Registration Rights Agreement - Learning Ventures International Inc. and National Computer Systems Inc.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 16th day of June,
1998, by and between LEARNING VENTURES INTERNATIONAL, INC., a Minnesota
corporation (the "Company"), and NATIONAL COMPUTER SYSTEMS, INC. (the "Holder").
RECITALS
WHEREAS, the Company has issued One Million Twenty Two Thousand Two
Hundred Twenty Two (1,022,222) of its Class D Convertible Preferred Shares (the
"Class D Shares") to Holder; and
WHEREAS, the Class D Shares are initially convertible into a like number
of Common Shares of the Company (the "Common Shares").
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration of Stock.
1.1. Definitions.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Company" shall mean Learning Ventures International, Inc., a
Minnesota corporation.
"Common Shares" shall mean the shares of Common Stock authorized by
the Company's Restated Articles of Incorporation and any additional shares
of Common Stock which may be authorized in the future by the Company, and
any stock into which such Common Shares may hereafter be changed.
"Holder" shall mean National Computer Systems, Inc. and shall be
deemed to include all successors of Holder acting jointly for purposes of
all rights and obligations hereunder.
"Registrable Securities" shall mean (i) the Common Stock issued to
Holder upon conversion of the Class D Shares and (ii) any additional
securities issued with respect to the above described securities upon any
stock split, stock dividend, recapitalization, or similar event, provided,
however, that none of the above described securities shall be treated as
Registrable Securities if (a) they have been sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, or (b) they have been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so
that all transfer restrictions and restrictive legends with respect
thereto are removed upon the consummation of such sale.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
1.2 Demand Registration. If at any time the Company shall receive a
written request therefor from Holder for the registration under the Securities
Act of Registrable Securities aggregating not less than Five Million Dollars
($5,000,000) in market value, or all of the Registrable Securities then held by
the Holder if the market value of such Registrable Security is estimated to be
less than Five Million Dollars ($5,000,000), the Company shall prepare and file
as soon as practicable and in any event within 90 days of receipt of such
request, a registration statement under the Securities Act covering the number
of Registrable Securities which are the subject of such request and shall use
its best efforts to cause such registration statement to become effective;
provided, however, that the Company shall not be obligated to prepare and file a
registration statement pursuant to this Section 1.2 until six (6) months have
elapsed from the date that the Company has first registered and sold a class of
equity securities on Form S-1 (or any successor form). In the event that Holder
determines for any reason not to proceed with a registration at any time before
the registration statement has been declared effective by the Commission, and
such registration statement, if theretofore filed with the Commission, is
withdrawn with respect to the Registrable Securities covered thereby, and Holder
agrees to bear its own expenses incurred in connection therewith and to
reimburse the Company for the expenses incurred by it attributable to the
registration of such Registrable Securities, then Holder shall not be deemed to
have exercised its right to require the Company to register Registrable
Securities pursuant to this Section at the expense of the Company. If a
registration statement filed by the Company at the request of Holder pursuant to
this Section is withdrawn at the initiative of the Company, then Holder shall
not be deemed to have exercised its right to require the Company to register
Registrable Securities pursuant to this Section.
The managing underwriter of an offering registered pursuant to this
Section shall be selected by the Company and shall be reasonably acceptable to
Holder. Without the written consent of Holder, neither the Company nor any other
holder of securities of the Company may include securities in such registration
if in the good faith judgment of the managing underwriter of such public
offering the inclusion of such securities would interfere with the successful
marketing of the Registrable Securities or require the exclusion of any portion
of the Registrable Securities to be registered. Shares to be excluded from an
underwritten public offering shall be selected pro rata among the holders of
securities of the Company requesting inclusion in such registration. The Company
shall be obligated to effect only two (2) registrations pursuant to this Section
1.2.
1.3. Piggyback Registration. Each time the Company shall determine
to proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale for
money of any of its securities by it or any of its security holders (other than
a registration statement on Form S-8 or other limited purpose form), the Company
will give written notice of its determination to Holder. Upon the written
request of Holder given within 30 days after receipt of any such notice from the
Company, the Company will, except as herein provided, cause all Registrable
Securities, of which Holder has so requested registration thereof, to be
included in such registration statement, all to the extent requisite to permit
the sale or other disposition by the prospective seller or sellers of the
Registrable Securities to be so registered; provided, however, that nothing
herein shall prevent the Company from, at any time, abandoning or delaying any
registration; provided further,
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however, that if the Company determines not to proceed with a registration after
the registration statement has been filed with the Commission and the Company's
decision not to proceed is primarily based upon the anticipated public offering
price of the securities to be sold by the Company, the Company shall promptly
complete the registration for the benefit of Holder; provided Holder shall
either bear all expenses incurred by the Company as the result of such
registration after the Company has decided not to proceed or such registration
shall be considered a demand registration under Section 1.2. If any registration
pursuant to this Section shall be underwritten in whole or in part, the Company
may require that the Registrable Securities requested for inclusion pursuant to
this Section be included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters. If in the good
faith judgment of the managing underwriter of such public offering the inclusion
of all of the Registrable Securities originally covered by a request for
registration would reduce the number of shares to be offered by the Company or
interfere with the successful marketing of the shares of stock offered by the
Company, the number of Common Shares to be included in the underwritten public
offering may be reduced in the manner determined by the managing underwriter.
