between or among the Knowledge Universe Stockholders, their
Permitted Transferees and their respective Affiliates; or (B) any Knowledge Universe Stockholder or
their respective Affiliates from soliciting, offering, seeking to effect or negotiating with any
Person with respect to transfers of shares of Series A Special Stock or shares of Company Common
Stock permitted by Section 3 without taking other actions expressly prohibited hereby, and
(ii) none of the restrictions in this Section 2 will restrict or otherwise apply to any
Person who receives Series A Special Stock or Company Common Stock in an Excluded Distribution.

This Section 2 shall terminate and be of no further force or effect on the first day
following the Standstill Termination Date; provided, however, that such termination
shall not relieve any Party of liability for such Party’s breach of this Section 2 prior to
such termination.

     3. Lock Up; Transfer Restrictions.

     (a) Lock Up.

          (i) During the Lock Up Period, no Stockholder shall, or shall permit any of its Affiliates to,
Transfer any shares of Series A Special Stock or shares of Company Common Stock, except (A) to a
Permitted Transferee of such proposed transferor, (B) in a transaction approved by the Board, (C)
in a bona fide gift to any charitable organization, or (D) De Minimis Transfers.

          (ii) No share of Series A Special Stock or Company Common Stock shall be Transferred pursuant
to this Section 3(a) to any Permitted Transferee of the applicable Stockholder unless and
until such Permitted Transferee shall have executed a Supplemental Stockholders Agreement.

          (iii) This Section 3(a) shall terminate and be of no further force or effect on the
first day following the Lock Up Period; provided, however, that such termination
shall not relieve any Party of liability for such Party’s breach of this Section 3(a) prior
to such termination.

     (b) Block Transfer Restrictions.

          (i) From and after the Lock Up Period, no Knowledge Universe Stockholder or any other Block
Transferee executing a Supplemental Shareholders Agreement as contemplated by this Section
3 shall, or shall permit any of its Affiliates to, Transfer any shares of Series A Special
Stock or shares of Company Common Stock to any Person or Group (other than any member of the
Knowledge Universe Group who has executed a Supplemental Stockholders Agreement) that, to the
actual knowledge of such Person after reasonable inquiry,

10

 

Beneficially Owns or after such Transfer
would Beneficially Own more than 9.9% of the Total Voting Power (a “Block Transferee”);
provided, however, that this Section 3(b) shall not restrict or otherwise
apply to (A) the Transfer of securities to an Underwriter for distribution in any bona fide
underwritten distribution, (B) a Transfer to any Block Transferee who, concurrently with the
effectiveness of such Transfer, executes a Supplemental Stockholders Agreement, (C) a Transfer to
any Person who is not a Block Transferee, (D) any Transfer approved by the Board, or (E) De Minimis
Transfers.

          (ii) No share of Series A Special Stock or Company Common Stock shall be Transferred pursuant
to this Section 3(b) to any Affiliate of a Knowledge Universe Stockholder or any Block
Transferee unless and until such Affiliate or Block Transferee shall have executed a Supplemental
Stockholders Agreement.

          (iii) This Section 3(b) shall terminate and be of no further force or effect on the
first day following the Transfer Restriction Termination Date; provided, however,
that such
termination shall not relieve any Party of liability for such Party’s breach of this
Section 3(b) prior to such termination.

     (c) Restrictions in Support of Voting Agreement.

          (i) No Stockholder shall Transfer or engage in any Constructive Transfer of any Voting
Security (not including the Series A Special Stock) or other security that is exercisable or
convertible (whether or not such exercise or conversion right is vested or exercisable) into a
Voting Security except for any Transfer (A) to any Person who is also a stockholder party to the
Voting Agreement, (B) to any other Person if such Person, prior to or concurrently with such
Transfer, shall have executed (x) a Supplemental Stockholders Agreement and (y) an agreement with
the Company that is substantially identical to the Voting Agreement, or (C) that is a De Minimis
Transfer.

          (ii) This Section 3(c) shall terminate and be of no further force or effect on the
first to occur after the Closing Date of (x) the Parent Stockholders’ Meeting (as defined in the
Merger Agreement) at which the Stockholder Approval is considered and voted upon or (y) the first
anniversary of the Closing Date.

     (d) Transfer in Violation Null and Void. Any attempt by any Stockholder or any of its
Affiliates to Transfer any share of Series A Special Stock or Company Common Stock not in
compliance with this Section 3 shall be null and void, and the Company shall be permitted
to cause any transfer agent not to give effect in the Company’s stock records to any such attempted
Transfer. Each Stockholder hereby agrees to authorize and permit the Company to notify its
transfer agent that this Agreement places limits on the transfer of such shares.

     (e) Non-Exclusive Limitation. The restrictions on Transfer set forth in this
Section 3 shall be in addition to any other limitation on the Transfer of any security
contemplated by the Merger Agreement.

     (f) Exclusion for Distributions to Non-Affiliates. Notwithstanding anything in this
Agreement to the contrary, none of the restrictions in this Section 3 will restrict or
otherwise

11

 

apply to (i) an Excluded Distribution or (ii) any subsequent Transfer by a Person who
received Series A Special Stock or Company Common Stock in an Excluded Distribution.

     4. Registration Rights.

     (a) Registration.

          (i) Demand. At any time and from time to time from after the later of (x) the
expiration of the Lock Up Period or (y) the receipt of the Stockholder Approval one or more
Stockholders holding a majority in interest of the Registrable Securities held by all Stockholders
may request that the Company effect the registration of all or any part of the Registrable
Securities held by the Stockholders in an Underwritten Offering by the Stockholders (a “Demand
Offering”) by giving written notice to the Company of such demand (a “Demand Notice”).
Each Demand Notice shall specify the number of shares of Registrable Securities proposed to be sold
and the intended method of disposition thereof. Within ten (10) Business Days after the receipt of
any Demand Notice, the Company will notify each other Stockholder who did not initially join in
such request. Within ten days after receipt of such notice from the Company, any such Stockholder
may request in writing that some or all of its Registrable Securities be included in such Demand
Offering, and the Company shall include in the Demand Offering the Registrable Securities of each
such Stockholder requested to be so included, subject to the other terms and conditions set forth
herein.

