1
EXHIBIT 10.31
UOL PUBLISHING, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is dated this 31st day of March
1998 by and among UOL Publishing, Inc., a Delaware corporation (the "Company"),
and each of the other persons and entities signatory hereto on the date hereof
or hereafter, as described in Section 10(h) hereof (collectively referred to as
the "Investors" and each individually as an "Investor").
WHEREAS, the Company now desires to issue to the Investors shares of
the Company's Series C Preferred Stock, which will be convertible into shares
of the Company's Common Stock, and Warrants to purchase shares of the Company's
Common Stock (such shares of Common Stock issuable upon conversion of the
Series C Preferred Stock, together with the shares of Common Stock issuable
upon exercise of the Warrants being sometimes collectively referred to herein
as the "Shares"); and
WHEREAS, the Company and the Investors desire to set forth certain
obligations and rights as set forth herein;
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties to this Agreement mutually agree as follows:
1. Demand Registration Rights. At any time on or after the date
hereof, but not more than once, the holders of Shares that have not had their
registration rights hereunder lapse as set forth in Section 9 hereof (the
"Registrable Securities") representing not less than 33 1/3% of the Registrable
Securities may deliver to the Company one written demand that the Company
effect a registration under the Securities Act of at least the greater of 30%
of the Registrable Securities or Registrable Securities with an aggregate price
to the public of not less than $2,000,000.00 for the purpose of sale in the
manner specified in such demand. Such demand shall also specify the number of
Registrable Securities that such holders wish to have so registered. The
Company shall, within 10 days of receipt of such demand, give written notice to
all other holders of Registrable Securities of such demand. Any such holder
may, within 30 days of its receipt of such notice from the Company, give a
written notice (the "Inclusion Notice") to the Company specifying the number of
Registrable Securities which such holder wishes to include in such
registration. The Company shall prepare and file a registration statement on
any available form of registration statement, for the public sale of the
Registrable Securities that are identified in and in accordance with the demand
and all Inclusion Notices as soon as practicable; provided, however, that if
the Company shall furnish to the holders of Registrable Securities (the
"Holders") a certificate signed by the Chairman or President of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company for a registration
statement to be filed, then the Company's obligation to file a registration
statement shall be deferred for a reasonable period not to exceed 180 days from
the date of such request. Upon written notice from the Company to the Holders
delivered within 30 days of a demand to register Registrable Securities under
this Section 1, the Holders' right to
2
demand registration pursuant to this Section 1 shall be suspended during the
period commencing 90 days before the date estimated in writing by the Company
to be the date of filing of a registration statement, and ending six months
following the effective date (or withdrawal date) of a registration statement,
for an underwritten public offering of the Common Stock.
All Holders proposing to distribute securities through such
registration shall enter into an underwriting agreement with the managing or
lead managing underwriter in the form customarily used by such underwriter with
such changes thereto as the parties thereto shall agree. If any Holder
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the managing or lead managing
underwriter. Any Registrable Securities so withdrawn from such underwriting
shall be withdrawn from such registration.
Whenever a registration is demanded pursuant to this Section 1, unless
a managing or lead managing underwriter objects thereto, the Company may
include in such registration securities for offering by the Company and any
other holder of securities, it being understood, however, that the Company's
and such other holder's right of inclusion in such registration shall be
subordinate to, and not pari passu with, the rights of the Holders who deliver
such demand or deliver to the Company Inclusion Notices under this Section 1.
If the managing underwriter thereof determines that the total number
of shares of the Common Stock to be sold in such offering shall be limited due
to market conditions or otherwise, the reduction in the total number of shares
offered shall be made by first excluding any shares of selling stockholders who
are not holders of contractual rights to have such shares registered under the
Securities Act, then, if necessary, by reducing the total number of shares to
be sold by the Company, and then, if necessary, by excluding pro rata (based on
the number of Registrable Securities held) the Registrable Securities to be
sold by the Holders.
2. Incidental Registration. If the Company at any time proposes to
register any of its securities under the Securities Act (other than a
registration effected on either Form S-4 or Form S-8) for the purpose of
selling such securities to the public whether for its own account or for the
account of any of its security holders or both, the Company shall each such
time give written notice to the Holders of its intention so to do. Upon the
written request by Holders given within 15 days after such notice (which
request shall state the number of Registrable Securities to be disposed of),
the Company will use reasonable efforts to cause promptly all Registrable
Securities of which registration is requested to be registered or qualified
under the Securities Act or any other applicable federal or state law or
regulation so as to permit the sale or other disposition thereof in accordance
with the Holders' written request. The Company will keep effective and
maintain any registration or qualification specified in this Section 2.2 for
such period (not exceeding 120 days) as may be reasonably necessary to effect
such sale or disposition in accordance with the Holders' written request. If
the registration is to be effected in connection with an underwritten offering,
(i) the Holders participating in such registration shall be
required to sell through the underwriter;
2
3
(ii) the Holders participating in such registration (together
with the Company) shall enter into an underwriting agreement with the
managing underwriter in the form customarily used by such underwriter;
and
(iii) if the managing underwriter thereof determines that the
total number of shares of the Common Stock to be sold in such offering
should be limited due to market conditions or otherwise, the reduction
in the total number of shares offered shall be made by first excluding
any shares of selling stockholders who are not holders of contractual
rights to have such shares registered under the Securities Act, and
then, if necessary, by excluding pro rata (based on the number of
securities requested to be included in such registration) the shares
to be sold by the Holders and other securityholders of the Company
with similar rights, before any reduction is made in the total number
of shares to be sold pursuant thereto by the Company.