Those shares which are thus excluded from the underwritten public offering shall
be withheld from the market for a period, not to exceed 180 days, which the
managing underwriter reasonably determines is necessary in order to effect the
underwritten public offering. In the event of any registration of Registrable
Securities pursuant to this Section 1.3 in connection with an underwritten
public offering, Holder shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter selected by the Company for such offering.
1.4. Short Form Registration.. In addition to the registration
rights provided in Sections 1.2 and 1.3, if the Company qualifies for the use of
Form S-3 or any similar registration form then in force, the Company shall at
its expense at the request of Holder from time to time register the Registrable
Securities on behalf of Holder; provided, however, that the Company shall not be
required to register less than 100,000 Registrable Securities nor to accommodate
more than two of such registrations in any calendar year.
1.5. Registration Procedures. If and whenever the Company is
required by the provisions of Sections 1.2, 1.3 or 1.4 to effect the
registration of Registrable Securities under the Securities Act, the Company
will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period as
may be reasonably necessary to effect the sale of such securities, not to
exceed 90 days;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for such
period as may be reasonably necessary to effect the sale of such
securities, not to exceed 90 days;
(c) furnish to Holder and to the underwriters of the securities
being registered such reasonable number of copies of the registration
statement, preliminary prospectus,
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final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(d) register or qualify the securities covered by such registration
statement under such state securities or blue sky laws of such
jurisdictions as Holder may reasonably request within 20 days following
the original filing of such registration statement, except that the
Company shall not for any purpose be required to execute a general consent
to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) notify Holder promptly after it shall receive notice thereof, of
the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement
has been filed;
(f) notify Holder promptly of any request by the Commission for the
amending or supplementing of such registration statement or prospectus or
for additional information;
(g) prepare and file with the Commission, promptly upon the request
of Holder, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for Holder (and concurred in
by counsel for the Company), is required under the Securities Act or the
rules and regulations thereunder in connection with the distribution of
the Registrable Securities by Holder;
(h) prepare and promptly file with the Commission and promptly
notify Holder of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading;
(i) advise Holder, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;
(j) at the request of Holder, furnish: (i) an opinion, dated the
closing date, of the counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and to Holder,
covering such matters as such underwriters and Holder may reasonably
request; and (ii) letters, dated as of the effective date of the
registration statement and as of the closing date, from the independent
certified public accountants of the Company, addressed to the
underwriters, if any, and to Holder, covering such matters as such
underwriters and Holder may reasonably request, in which letters such
accountants shall state (without limiting the generality of the foregoing)
that
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they are independent certified public accountants within the meaning of
the Securities Act and that in the opinion of such accountants the
financial statements and other financial data of the Company included in
the registration statement or any amendment or supplement thereto comply
in all material respects with the applicable accounting requirements of
the Securities Act.
1.6. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant hereto with respect to
the Registrable Securities that Holder shall furnish to the Company such
information regarding itself, the Registrable Securities, and the intended
method of disposition of such securities as shall be required to effect the
registration of the Registrable Securities.
1.7. Expenses. With respect to each inclusion of Registrable
Securities in a registration statement pursuant to Section 1.2, 1.3 or 1.4, the
Company shall bear the following fees, costs and expenses: all registration,
filing and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified. Underwriting discounts and commissions and transfer taxes for Holder
and any other expenses incurred by Holder not expressly included above shall be
borne by Holder.
1.8. Indemnification.
(a) The Company will indemnify and hold harmless Holder pursuant to
the provisions of this Section 1 and any underwriter (as defined in the
Securities Act) for Holder, and each person, if any, who controls Holder
or such underwriter within the meaning of the Securities Act, from and
against any and all loss, damage, liability, cost and expense to which
Holder or any such underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses (i) are caused by any untrue statement or
alleged untrue statement of any material fact contained in such
registration statement, any preliminary or final prospectus contained
therein or any amendment or supplement thereto, (ii) arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, damage, liability, cost or
expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity
with written information furnished by Holder, such underwriter or such
controlling person specifically for use in the preparation thereof; or
(iii) any violation or alleged violation by the Company of the Securities
Act, the Securities Exchange Act of 1934 ("1934 Act"), or any rule or
regulation promulgated under the Securities Act or the 1934 Act; provided,
however, that the foregoing indemnity, insofar as it relates to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus but eliminated or remedied in the prospectus shall
not inure to the benefit of any underwriter (or any employee, agent or
affiliate of or any person controlling such underwriter) with respect to
any action or claim asserted by a person who purchased any securities from
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such underwriter unless such person was sent or given a copy of the
prospectus with or prior to the written confirmation of the sale involved.