          (ii) As soon as reasonably practicable, but in no event later than 60 days after receipt of
the Demand Notice given in accordance with Section 4(a)(i) except as otherwise provided in
herein, the Company shall file a Registration Statement with the SEC with respect to the
Registrable Securities required to be included therein as provided in Section 4(a)(i) and
shall use its commercially reasonable efforts to effect the Demand Offering as expeditiously as
possible; provided, however, that (A) the Company shall not be obligated to effect
a Demand Offering pursuant to this Section 4(a): (1) more than once in any 9-month period
and (2) more than two times in the aggregate and (B) the Registrable Securities for which a Demand
Offering has been requested (including, for this purpose, Registrable Securities that
non-initiating Stockholders request be included in such Demand Offering in accordance with the last
sentence of Section 4(a)(i)) shall not be less than the lesser of (x) 750,000 Registrable
Securities and (y) the total amount of Registrable Securities then-outstanding.

          (iii) Underwriter. The Stockholder delivering the Demand Notice will select the lead
Underwriter and any additional Underwriters in connection with the applicable Demand Offering with
the consent of the Company (such consent not to be unreasonably withheld or delayed). The right of
any Stockholder to participate in a Demand Offering pursuant to this Section 4(a) will be
conditioned upon such Stockholder’s participation in such underwriting and the inclusion of such
Stockholder’s Registrable Securities in the underwriting, and each such Stockholder will enter into
an underwriting agreement in customary form with the Underwriter or Underwriters selected for such
underwriting. If any Stockholder disapproves of the terms of the underwriting, such Stockholder
may elect to withdraw therefrom by written notice to the Company, the managing Underwriter and the
other Stockholders participating in the Demand Offering as provided in Section 4(a)(iv).

12

 

          (iv) Withdrawal of Offering. The Stockholders holding a majority of the Registrable
Securities to be included in the Demand Offering will be permitted to rescind a Demand Notice and
any Stockholder may request the removal of any Registrable Securities held by them from any Demand
Offering at any time prior to the effectiveness of the Demand Offering; provided that, if
such Stockholders rescind a Demand Notice, no Stockholder may deliver a Demand Notice for 6 months
following such rescission and the Stockholders shall be required to reimburse the Company for all
costs and expenses incurred by the Company in connection with the Demand Offering contemplated by
the rescinded Demand Notice.

          (v) Reductions in Securities to be Registered. Notwithstanding the foregoing, if the
lead Underwriter in any Demand Offering advises the Company or any Stockholder in writing that in
its reasonable opinion, the number of shares of Company Common Stock (including any Registrable
Securities) that the Company, the Stockholders and any other Persons intend to include in any
Registration Statement is such that the success of any such offering would be materially and
adversely affected, including the price at which the securities can be sold or the number of
Registrable Securities that any participant may sell, then the number of shares of Company Common
Stock to be included in the Registration Statement will be so included in the following order of
priority: (1) first, Registrable Securities of the Stockholders, pro rata on the basis of the
aggregate number of Registrable Securities owned by each such Stockholder, (2) second, Registrable
Securities of the Company that have been requested to be so included, and (3) third, any securities
any other Person included, pro rata on the basis of the aggregate number of shares of Company
Common Stock owned by each such Person, in each case as necessary to reduce the total number of
securities to be included in any such registration statement to the number recommended by such lead
Underwriter; provided, that the number of Registrable Securities held by the Stockholders
to be included in any Demand Offering shall not be reduced unless all other securities are first
entirely excluded from such Demand Offering.

     (b) Registration Procedures.

          (i) In connection with, and subject to the limitations of, the Company’s registration
obligations hereunder, from and after the delivery of a Demand Notice (until properly rescinded as
provided hereby), other than in the case of clause (1) below (which shall occur at the time
provided therein), the Company shall use its reasonable best efforts (unless a different standard
is provided below) to:

               (1) (A) on or as soon as practicable after the later of (x) the expiration of the Lock Up
Period or (y) the receipt of the Stockholder Approval, file a supplemental application for the
listing of the Registrable Securities (determined without regard to any unknown dividend or stock
split) on the NYSE and authorization for quotation on the NYSE of all Registrable Securities
(determined without regard to any unknown dividend or stock split), in each case, to the extent
such Registrable Securities are not already listed and authorized for quotation on the NYSE and (B)
use its commercially reasonable efforts to cause the supplemental listing application to be
approved as soon as practicable thereafter, but in any event
no later than the effective date of any Registration Statement used to effect a Demand
Offering;

               (2) no fewer than five (5) Business Days prior to the initial filing of a Registration
Statement or Prospectus and no fewer than three (3) Business Days prior to the

13

 

filing of any
amendment or supplement thereto (other than any document that would be incorporated or deemed to be
incorporated therein by reference), furnish to the Stockholders copies of all such documents
proposed to be filed (including, without limitation, at least one conformed copy of the
Registration Statement and each amendment thereto, including financial statements (but excluding
schedules, all documents incorporated or deemed to be incorporated therein by reference and all
exhibits)), which documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review and comment of the Stockholders;