3. Registration Statement Information Relating to Holders. The
Holders shall promptly upon receipt of written request provide the Company or
any underwriter or counsel participating or otherwise involved in such
registration with any information relating to the Holders or the Registrable
Securities that is reasonably required to be included in the registration
statement or the prospectus, or any amendment thereof, relating to such
offering or required to cause the registration to be declared and remain
effective. Such information shall be submitted in writing, signed by the
applicable Holders, or a duly authorized representative or agent thereof, and
shall state that the information is submitted specifically for the purpose of
inclusion in the registration statement, prospectus, offering circular or other
document related to the registration or qualification of the Registrable
Securities pursuant to Section 1 or 2. If the Holders shall fail within a
reasonable time to provide such information, the Company may exclude from such
registration the Registrable Securities requested by the Holders to be included
therein.
4. Registration Procedures. If and whenever the Company is required
to effect the registration of any Shares pursuant to Section 1 or 2, the
Company will:
(a) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to such
Registrable Securities and use reasonable efforts to cause such registration
statement to become and remain effective as provided herein; provided, however,
that in connection with any proposed registration intended to permit an
offering of any securities from time to time (i.e., a so-called "shelf
registration"), the Company shall in no event be obligated to cause any such
registration to remain effective for more than 120 days;
(b) immediately notify each Holder who has included
Registrable Securities in the registration, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in the
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, and if it is necessary, in the opinion of counsel
to the Company, to prepare and file with the Commission such amendments
3
4
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and current and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all shares covered by such
registration statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition from time to time of
the Holders if the registration is effected in connection with an offering
which is not underwritten, but in no event for more than (i) 120 days after the
effective date of a registration that is not underwritten or that is
underwritten on a best efforts basis, or (ii) for as long a period as is
customary and is required by the underwriter in the case of a firmly
underwritten offering;
(c) furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus and any amendments and any
supplements thereto, in conformity with the requirements of the Securities Act,
as the Holders may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities owned by the Holders;
(d) use reasonable efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or blue sky or other applicable laws of such jurisdictions within
the United States as the Holders shall reasonably request to enable the Holders
to consummate the public sale or other disposition in such jurisdictions of the
Registrable Securities owned by the Holders, except that the Company shall not
for any such purpose be required (i) to qualify generally to do business as a
foreign corporation in any jurisdiction in which it would not be required to so
qualify but for such registration or qualification, (ii) to subject itself to
taxation in any such jurisdiction, or (iii) to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to furnish to each Holder who
has included Registrable Securities in the registration a signed counterpart,
addressed to such Holder, of (i) an opinion of counsel for the Company, dated
the date of the closing under the underwriting agreement, and (ii) a "cold
comfort" letter signed by the independent public accountants who have issued a
report on the Company's financial statements included in such registration
statement dated the date of effectiveness of the registration statement and the
date of the closing under the underwriting agreement, covering substantially
the same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of such accountants' letters,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and, in the case of the accountants' letters, such other financial
matters as such Holders may reasonably request;
(f) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, beginning with the first month of
the first fiscal quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act;
(g) use its best efforts to list such Registrable
Securities on each securities
4
5
exchange or over-the-counter market on which shares of Common Stock are then
listed, if such Registrable Securities are not already so listed and if such
listing is then permitted under the rules of such exchange and, if shares of
Common Stock are not then listed on a securities exchange or over-the-counter
market, to use its best efforts to cause such Registrable Securities to be
listed on such securities exchange or over-the-counter market as the managing
or lead managing underwriter shall reasonably request;
(h) use its best efforts to provide a transfer agent and
registrar for such Registrable Securities not later than the effective date of
such registration statement; and
(i) issue to any underwriter to which any Holder may sell
such Registrable Securities in connection with any such registration (and to
any direct or indirect transferee of any such underwriter) certificates
evidencing such Registrable Securities without restrictive legends.
If requested by the managing or lead managing underwriter for any
underwritten offering that includes any Registrable Securities, the Company
will enter into an underwriting agreement with the underwriters of such
offering, such agreement to contain such representations and warranties by the
Company and such other terms and conditions as are contained in underwriting
agreements customarily used by such managing or lead managing underwriter with
such changes as the parties thereto shall agree, including, without limitation,
provisions relating to indemnification and contribution in lieu thereof.
