EXHIBIT 10.14
FIRST AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
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FIRST AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of June
30, 1998 (the "Agreement"), by and between Nobel Education Dynamics, Inc., a
Delaware corporation (the "Company") and Allied Capital Corporation, a Maryland
corporation ("Allied").
BACKGROUND:
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WHEREAS, the parties hereto are parties to a Registration Rights Agreement
dated August 30, 1995 (the "Original Registration Rights Agreement"), which was
entered into in connection with the execution by the parties of the Investment
Agreement dated as of August 30, 1995 (the "1995 Investment Agreement") pursuant
to which Allied purchased an aggregate of 1,063,830 shares (the "Preferred
Shares") of the Company's Series D Convertible Preferred Stock, $.001 par value,
and warrants (the "1995 Warrants") for the purchase of up to an aggregate of
1,236,171 shares (the "1995 Warrant Shares") of the Company's common stock,
$.001 par value (the "Common Stock").
WHEREAS, the parties hereto amended the Original Registration Rights
Agreement pursuant to the First Amendment of Registration Rights Agreement dated
as of February 23, 1996 (the "First Amendment") in order to eliminate certain
conflicts among holders of registration rights relating to the Common Stock.
WHEREAS, the Company, certain of its subsidiaries and Allied have entered
into an Investment Agreement dated as of the date hereof (the "1998 Investment
Agreement," and together with the 1995 Investment Agreement, the "Investment
Agreements") pursuant to which Allied has purchased a warrant (the "1998
Warrant," and collectively with the 1995 Warrants, the "Warrants") for the
purchase of _________ shares (the "1998 Warrant Shares," and collectively with
the 1995 Warrant Shares, the "Warrant Shares") of Common Stock.
WHEREAS, the parties hereto wish to amend and restate in its entirety the
Original Registration Rights Agreement, as amended by the First Amendment, as
provided herein.
NOW THEREFORE, in consideration of the mutual promises made herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
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other federal agency at the time administering the Securities Act.
"Common Stock" shall mean Common Stock, $.001 par value, of the Company, as
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constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued upon
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conversion of the Preferred Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
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or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Registration Expenses" shall mean the expenses so described in Section 8.
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"Restricted Stock" shall mean the Conversion Shares and Warrant Shares,
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excluding shares which have been registered under the Securities Act pursuant to
an effective registration statement filed thereunder and disposed of in
accordance with the registration statement covering them, shares which have been
publicly sold pursuant to Rule 144 under the Securities Act, or shares which are
eligible to be publicly sold under paragraph (k) of Rule 144.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
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similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 8.
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2. Restrictive Legend. Each certificate representing Preferred Shares,
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Conversion Shares or Warrant Shares and each Warrant shall, except as otherwise
provided in this Section 2 or in Section 3, be stamped or otherwise imprinted
with a legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
A certificate or Warrant shall not bear such legend if in the written opinion of
counsel satisfactory to the Company (it being agreed that Piper & Marbury L.L.P.
shall be satisfactory) the securities being sold thereby may be publicly sold
without registration under the Securities Act.
3. Notice of Proposed Transfer. Prior to any proposed transfer of any
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Preferred Shares, Conversion Shares, Warrants or Warrant Shares (other than
under the circumstances described in Sections 4, 5 or 6), the holder thereof
shall give written notice to the Company of its intention to effect such
transfer. Each such notice shall describe the manner of the proposed transfer
and, if requested by the Company, shall be accompanied by an opinion of counsel
satisfactory to the Company (it being agreed that Piper & Marbury L.L.P. shall
be satisfactory) to the effect that the proposed transfer may be effected
without registration under the Securities Act,
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whereupon the holder thereof shall be entitled to transfer such stock or Warrant
in accordance with the terms of its notice. Each certificate for Preferred
Shares, Conversion Shares or Warrant Shares and each Warrant transferred as
above provided shall bear the legend set forth in Section 2, except that such
certificate or Warrant shall not bear such legend if the opinion of counsel
referred to above is to the effect that the transferee and any subsequent
transferee would be entitled to transfer such securities in a public sale
without registration under the Securities Act. The restrictions provided for in
this Section 3 shall not apply to securities which are not required to bear the
legend prescribed by Section 2 in accordance with the provisions of that
Section.