               (3) (A) use its commercially reasonable efforts to prepare and file with the SEC such
amendments, including post-effective amendments, to the Registration Statement as may be reasonably
necessary to keep such Registration Statement effective until the completion of the Demand Offering
to which such Registration Statement relates (including the completion of sales to the Underwriters
pursuant to any “greenshoe” or over-allotment option), except as otherwise contemplated by this
Agreement, (B) cause the related Prospectus to be supplemented by any required Prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424 promulgated under the
Securities Act, and (C) respond as promptly as reasonably practicable to any comment from the SEC
with respect to the Registration Statement and, at the request of any Stockholder, as promptly as
reasonably practicable, provide such Stockholder true and complete copies of all correspondence
from and to the SEC relating to the Registration Statement;

               (4) promptly notify the Stockholders of any Suspension Event;

               (5) use its reasonable efforts to avoid the issuance of, or if issued, to obtain the
withdrawal of, any order enjoining or suspending the use or effectiveness of the Registration
Statement, or to obtain the lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment;

               (6) deliver, without charge, to the Stockholders as many copies of the Prospectus or
Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as the
Stockholders reasonably request;

               (7) prior to any public offering of Registrable Securities, (A) use its reasonable efforts to
register, qualify or cooperate with the Stockholders in connection with the registration or
qualification (or exemption from such registration or qualification) of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions within the United
States as is reasonably requested in writing, and (B) keep each
such registration or qualification (or exemption therefrom) effective during the period such
registration statement is required to be kept effective and do any and all other acts or things
necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by
the registration statement; provided, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified or to take any
action that would subject it (x) to general service of process in any such jurisdiction where it is
not then so subject or (y) to any tax in any such jurisdiction where it is not then so subject;

14

 

               (8) use commercially reasonable efforts to (A) enter into customary agreements and (B) take
such other actions as are reasonably requested by the Stockholders in order to expedite or
facilitate the disposition of such Registrable Securities, including, if applicable, preparing for
and participating in a “road show,” seeking to obtain and deliver to each Underwriter and
Stockholder a comfort letter from the independent registered public accounting firm for the Company
and other customary selling efforts as the Underwriters or the Stockholders reasonably request in
order to expedite or facilitate such disposition;

               (9) make available for inspection by the Stockholders, any Underwriter participating in any
disposition of such Registrable Securities, and any legal counsel, accountant or other agent
retained by any Stockholder or Underwriter (collectively, the “Inspectors”), all financial
and other records, pertinent corporate documents and properties of the Company then in the
possession of the Company (collectively, the “Records”) as will be reasonably necessary to
enable them to conduct reasonable due diligence investigation with respect to the Company and the
related Registration Statement and prospectus, and cause the employees, agents and representatives
of the Company and its Subsidiaries to supply all information reasonably requested by any such
Inspector, in each case during reasonable business hours and in a manner so as to not be
unreasonably disruptive to the business of the Company; provided, however, that (w)
the Company shall not be obligated to provide any Records or other information to any Inspector who
has not executed a confidentiality agreement in a form reasonably acceptable to the Company, (x)
Records and information obtained hereunder will be used by such Inspector only to conduct such due
diligence, (y) Records or information that the Company determines, in good faith, to be
confidential or competitively sensitive will not be required to be disclosed to such Inspector
unless (A) the disclosure of such Records or information is necessary to avoid or correct a
material misstatement or omission in a Registration Statement or related Prospectus or (B) the
release of such Records or information is ordered by a Governmental Entity and (z) the foregoing
shall not require the Company to provide any Records or information if doing so (A) may result in a
waiver or breach of any attorney/client privilege or other privilege of the Company, or (B) could
reasonably be expected to result in violation of an applicable Legal Requirement; and

               (10) in connection with any Demand Offering, enter into a commercially reasonable written
agreement with each Underwriter selected in the manner herein provided in such form and containing
such provisions as are customary in the securities business for such an arrangement between such
Underwriter and companies of the Company’s size and
investment stature in the context of an Underwritten Offering of a selling stockholder and, to
the extent practicable, on terms consistent with underwriting agreements entered into by the
Company in the past if applicable; provided, however, that the Company shall not be
obligated to enter into such underwritten agreement unless each participating Stockholder has
completed and executed all such other documents customary in similar offerings, including any
reasonable questionnaires, powers of attorney, holdback agreements, letters and other documents
customarily required under the terms of such underwriting arrangements.

     (c) Conditions to Offerings. The obligations of the Company to take the actions
contemplated by this Section 4 with respect to a Demand Offering will be subject to the
following conditions:

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          (i) The Company may require the Stockholders as to which any registration is being effected to
furnish to the Company such information regarding the such Stockholder and/or the distribution of
such Registrable Securities as the Company may from time to time reasonably require for inclusion
in a Registration Statement, but, in each case, only as it determines in good faith is required by
the Securities Act or under state securities or blue sky laws; and the Company may exclude from
such registration the Registrable Securities of any Stockholder who fails to furnish such
information within a reasonable time after receiving such request and may delay any filing or
taking of action required by this until such information is provided;
and

          (ii) In any Demand Offering, the participating Stockholders will enter into an underwriting
agreement in accordance with Section 4(b)(i)(10) above with the Underwriter(s) selected for
such underwriting, and in any event shall execute and provide such other documents customary in
similar offerings or otherwise required by this Section 4.

     (d) Blackout Period.

          (i) The Company’s obligations pursuant to Section 4(a), Section 4(b) and
Section 4(c) hereof will be suspended upon the occurrence of any Suspension Event;
provided, that (x) any all such suspensions will not exceed seventy-five (75) calendar days
in the aggregate in any consecutive 12-month period; but provided further that such
number of days shall be increased thereafter by the number of days for which the Company has used
its reasonable best efforts to eliminate Suspension Events caused by events outside of its ability
to control, and (y) the Company shall not register any securities for its own account or that of
any other stockholder during such period other than (1) a registration relating to the sale of
securities to employees of the Company or a Subsidiary pursuant to a stock option, stock purchase,
or similar plan; (2) a registration relating to a “SEC Rule 145 transaction”; and/or (3) any
registration statement that relates to the underlying cause of any such Suspension Event (the
period during which such obligations are suspended is referred to herein as a “Suspension
Period”).