The Company will pay to Holder, underwriter or controlling person any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, damage, liability, cost and
expense.
(b) Holder will indemnify and hold harmless the Company and any
underwriter, and each person, if any, who controls the Company or such
underwriter within the meaning of the Securities Act, from and against any
and all loss, damage, liability, cost or expense to which the Company or
any such underwriter or controlling person and/or any underwriter may
become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance
upon and in strict conformity with written information furnished by Holder
specifically for use in the preparation thereof. Holder will pay to any
person intended to be indemnified pursuant to this paragraph 1.8(b) any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, damage, liability, cost and
expense.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is
to be made against the indemnifying party pursuant to the provisions of
said paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any
indemnified party otherwise than hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any action include both the indemnified
party and the indemnifying party and there is a conflict of interest which
would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party or parties shall have the
right to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of said paragraph (a) or
(b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnified party shall
have employed counsel in accordance with the proviso of the preceding
sentence, (ii) the indemnifying party shall not have employed counsel
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satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the notice of the commencement of the
action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying
party.
(d) The obligations of the Company and Holder under this Section 1.8
shall survive the completion of any offering of Registrable Securities in
a registration statement hereunder, and otherwise.
1.9. Market "Stand-Off" Agreement. Holder agrees, in connection with
any public offering of the Company's Common Shares that, upon request of the
Company or the underwriters managing the underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Common Shares of the Company other than
those included in the registration without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time (not
exceeding 180 days) from the effective date of such registration as may be
requested by the underwriters; provided, that all other holders of at least 10%
of the Company's outstanding voting equity securities (other than holders which
have acquired such shares in registered offerings, open market transactions or
block trades) and all of the officers and directors of the Company who own stock
of the Company also agree to such restrictions; and provided further that such
agreement under this paragraph 1.9 shall be applicable only to registration
statements of the Company which cover Common Shares or other securities to be
sold on its behalf to the public in an underwritten offering during the term of
this Agreement.
2. Termination of Registration Rights. The right of Holder to request
registration or inclusion in any registration shall terminate on the first to
occur of (a) June 30, 2005, or (b) if all Registrable Securities held or
entitled to be held upon conversion by Holder may immediately be sold under Rule
144.
3. Reports Under 1934 Act. With a view to making available to Holder the
benefits of Rule 144 promulgated under the Act and any other rule or regulation
of the SEC that may at any time permit Holder to sell securities of the Company
to the public without registration or pursuant to a registration on Form S-3,
after the Company has become obligated to file reports under the 1934 Act the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company
that it has complied with the reporting requirements of SEC Rule 144, the
Act and the 1934 Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as
may be
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reasonably requested in availing Holder of any rule or regulation of the
SEC which permits the offer and sale of any such securities without
registration or pursuant to such form.
4. Miscellaneous.
(a) Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective permitted successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except
as expressly provided in this Agreement.
(b) Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Minnesota as applied to agreements among
Minnesota residents entered into and to be performed entirely within
Minnesota.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be
deemed effectively given upon personal delivery to the party to be
notified or upon deposit with the United States Post Office, by registered
or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page
hereof, or at such other address as such party may designate by ten (10)
days' advance written notice to the other parties.
(f) Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
(g) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the
Holder. Any amendment or waiver effected in accordance with this
subparagraph shall be binding upon the Holder, each future holder of all
such Registrable Securities and the Company.
(h) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were excluded and shall be enforceable in
accordance with its terms.
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(i) Aggregation of Securities. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights
under this Agreement.
(j) Entire Agreement: Amendment; Waiver. This Agreement (including
the Exhibits hereto, if any) constitutes the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof.
(The remainder of this page has been left blank intentionally.
Signature page follows.)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth in the first paragraph of this Agreement.
LEARNING VENTURES INTERNATIONAL, INC.
By: /s/ Paul C.F. Clifford
----------------------------
Its: Vice President and CFO
Address: 330 Second Avenue South, Suite
550 Minneapolis, MN 55401
HOLDER: NATIONAL COMPUTER SYSTEMS, INC.
By: /s/Russell A. Gullotti
--------------------------------
Russell A. Gullotti
Its: Chairman, President and CEO
Address: 11000 Prairie Lakes Drive
Eden Prairie, MN 55344
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