4. Required Registration. Subject to the limitation expressed in Section
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5(b), at any time after the date of this Agreement that the Company is
ineligible to use a Form S-3 to effect the registrations contemplated by Section
6 below, the holders of Restricted Stock constituting at least 50% of the total
shares of Restricted Stock then outstanding may request the Company to register
under the Securities Act all or any portion of the shares of Restricted Stock
held by such requesting holder or holders for sale in the manner specified in
such notice, provided that the shares of Restricted Stock for which registration
has been requested shall constitute at least 50% of the total shares of
Restricted Stock originally issued if such holder or holders shall request the
registration of less than all shares of Restricted Stock then held by such
holder or holders. For purposes of this Section 4 and Sections 5, 6, 13(a) and
13(d), the term "Restricted Stock," shall be deemed to include the number of
shares of Restricted Stock which would be issuable to a holder of Preferred
Shares upon conversion of all Preferred Shares held by such holder at such time
and the number of shares of Restricted Stock which would be issuable to a holder
of Warrants upon exercise of all Warrants held by such holder at such time,
provided, however, that the holder or holders of the 1998 Warrant Shares shall
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have no registration rights with respect to such 1998 Warrant Shares pursuant to
this Section 4 until June 30, 1999, provided further, however, that the only
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securities which the Company shall be required to register pursuant hereto shall
be shares of Common Stock, and provided further, however, that, in any
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underwritten public offering contemplated by this Section 4 or Sections 5 and 6,
the holders of Preferred Shares shall be entitled to sell such Preferred Shares
to the underwriters for conversion and sale of the shares of Common Stock issued
upon conversion thereof. Notwithstanding anything to the contrary contained
herein, no request may be made under this Section 4 or under Section 6 within
120 days after the effective date of a registration statement filed by the
Company covering a firm commitment underwritten public offering in which the
holders of Restricted Stock shall have been entitled to join pursuant to
Sections 5 or 6 and in which there shall have been effectively registered all
shares of Restricted Stock as to which registration shall have been requested.
(a) Following receipt of any notice under this Section 4, the Company
shall immediately notify all holders of Restricted Stock from whom notice has
not been received and shall use its best efforts to register under the
Securities Act, for public sale in accordance with the method of disposition
specified in such notice from requesting holders, the number of shares of
Restricted Stock specified in such notice (and in all notices received by the
Company from other holders within 30 days after the giving of such notice by the
Company). If such method of disposition shall be an underwritten public
offering, the holders of a majority of the shares of Restricted Stock to be sold
in such offering may designate the managing underwriter of such
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offering, subject to the approval of the Company, which approval shall not be
unreasonably withheld or delayed. The Company shall not be obligated to register
the 1998 Warrant Shares pursuant to this Section 4 and pursuant to Section 6 on
more than one occasion (for both sections) and shall not be obligated to
register Restricted Stock (other than the 1998 Warrant Shares) pursuant to this
Section 4 and pursuant to Section 6 on more than two occasions (for both
sections), provided, however, that such obligation shall be deemed satisfied
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only when a registration statement covering all shares of Restricted Stock
specified in notices received as aforesaid, for sale in accordance with the
method of disposition specified by the requesting holders, shall have become
effective and, if such method of disposition is a firm commitment underwritten
public offering, 75% of all such shares shall have been sold pursuant thereto.
(c) The Company may not include in any registration statement referred to
in this Section 4 any shares of Common Stock to be sold for the account of any
person not entitled as of June 30, 1998 to registration rights with respect to
such shares except for the shares of Common Stock to be issued to persons
purchasing such shares in connection with the Company's private placement of
1,000,000 shares of Common Stock as described in the Company's Private Placement
Offering memorandum dated February 15, 1996, all of which persons have brokerage
accounts with Gilder, Gagnon, Xxxx & Co. at the closing of such transaction
(collectively, the "Xxxxxx Shares"). The Company may include in any registration
statement referred to in this Section 4 Xxxxxx Shares and/or shares of Common
Stock to be sold for its own account or for the account of any other holders of
Common Stock who as of June 30, 1998 are entitled to "piggyback" or "incidental"
rights to be included in the registration statement, in which case such
registration statement shall be deemed to be a registration statement initiated
by the Company and shall be governed by the provisions of Section 5 below.
Except for registration statements on Form X-0, X-0 or any successor thereto,
registration statements registering the Xxxxxx Shares and/or securities to be
issued by the Company to the seller or sellers in connection with an acquisition
by the Company and registration statements required to be filed for holders of
Common Stock who as of June 30, 1998 are entitled to "demand" registration
rights, the Company will not file with the Commission any other registration
statement with respect to its Common Stock, whether for its own account or that
of other stockholders, from the date of receipt of a notice from requesting
holders pursuant to this Section 4 until the completion of the period of
distribution of the registration contemplated thereby, as described in Section
7.