          (ii) From and after the delivery of a Demand Notice (until properly rescinded
as provided herein), the Company will promptly give each Stockholder written notice of any
Suspension Event, containing the approximate length of the anticipated delay, and will notify each
Stockholder upon the termination of any Suspension Period.

          (iii) Each Stockholder agrees that upon receipt of any notice from the Company of the
occurrence of a Suspension Event, such Stockholder will immediately discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus until it is advised in
writing by the Company that the use of the Prospectus may be resumed.

     (e) Registration Expenses.

          (i) Except as otherwise provided herein, with respect to the first Demand Offering, all fees
and expenses incident to the Company’s performance of or compliance with its obligations under this
Section 4 (excluding any underwriting discounts and selling commissions) will be borne by
the Company whether or not any Registration Statement is filed or becomes

16

 

effective and whether or
not any securities are issued or sold pursuant to any Registration Statement. The fees and
expenses referred to above shall include (1) all registration and filing fees (including fees and
expenses (x) with respect to filings required to be made with the Financial Industry Regulatory
Authority, Inc. and (y) in compliance with federal or state securities laws), (2) reasonable and
customary printing expenses (including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with The Depository Trust Company and of
printing or reproducing Prospectuses), (3) fees, disbursements and expenses of counsel for the
Company, (4) Securities Act liability insurance, if the Company desires such insurance, (5) fees
and expenses of all other Persons retained by the Company (including the fees and expenses charged
by the Company’s independent registered public accounting firm for providing any comfort letter)
and (6) fees of transfer agents and registrars. With respect to the second Demand Offering, the
expenses referenced above in this Section 4(a)(i) shall be borne severally by the Stockholders
selling Registrable Securities therein in proportion to the Registrable Securities so sold.

          (ii) The Stockholders shall bear, and shall reimburse the Company for, (1) any underwriting
discounts and selling commissions applicable to Registrable Securities offered for the Stockholders
respective accounts pursuant to any Registration Statement, (2) any other costs and expenses
incurred by the Stockholders in connection with the performance of and compliance with their
obligations under this Section 4, (3) any other expenses required by a Legal Requirement to
be paid as a selling stockholder, (4) any other costs or expenses of any of the Stockholders,
including the fees, disbursements and expenses of legal counsel, the Underwriters and any of its
counsel, (5) any transfer taxes applicable to the sale of Registrable Securities hereunder, (6) any
costs and expenses incurred by any person in connection with any “road show” or other selling
efforts requested by the Stockholders, and (7) any fees and expenses to be borne by the Stockholder
as contemplated by any provision of this Section 4.

     (f) Indemnification.

          (i) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Stockholder and its officers,
directors, agents, partners, members, stockholders and employees of each of them, each Person who
controls any such Stockholder (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable Legal Requirement, from and against any and
all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of Prospectus (including,
without limitation, any “issuer free writing prospectus” as defined in Rule 433 promulgated under
the Securities Act) or in any amendment or supplement thereto or in any preliminary Prospectus, or
arising out of or relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any Prospectus or form
of Prospectus (including, without limitation, any “issuer free writing prospectus” as defined in
Rule 433 promulgated under the Securities Act) or supplement thereto, in light of the circumstances
under which they were made) not misleading, except to the extent, but only to the extent, that such
untrue statements, alleged untrue statements, omissions or

17

 

alleged omissions are based upon
information regarding or provided by any Stockholder, any of its related persons or any
Underwriter, broker-dealer or selling agent for use therein.

          (ii) Indemnification by Stockholders. Each Stockholder shall, notwithstanding any
termination of this Agreement, severally and not jointly, indemnify and hold harmless the Company,
its directors, officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent permitted by
applicable Legal Requirements, from and against all Losses, as incurred, arising out of or relating
to any untrue or alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of Prospectus (including, without limitation, any “issuer
free writing prospectus” as defined in Rule 433 promulgated under the Securities Act), or in any
amendment or supplement thereto, or arising out of or related to any omission of a material fact
required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus, or any form of Prospectus (including, without limitation, any “issuer free writing
prospectus” as defined in Rule 433 promulgated under the Securities Act) or supplement thereto, in
light of the circumstances under which they were made) not misleading to the extent, but only to
the extent, that such untrue statements, alleged untrue statements, omissions or alleged omissions
are based solely upon information regarding or provided by such Stockholder, any of its related
persons, or any underwriter, broker-dealer or selling agent for use therein. In no event shall the
liability of any selling Stockholder hereunder be greater in amount than the dollar amount of the
net proceeds received by such Stockholder
upon the sale of the Registrable Securities giving rise to such indemnification obligation.

          (iii) Conduct of Indemnification Proceedings.

               (1) If any Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party may assume the defense thereof, including the employment of counsel reasonably satisfactory
to the Indemnified Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party

               (2) An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have received an opinion of counsel that there is a conflict of
interest if the same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the

18

 

Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party); provided that the Indemnifying Party shall not be liable for the fees
and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent shall not be unreasonably withheld. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of
any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability on claims that are
the subject matter of such Proceeding.

               (3) All fees and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section 4(f)) shall be paid to the Indemnified Party, as
incurred, promptly upon receipt of written notice thereof to the Indemnifying Party;
provided that the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder.

               (4) In all cases, the Indemnified Party and the Indemnifying Party shall provide the other
with reasonable cooperation in defense of claims or litigation and all aspects of any
investigation, defense, pretrial activities, trial, compromise, settlement or discharge at the cost
and expenses of the Indemnifying Party, including, but not limited to, by providing the other party
with reasonable access to books, records, employees and officers (including as witnesses) of the
party and its Affiliates.