5. Incidental Registration.
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(a) If the Company at any time (other than pursuant to Section 4 or
Section 6) proposes to register any of its securities under the Securities Act
for sale to the public, whether for its own account or for the account of other
security holders or both (except with respect to registration statements on
Forms X-0, X-0 or another form not available for registering the Restricted
Stock for sale to the public, and the registration statement to be filed by the
Company to register the shares of Common Stock to be issued to the stockholders
of Educo, Inc.), each such time it will give written notice to all holders of
outstanding Restricted Stock of its intention so to do. Upon the written request
of any such holder, received by the Company within 30 days after the giving of
any such notice by the Company, to register any of its Restricted Stock (which
request shall state the intended method of disposition thereof), the Company
will use its best
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efforts to cause the Restricted Stock as to which registration shall have been
so requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent requisite to
permit the sale or other disposition by the holder (in accordance with its
written request) of such Restricted Stock so registered. In the event that any
registration pursuant to this Section 5 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of shares of Restricted
Stock to be included in such an underwriting may be reduced (pro rata among the
requesting holders based upon the number of shares of Restricted Stock owned by
such holders and the shares of Common Stock held by the persons referred to in
clauses (ii) and (iii) of the proviso to this sentence) if and to the extent
that the managing underwriter shall be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein, provided, however, that such number of shares of Restricted Stock shall
not be reduced if any shares are to be included in such underwriting for the
account of any person other than (i) the Company, (ii) requesting holders of
Restricted Stock or (iii) any other holders of Common Stock who as of June 30,
1998 are entitled to contractual "piggyback" or "incidental" rights to be
included in the registration statement. Whenever a registration statement is
deemed (pursuant to the provisions of Section 4 or Section 6) to be a
registration statement initiated by the Company and therefore governed by the
provisions of this Section 5, such registration statement shall nevertheless be
deemed to count as a registration statement required to be filed by the Company
under Section 6 and Section 4 if the registration statement covers all shares of
Restricted Stock specified in the notices from the requesting holders thereof
for sale in accordance with the method of disposition specified in such notice,
becomes effective and, if such method of disposition is a firm commitment
underwritten public offering, 75% of all such shares are sold pursuant thereto.
(b) Notwithstanding anything herein to the contrary, the Company shall not
be required to file any registration statement registering the Restricted Stock
upon the demand of the holders of the Restricted Stock made under Section 4 or
Section 6 of this Agreement during the period beginning on the date of the
Company's receipt of a notice from requesting holders pursuant to Section 4 or
Section 6 of the Registration Rights Agreement by and among the Company, Edison
Venture Fund II, L.P. and Edison Venture Fund, II-Pa., L.P. and ending on the
date on which the distribution of the securities included in such registration
has been completed.
6. Registration on Form S-3. Subject to the limitation set forth in
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Section 5(b) and in the last sentence of Section 4(a), if at any time (i) a
holder or holders of Restricted Stock constituting at least 50% of the total
shares of Restricted Stock then outstanding request the Company to register
under the Securities Act all or any portion of the shares of Restricted Stock
held by such requesting holder or holders for sale in the manner specified in
such notice (provided that the shares of Restricted Stock for which registration
has been requested shall constitute at least 50% of the total shares of
Restricted Stock originally issued if such holder or holders shall request the
registration of less than all shares of Restricted Stock then held by such
holder or holders) on Form S-3 or any successor thereto for a public offering of
shares of Restricted Stock held by such requesting holder or holders and (ii)
the Company is a registrant entitled to use Form S-3 or any successor thereto to
register such shares, then the Company shall use its best efforts to register
under the Securities Act on Form S-3 or any successor thereto, for public sale
in accordance with the method of disposition specified in such notice, the
number of
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shares of Restricted Stock specified in such request. Whenever the Company is
required by this Section 6 to use its best efforts to effect the registration of
Restricted Stock, each of the procedures and requirements of Section 4
(including but not limited to the requirement that the Company notify all
holders of Restricted Stock from whom notice has not been received and provide
them with the opportunity to participate in the offering) shall apply to such
registration, provided, however, that the requirements contained in the first
sentence of Section 4(a) shall not apply to any registration on Form S-3 which
may be requested and obtained under this Section 6. The Company may not include
in any registration statement referred to in this Section 6 any shares of Common
Stock to be sold for the account of any person not entitled as of June 30, 1998
to registration rights with respect to such shares, except the Xxxxxx Shares.
The Company may include in any registration statement referred to in this
Section 6 the Xxxxxx Shares and/or shares of Common Stock to be sold for its own
account or for the account of any other holders of Common Stock who as of June
30, 1998 are entitled to "piggyback" or "incidental" rights to be included in
the registration statement, in which case such registration statement shall be
deemed to be a registration-statement initiated by the Company and shall be
governed by the provisions of Section 5 above. Except for registration
statements on Form X-0, X-0 or any successor thereto, registration statements
registering the Xxxxxx Shares and/or securities to be issued by the Company to
the seller or sellers in connection with an acquisition by the Company and
registration statements required to be filed for holders of Common Stock who as
of June 30, 1998 are entitled to "demand" registration rights, the Company will
not file with the Commission any other registration statement with respect to
its Common Stock, whether for its own account or that of other stockholders,
from the date of receipt of a notice from requesting holders pursuant to this
Section 6 until the completion of the period of distribution of the registration
contemplated thereby, as described in Section 7.
7. Registration Procedures. If and whenever the Company is required by
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the provisions of Sections 4, 5 or 6 to use its best efforts to effect the
registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement (which,
in the case of an underwritten public offering pursuant to Section 4, shall be
on Form S-1 or other form of general applicability satisfactory to the managing
underwriter selected as therein provided) with respect to such securities and
use its best efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby (determined as
hereinafter provided);
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for the period
specified in paragraph (a) above and comply with the provisions of the
Securities Act with respect to the disposition of all Restricted Stock covered
by such registration statement in accordance with the sellers' intended method
of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Restricted Stock and to each underwriter
each number of copies of the registration statement and the prospectus included
therein (including each
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preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Restricted Stock covered
by such registration statement;
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or "blue sky" laws
of such jurisdictions as the sellers of Restricted Stock or, in the case of an
underwritten public offering, the managing underwriter reasonably shall request,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to list the Restricted Stock covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;
(f) immediately notify each seller of Restricted Stock and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, whereupon each such
seller shall refrain from making any sales of Restricted Stock until a
prospectus supplement describing such event has been forwarded to such seller by
the Company;
(g) if the offering is underwritten and at the request of any seller of
Restricted Stock, use its best efforts to furnish on the date that Restricted
Stock is delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to such seller,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the registration statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements contained therein) and (C) to such other
effects as reasonably may be requested by counsel for the underwriters or by
such seller or its counsel and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to such registration as such underwriters reasonably may request;
and
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(h) make available for inspection by each seller of Restricted Stock, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
For purposes of Section 7(a) and 7(b) and of Section 4(c), the period of
distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted stock covered thereby and 120 days
after the effective date thereof.
In connection with each registration hereunder, the sellers of Restricted
Stock will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
In connection with each registration pursuant to Sections 4, 5 or 6
covering an underwritten public offering, the Company and each seller agree to
enter into a written agreement with the managing 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.
8. Expenses. All expenses incurred by the Company in complying with
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Sections 4, 5 and 6, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or "blue sky" laws,
fees of the National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, and costs of insurance for the sellers
of Restricted Stock, but excluding any Selling Expenses, are called
"Registration Expenses". All underwriting discounts, selling commissions and
fees of counsel to participating sellers applicable to the sale of Restricted
Stock are called "Selling Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement under Sections 4, 5 or 6. All Selling Expenses in
connection with each registration statement under Sections 4, 5 or 6 shall be
borne by the participating sellers in proportion to the number of shares sold by
each, or by such participating sellers other than the Company (except to the
extent the Company shall be a seller) as they may agree.
9. Indemnification and Contribution. In the event of a registration of
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any of the Restricted Stock under the Securities Act pursuant to Sections 4, 5
or 6, the Company will indemnify and hold harmless each seller of such
Restricted Stock thereunder, each underwriter of such Restricted Stock
thereunder and each other person, if any, who controls such seller or
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underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Stock was registered under the Securities Act
pursuant to Sections 4, 5 or 6, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or 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 not
misleading, and will reimburse each such seller, each such underwriter and each
such controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such seller, any such underwriter or any such controlling
person in writing specifically for use in such registration statement or
prospectus.