          (iv) The indemnity agreements contained in this Section 4(f) are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties and are not in
diminution or limitation of the indemnification provisions under the Merger Agreement.

     (g) Facilitation of Sales Pursuant to Rule 144. To the extent it shall be required to
do so under the Exchange Act, the Company shall use its commercially reasonable efforts to
(i) timely file the reports required to be filed by it under the Exchange Act or the Securities Act
(including the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 promulgated under the Securities Act), and (ii) take such further action as any
Stockholder may reasonably request, all to the extent required from time to time to enable the
Stockholders to sell Registrable Securities without registration under the Securities Act within
the limitations of the exemption provided by Rule 144 promulgated under the Securities Act. Upon
the request of any Stockholder in connection with that Stockholder’s sale pursuant to Rule 144
promulgated under the Securities Act, the Company shall deliver to such Stockholder a written
statement as to whether it has complied with such requirements.

     (h) Assignment of Registration Rights; Eligible Stockholders. The registration rights
under this Section 4 will be deemed to have been validly assigned (together with all
related obligations under this Section 4) upon the occurrence of both of (i) a Transfer of
Registrable Securities in compliance with this Agreement by a Stockholder to a Person who, after
such Transfer, Beneficially Owns at least 50,000 shares of Registrable Securities (subject to

19

 

appropriate adjustment for stock splits, stock dividends, combinations, and other
recapitalizations) and (ii) the execution by such Person of a Supplemental Stockholders Agreement.
No such assignment will result in the elimination of registration rights in favor of the
Stockholder effecting such Transfer to the extent that, after such Transfer, such Stockholder
continues to hold Registrable Securities. Notwithstanding anything to the contrary set forth in
this Section 4, no Stockholder executing a Supplemental Stockholders Agreement hereto other
than those contemplated by clause (i) of this Section 4(h) shall have any rights under this
Section 4. Except as set forth in this Section 4(h), the registration rights under
this Section 4 may not be assigned without the Company’s consent, which may be given or
withheld in its sole discretion.

     (i) Termination. The obligations of the Company under this Section 4 (other
than those obligations pursuant to Section 4(f), which shall survive) shall terminate and
be of no further force or effect on the first to occur of (i) the 5-year anniversary of the Closing
Date, (ii) the date on which the second Demand Offering has been completed, or (iii) the date on
which there shall cease to be any outstanding Registrable Securities held by any Knowledge Universe
Stockholder or any other Stockholder who has executed a Supplemental Stockholders Agreement
and has registration rights pursuant to Section 4(h), including upon the redemption of all
shares of Series A Special Stock or following a Reorganization Event (as defined in Certificate of
Designations) in which the Series A Special Stock or Company Common Stock shall cease to be
outstanding and registered pursuant to Section 12(b) or 12(g) of the Exchange Act;
provided, however, that such termination shall not relieve any Party of liability
for such Party’s breach of this Section 4 prior to such termination, and any obligation of
any Party to pay any expenses contemplated by Section 4(e) shall survive until such
payments are made in full.

     5. Number and Availability of Authorized Shares.

     (a) Authorized Shares of Series A Special Stock. From time to time, to the extent
necessary to comply with its obligations under Section F.5 of the Certificate of Designations, the
Company shall amend the Certificate of Designations to increase the number of authorized shares
constituting the Series A Special Stock by further resolution duly adopted by the Board or any duly
authorized committee thereof stating that such increase has been so authorized.

     (b) Reserved for Issuance. The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Series A Special Stock such number of shares of Series
A Special Stock as shall from time to time be sufficient to comply with its obligations under
Section F.5 of the Certificate of Designations.

     6. Redemption; Failure to Redeem.

     (a) Redemption; Efforts to Comply.

          (i) Redemption. If Stockholder Approval is not obtained by the first (1st)
anniversary of the Closing Date, the Company will redeem the shares of Series A Special Stock as
and to the extent required by the Certificate of Designations following a valid request therefor by
a holder of Series A Special Stock.

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          (ii) Efforts to Comply. Without limiting the foregoing, the Company agrees that it
will not, nor will it permit any of its Subsidiaries to, enter into any contract (written or
otherwise) or other agreement that will expressly prohibit or, upon any default or breach thereof
(whether with or without notice or the passage of time or both), would expressly prohibit the
Company’s ability to redeem the Series A Special Stock as and to the extent required by the
Certificate of Designations. In addition, from and after the later to occur of (x) the date of the
Parent Stockholder Meeting (as defined in the Merger Agreement) if the Stockholder Approval is not
obtained at such meeting and (y) the ten-month anniversary of the Closing, but in no event
later than the first anniversary of the Closing Date, the Company agrees that (A) it will not,
nor will it permit any of its Subsidiaries to, take any action or refrain from taking any action
that, in any such case, would reasonably be expected to prohibit or materially limit the Company’s
ability to redeem the Series A Special Stock as and to the extent required by the Certificate of
Designations, other than with respect to ordinary course of business activities the absence of
which would significantly impair the value of the Company’s business, and (ii) it will take, and
will cause its Subsidiaries to take, commercially reasonable actions not prohibited by Legal
Requirements and which are reasonably necessary to facilitate the redemption of the shares of
Series A Special Stock as and to the extent required by the Certificate of Designations that may
occur following the first anniversary of the Closing, including, if and only to the extent
necessary to eliminate any capital deficit that might otherwise prohibit such redemption under
applicable Legal Requirements, by revaluing its and its Subsidiaries’ assets to reflect market
value and thereby eliminate any such capital deficit.

          (iii) Termination. The obligations of the Company under this Section 6(a)
shall terminate and be of no further force or effect on the first to occur of the Stockholder
Approval and the redemption of all shares of Series A Special Stock; provided,
however, that such termination shall not relieve any Party of liability for such Party’s
breach of this Section 6(a) prior to such termination.

     (b) Remedies Upon Redemption Default.

          (i) Redemption Default. If the Company fails to honor the redemption obligations set
forth in Section 6(a)(i) following a valid request therefor by a holder of Series A Special
Stock (such failure, a “Redemption Default”), including, for the avoidance of doubt, as a
result of the lack of funds legally available therefor or because such redemption is prohibited by
Legal Requirements, then each Stockholder holding Series A Special Stock with respect to which a
Redemption Default has occurred will be entitled to receive from the Company payments
(collectively, “Redemption Default Payments”) equal to the amount of the interest on the
applicable unpaid portion of the Series A Redemption Price payable for such shares of Series A
Special Stock determined in accordance with this Section 6(b). Redemption Default Payments
will initially be payable in cash at an annual rate of eight percent (8%), and the interest rate
payable on amounts due will increase by one percent per annum (1%) on each anniversary of the
Redemption Default. Redemption Default Payments shall be computed on the basis of a 360-day year
consisting of twelve 30-day months, shall accrue from the date of the applicable Redemption Default
until such Redemption Default has been cured and the applicable Redemption Default Payments paid in
full (such period, the “Redemption Default Period”), shall compound on a semi-annual basis,
and shall be payable in cash quarterly in arrears on each January 1, April 1, July 1 and October 1
following the applicable Redemption Default until paid

21

 

in full. Upon any Transfer of shares of
Series A Special Stock prior to the Stockholder Approval, the transferor Stockholder shall transfer
with such Series A Special Stock to the transferee any right it has to any Redemption Default
Payments with respect to such shares and agrees that it shall not seek any Redemption Default
Payments with respect to shares Transferred
by such Stockholder from the Company.

          (ii) Limitations on Certain Activities. During the pendency of any Redemption
Default, the Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly (1) declare or pay any dividend or make any other payment or distribution on account of
its securities (other than dividends or distributions from wholly-owned Subsidiaries), (2)
purchase, redeem or otherwise acquire or retire for value any of its or their securities (other
than as contemplated by the Merger Agreement), (3) purchase, redeem, defease or otherwise acquire
or retire for value prior to its maturity any Indebtedness of the Company or its Subsidiaries,
unless so doing eliminates a limitation on the redemption of the Series A Special Stock, (4) make
any capital investment other than capital investments the absence of which would significantly
impair the value of the Company’s business, (5) create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise, with respect to any
Indebtedness except (x) ordinary course letters of credit, performance bonds and other similar
credit support instruments that are necessary to maintain the normal operation of business or (y)
to the extent such Indebtedness is created, incurred or issued in connection with a substantially
concurrent redemption to cure an applicable Redemption Default in whole or in part, and/or (6)
issue any security of the Company or its Subsidiaries that, by its terms (or by the terms of any
security into which it is convertible, or for which it is exchangeable, in each case, at the option
of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, unless such maturity, redemption or other right shall be expressly
junior to the right of redemption of the holders of the Series A Special Stock.

     (c) Remedies; Maximum Damages. The rights to Redemption Default Payments shall be in
addition to any other rights available to each affected Stockholder (including pursuant to
Section 13). However, notwithstanding anything to the contrary set forth in this
Agreement, the Merger Agreement, the Certificate of Designations or any other Transaction Document,
the maximum aggregate liability of the Company or any of its Subsidiaries relating to or arising
out of the failure of the Company to redeem the Series A Special Stock as and to the extent set
forth in the Certificate of Designations shall be the sum of (i) the applicable redemption price
therefor, (ii) the amount of Redemption Default Payments contemplated by this Section 6 and
(iii) if applicable, Collection Costs; and upon payment thereof, neither the Company nor any of its
Subsidiaries shall have any further liability relating to or arising out of any such matter,
whether at law or equity, in contract, in tort or otherwise, relating to or arising therefrom. In
the event that (x) a Stockholder commences an action to recover any payment contemplated by this
Section 6 from and after the time that such Stockholder has validly requested redemption of
some or all of its Series A Special Stock and there has been a Redemption Default and (y) a court
of competent jurisdiction determines in such action that the Company has breached this Section
6, the Company shall be liable for, and shall pay to such Stockholder upon request, the
reasonable legal fees and expenses of legal counsel incurred by such Stockholder in connection with
enforcing such breach (“Collection Costs”).

22

 

     7. Representations and Warranties. Each Stockholder (as to himself, herself or itself
only) represents and warrants to the Company and each other Stockholder that:

     (a) each Stockholder is the record owner of the number of shares of Company Common Stock set
forth opposite such Stockholder’s name on the Schedule of Stockholders attached as Exhibit A
hereto, and Exhibit A accurately reflects the number of shares of Company Common Stock and Series A
Special Stock to be Beneficially Owned by such Stockholder as of the Closing Date;

     (b) this Agreement has been duly authorized, executed and delivered by each Stockholder and
constitutes the valid and binding obligation of each Stockholder, enforceable against such
Stockholder in accordance with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar Legal Requirement affecting creditors’ rights
generally and subject, as to enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law);

     (c) each Stockholder has not granted and is not a party to any proxy, voting trust or other
agreement which is inconsistent with, conflicts with or violates any provision of this Agreement;

     (d) the execution, delivery and performance by each Stockholder of this Agreement and the
consummation by each Stockholder of the transactions contemplated hereby will not, with or without
the giving of notice or lapse of time, or both, (i) violate any provision of a Legal Requirement to
which such Stockholder is subject, (ii) violate any order, judgment or decree applicable to such
Stockholder or (iii) conflict with, or result in a breach or default under, any term or condition
of any agreement or other instrument to which such Stockholder is a party or by which such
Stockholder or any of such Stockholder’s assets or properties is bound; and

     (e) except for the representations and warranties contained in this Agreement or in any other
Transaction Document, no Stockholder makes any express or implied representation or warranty in
respect or on behalf of such Stockholder or any of its Affiliates, and such Stockholder disclaims
any such representation or warranty, whether by the Stockholder or any of its officers, directors,
employees, agents or representatives or any other Person, with respect to the execution and
delivery of this Agreement or any other Transaction Document or the consummation of the
transactions contemplated hereby and thereby.