(b) In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant to Sections 4, 5 or 6, each seller of such
Restricted Stock thereunder, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Sections 4, 5 or 6, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or 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 not misleading, and will reimburse
the Company and each such officer, director, underwriter and controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the Company by such
seller specifically for use in such registration statement or prospectus, and
provided, further, however, that the liability of each seller hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the public offering price of the shares
sold by such seller under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any event to
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exceed the proceeds received by such seller from the sale of Restricted Stock
covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 9 and shall only relieve it
from any liability which it may have to such indemnified party under this
Section 9 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 9 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided,
however, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Restricted Stock exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 9 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section
9; then, and in each such case, the Company and such holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its Restricted Stock offered by the registration statement
bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the public offering price of all
such Restricted Stock offered by it pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning
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of Section 11(f) of the Securities Act) will be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
10. Changes in Common Stock or Preferred Shares. If, and as often as,
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there is any change in the Common Stock or the Preferred Shares by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or the Preferred Shares as so changed.
11. Rule 144 Reporting. With a view to making available the benefits of
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certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Stock to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith upon request a
written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as such holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such holder to sell any Restricted Stock without
registration.
12. Representations and Warranties of the Company. The Company represents
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and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Charter or By-laws of the Company or any provision of any
indenture, agreement or other instrument to which it or any or its properties or
assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(b) This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms.
13. Miscellaneous.
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(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including, without
limitation, transferees of any Preferred Shares, Warrants or Restricted Stock),
whether so expressed or not, provided, however, that registration rights
conferred herein on the holders of Preferred Shares, Warrants or Restricted
Stock shall only inure to the benefit of a transferee of Preferred Shares,
Warrants or Restricted Stock if there is transferred to such transferee at least
10% of the total shares of Restricted Stock originally issued pursuant to the
Investment Agreement to the direct or indirect transferor of such transferee or
such transferee is a partner, shareholder or affiliate of a party hereto.
(b) All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person, mailed by certified or
registered mail, return receipt requested, or sent by telecopier or telex,
addressed as follows:
if to the Company or any other party hereto, at the address of such party
set forth in the applicable Investment Agreement;
if to any subsequent holder of Preferred Shares, Warrants or Restricted
Stock, to it at such address as may have been furnished to the Company in
writing by such holder;
or, in any case, at such other address or addresses as shall have been
furnished in writing to the Company (in the case of a holder of Preferred
Shares, Warrants or Restricted Stock) or to the holders of Preferred Shares,
Warrants or Restricted Stock (in the case of the Company) in accordance with
the provisions of this paragraph.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
(d) This Agreement may not be amended or modified, and no provision hereof
may be waived, without the written consent of the Company and the holders of at
least two-thirds of the outstanding shares of Restricted Stock.
(e) 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.
(f) The obligations of the Company to register shares of Restricted Stock
under Sections 4, 5 or 6 shall terminate on August 19, 2009.
(g) If requested in writing by the underwriters for an underwritten public
offering of securities of the Company, each holder of Restricted Stock who is a
party to this Agreement shall agree not to sell publicly any shares of
Restricted Stock or any other shares of Common Stock (other than shares of
Restricted Stock or other shares of Common Stock being registered in such
offering), without the consent of such underwriters, for a period of not more
than 180 days following the effective date of the registration statement
relating to such offering; provided, however, that all persons entitled to
registration rights with respect to shares of Common Stock who are not parties
to this Agreement, all other persons selling shares of Common Stock in such
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offering, all persons holding in excess of 1% of the capital stock of the
Company on a fully diluted basis and all executive officers and directors of the
Company shall also have agreed not to sell publicly their Common Stock under the
circumstances and pursuant to the terms set forth in this section 13(g).
(h) Notwithstanding the provisions of Section 7(a), the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective, shall be suspended for a period not to
exceed 90 days in any 12-month period if there exists at the time material non-
public information relating to the Company which, in the reasonable opinion of
the Company, should not be disclosed, and no sales of Restricted Stock shall be
made by the holders during such period.
(i) The Company shall not grant to any third party any registration rights
more favorable than any of those contained herein, so long as any of the
registration rights under this Agreement remains in effect.
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NOBEL EDUCATION DYNAMICS, INC.
By:____________________________
Title:
ALLIED CAPITAL CORPORATION
By:____________________________
Title:
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