     8. Amendment and Waiver.

     (a) Except as otherwise provided herein, the provisions of this Agreement may be amended or
waived only upon the prior written consent of the Company and Stockholders
holding a majority in interests of the Series A Special Stock held by all Stockholders. The
Company will promptly deliver a copy of each such amendment to each Stockholder and each such
amendment shall be binding upon each Party hereto; provided that the failure to deliver a
copy of such amendment shall not impair or affect the validity of such amendment.

     (b) Except where a specific period for action or inaction is provided herein, neither

23

 

the
failure nor any delay on the part of any Party in exercising any right, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any Party of
any such right, power or privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise of any other such right,
power or privilege. The failure of a Party to exercise any right conferred herein within the time
required shall cause such right to terminate with respect to the transaction or circumstances
giving rise to such right, but not to any such right arising as a result of any other transactions
or circumstances.

     9. Severability. If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced as a result of any rule of law or public policy, all other terms and
other provisions of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated by this Agreement is not affected
in any manner materially adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that the transactions contemplated by this Agreement
are fulfilled to the greatest extent possible.

     10. Entire Agreement. This Agreement, including the Exhibits and Schedules hereto, along
with the Merger Agreement, the Voting Agreement and Certificate of Designations constitute the
entire agreement between the Parties and supersedes any prior understandings, agreements or
representations by or between the Parties, written or oral, to the extent that they relate in any
way to the subject matter hereof.

     11. Successors and Assigns. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors, permitted assigns,
heirs, executors and administrators of the Parties hereto. Except as otherwise expressly provided
herein, (i) no Stockholder may assign any of its rights or obligations hereunder without the prior
written consent of the Company and (ii) the Company may not assign any of its rights or obligations
hereunder without the prior written consent of Stockholders holding a majority in interest of
either the Series A Special
Stock held by all Stockholders, if outstanding, or the Registrable Securities held by all
Stockholders.

     12. Counterparts. This Agreement may be executed in multiple counterparts (including by
means of telecopied or electronic signature pages), any one of which need not contain the
signatures of more than one Party, but all such counterparts taken together shall constitute one
and the same instrument.

     13. Specific Performance. Each of the Parties acknowledges and agrees that the other
Parties would be irreparably damaged in the event that any of the terms or provisions of this
Agreement are not performed in accordance with their specific terms or otherwise are breached.
Therefore, each of the Parties hereby agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of any of the terms or provisions of this Agreement
and to enforce specifically the performance by such first Party under this Agreement, and each
Party hereby agrees to waive the defense in any such suit that the other Parties have an adequate
remedy at law and to interpose no opposition, legal or otherwise, as to the propriety of injunction

24

 

or specific performance as a remedy, and hereby agrees to waive any requirement to post any bond in
connection with obtaining such relief. The equitable remedies described in this Section 13
shall be in addition to, and not in lieu of, any other remedies at law or in equity that the
Parties may elect to pursue.

     14. Notices. All notices, requests, demands, claims 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; when transmitted if transmitted by facsimile
(with written confirmation of transmission); the Business 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 five (5) business days after the date mailed by certified or registered mail, postage
prepaid, if sent by certified or registered mail, return receipt requested. For the Stockholders,
such Stockholder’s address will be deemed to be the address indicated on the Schedule of
Stockholders, as indicated by the Company’s records, or such address or the attention of such other
Person as the recipient party has specified by prior written notice to the sending party. The
Company’s address as of the date hereof is:

K12 Inc.

2300 Corporate Park Drive

Herndon, VA 20171

Attention: General Counsel

Facsimile: (703) 483-7496

with a copy, which shall not constitute notice to the Company, to:

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attention: David Fox, Esq.

                 William B. Sorabella, Esq.

Facsimile: (212) 446-6460

Any Party may change the address to which notices, requests, demands, claims, and other
communications required or permitted hereunder are to be delivered by giving the other Party(ies)
notice in the manner herein set forth.

     15. Delivery by Facsimile or Email. This Agreement, the agreements referred to herein, and
each other agreement or instrument entered into in connection herewith or therewith or contemplated
hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by
means of a facsimile machine or email with scan or facsimile attachment, shall be treated in all
manner and respects as an original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered in person. At the
request of any Party hereto or to any such agreement or instrument, each other Party hereto or
thereto shall re-execute original forms thereof and deliver them to all other Parties. No Party
hereto or to any such agreement or instrument shall raise the use of a facsimile machine or email
to deliver a signature or the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine or email as

25

 

a defense to the formation or
enforceability of a contract, and each such Party forever waives any such defense.

     16. Governing Law; Consent to Jurisdiction. All matters relating to the interpretation,
construction, validity and enforcement of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of laws of any jurisdiction other than the State of Delaware. Each
Party hereby irrevocably and unconditionally submits, for itself and its assets and properties, to
the exclusive jurisdiction of any Delaware State court in New Castle County, or Federal court of
the United States of America, sitting within New Castle County in the State of Delaware, and any
respective appellate court, in any action or proceeding arising out of or relating to this
Agreement, the agreements delivered in connection with this Agreement, or the transactions
contemplated hereby or thereby, or for recognition or enforcement of any judgment relating thereto,
and each Party hereby irrevocably and unconditionally (i) agrees not to commence any such action or
proceeding except in such courts; (ii) agrees that any claim in respect of any such action or
proceeding may be heard and
determined in such Delaware State court or, to the extent permitted by law, in such Federal court;
(iii) waives, to the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such action or proceeding in any such
Delaware State or Federal court; and (iv) waives, to the fullest extent permitted by law, the
defense of lack of personal jurisdiction or an inconvenient forum to the maintenance of such action
or proceeding in any such Delaware State or Federal court. Each Party hereby agrees that a final
judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Each Party hereby
irrevocably consents to service of process in the manner provided for notices in Section
14. Nothing in this Agreement shall affect the right of any Party to serve process in any
other manner permitted by applicable law.

     17. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS; (B) IT UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS; (C) IT MAKES SUCH WAIVERS VOLUNTARILY; AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 17.

26

 

     18. Business Days. If any time period for giving notice or taking action hereunder expires
on a day which is not a Business Day, the time period shall automatically be extended to the
Business Day immediately following such day.

     19. Mutual Drafting. The Parties have participated jointly in the negotiation and drafting
of this Agreement. Accordingly, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any Party hereto by virtue of
the authorship of any of the provisions of this Agreement.

     20. Interpretation. The headings and subheadings contained in this Agreement and the
annexes hereto are solely for the purpose of reference, are not part of the agreement of the
parties hereto, and shall not in any way affect the meaning or interpretation of this Agreement or
any exhibit hereto. All references to days or months shall be deemed references to calendar days
or months. All references to “$” or “dollars” shall be deemed references to United States dollars.
Unless the context otherwise requires, any reference to a “Section” or “Annex” shall be deemed to
refer to a section of this Agreement or an annex to this Agreement, as applicable. Any reference
to any federal, state, county, local or foreign statute or Legal Requirement shall be deemed also
to refer to all rules and regulations promulgated thereunder, including any successor thereto,
unless the context requires otherwise. For all purposes of and under this Agreement, (i) the word
“including” shall be deemed to be immediately followed by the words “without limitation”; (ii)
words (including defined terms) in the singular shall be deemed to include the plural and vice
versa; (iii) words of one gender shall be deemed to include the other gender as the context
requires; (iv) “or” is not exclusive; and (v) the terms “hereof,” “herein,” “hereto,” “herewith”
and any other words of similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole (including the annexes hereto) and not to any particular term or provision of
this Agreement, unless otherwise specified. Any reference to “written” or comparable expressions
includes a reference to facsimile transmission or comparable means of communication but shall not
refer to e-mail or other electronic communication.

     21. No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to
the benefit of the parties hereto and their respective successors and permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

     22. Responsibility for Compliance. Each Stockholder shall be responsible for ensuring that
its Affiliates and representatives adhere to the terms of this Agreement applicable to such Persons
as if such Persons were original parties hereto, shall be responsible for any breach of this
Agreement by its Affiliates and representatives and shall take all reasonable measures to avoid any
breach of this Agreement by its Affiliates or representatives. The foregoing obligation shall not
limit the remedies available to the Company for any breach of this Agreement by any Person.

27

 

     23. Effectiveness. This Agreement shall become effective immediately upon the execution
and delivery hereof.

{Remainder of page intentionally left blank.}

28

 

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day and year first
above written.

	 	 	 	 	 	 	 

	 	 	K12 INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Howard D. Polsky	 	 
	 

	 	Name:
	 	 

Howard D. Polsky
	 	 
	 

	 	Title:
	 	General Counsel and Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	KCDL HOLDINGS LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stanley E. Maron	 	 
	 

	 	Name:
	 	 

Stanley E. Maron
	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 	 	LEARNING GROUP LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stanley E. Maron	 	 
	 

	 	Name:
	 	 

Stanley E. Maron
	 	 
	 

	 	Title:
	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	LEARNING GROUP PARTNERS	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stanley E. Maron	 	 
	 

	 	Name:
	 	 

Stanley E. Maron
	 	 
	 

	 	Title:
	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	KNOWLEDGE INDUSTRIES LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stanley E. Maron	 	 
	 

	 	Name:
	 	 

Stanley E. Maron
	 	 
	 

	 	Title:
	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	CORNERSTONE FINANCIAL GROUP LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stanley E. Maron	 	 
	 

	 	Name:
	 	 

Stanley E. Maron
	 	 
	 

	 	Title:
	 	Secretary	 	 

{Signature Page to Stockholders Agreement}

 

 

EXHIBIT A

SCHEDULE OF STOCKHOLDERS

(DATED AS OF JULY 23, 2010)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number of Shares of
	 	 	Number of Shares of	 	Series A Special
	 	 	Company Common	 	Stock Obtained at the
	                     Name and Address of Stockholder	 	Stock	 	Closing
	KCDL Holdings LLC
	 	 	0	 	 	 	2,750,000	 
	Learning Group LLC
	 	 	4,665,083	 	 	 	—	 
	Learning Group Partners
	 	 	399,171	 	 	 	—	 
	Knowledge Industries LLC
	 	 	82,503	 	 	 	—	 
	Cornerstone Financial Group LLC
	 	 	83,874	 	 	 	—	 

The address for each of the foregoing is:

the name of such Stockholder

c/o Maron & Sandler

1250 Fourth Street, Suite 550

Santa Monica, California 90401

Attn: Stanley E. Maron

Fax: (310) 570-4901

with a copy, which shall not constitute notice, to:

Latham & Watkins LLP

355 South Grand Ave.

Los Angeles, California 90071

Attn: Thomas C. Sadler

Fax: (213) 891-8763

A-1

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