During the effective period of any registration statement covering
Registrable Securities, the Holders will not effect sales thereof after receipt
of telegraphic or written notice from the Company to suspend sales to permit
the Company to correct or update a registration statement or prospectus until
the Holders receive written notice from the Company that the registration
statement or prospectus has been corrected or updated.
At the end of the effective period of any registration statement
covering any Registrable Securities, the Holders shall discontinue sales of
shares pursuant to such registration statement upon receipt of notice from the
Company of its intention to remove from registration the shares covered by such
registration statement which remain unsold, and the Holders shall notify the
Company of the number of shares registered which remain unsold immediately upon
receipt of such notice from the Company.
5. Expenses of Registration. Subject to the requirements of
otherwise applicable state blue sky laws, all expenses incurred in effecting
registration of any Registrable Securities pursuant to Section 1 or 2,
including without limitation, all registration, qualification and filing fees,
printing expenses, expenses of compliance with blue sky laws (excluding any
such expenses incurred solely due to the Holders' request pursuant to Section
4(d)), reasonable fees and disbursements of counsel for the Company, and of one
counsel to represent all of the participating securityholders requesting
registration and expenses of any audits incidental to or required by any such
registration, shall be borne by the Company, provided that the commissions and
discounts of the underwriters applicable to the Registrable Securities shall be
borne by the Holders whose Registrable Securities are being registered pursuant
to such registration, pro rata
5
6
according to the value of their Registrable Securities sold under such
registration.
6. Indemnification.
(a) The Company will indemnify each Holder joining in a
registration and each underwriter and selling broker for such Holder and each
officer and director of the Holder and each person, if any, who controls any
such Holder or any such underwriter or broker within the meaning of Section 15
of the Securities Act, against all claims, losses, damages, expenses and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any preliminary prospectus or amended preliminary prospectus
or in the prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related registration
statement, notification or the like) as such may be amended or supplemented
from time to time or any 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 under which they were made, not
misleading, or any violation by the Company of the Securities Act or any rule
or regulation promulgated thereunder or any state securities laws or
regulations applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder and each such
underwriter, broker and controlling person for any legal and any other expenses
reasonably incurred, as such expenses are incurred, in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company in an instrument executed by
such Holder or underwriter for the Holder or any representative of such Holder
or underwriter for the Holder and stated to be specifically for use therein.
(b) Each Holder joining in a registration will indemnify the
Company and its officers and directors, each person, if any, who controls any
thereof within the meaning of Section 15 of the Securities Act and their
respective successors and any underwriter for the Company for such registration
and each other Holder against all claims, losses, damages, expenses and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any preliminary prospectus or amended prospectus or in the prospectus, offering
circular or other document incident to any registration statement,
qualification or compliance (or in any related registration statement,
notification or the like) as such may be amended or supplemented from time to
time or any 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 under which they were made, not misleading, and will
reimburse the Company and each other person indemnified pursuant to this
paragraph (b) for any legal and any other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating or defending any such
claim, loss, damage, liability or action; provided, however, that this
paragraph (b) shall apply only if (and only to the extent that) such statement
or omission was made in reliance upon and in conformity with written
information (including, without limitation, written negative responses to
inquiries)
6
7
furnished to the Company specifically for inclusion in the prospectus, offering
circular, or other document incident to the registration statement by an
instrument duly executed by such Holder or its representatives, and as to which
the Company had no actual knowledge. Notwithstanding the foregoing, the
liability of each Holder under this paragraph (b) shall be limited to an amount
equal to the aggregate proceeds received by such Holder from the sale of its
shares in such registration, unless such liability arises out of or is based on
willful conduct by such Holder.
(c) Each party entitled to indemnification hereunder (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party (at its expense) to assume the defense
of any claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be satisfactory to the Indemnified Party, and the Indemnified
Party may participate in such defense at such party's expense, and provided,
further, that the omission by any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 6 except to the extent that the omission results from a failure of
actual notice to the Indemnifying Party by the Indemnified Party and such
Indemnifying Party is damaged solely as a result of the failure to give notice;
and provided further, however, that the Indemnifying Party shall not be
entitled to assume the defense for matters as to which there is, in the opinion
of counsel to the Indemnified Party, a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
(d) The payments with respect to any indemnity required by
this Section 6 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred,
upon submission of supporting invoices or other claims for payment, including
any calculations necessary to pro-rate any amounts payable pursuant to the
indemnity.
7. Contribution.
(a) If the indemnification provided for in Section 6
hereof is unavailable to the Indemnified Parties in respect of any losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
referred to therein, then each such Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Indemnifying Party on the one hand and the
Indemnified Party on the other in connection with the statement or omission
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue statement (or alleged untrue statement) of a
material fact or the omission (or alleged omission) to state a material fact
relates
7
8
to information supplied by the Indemnifying Party or the Indemnified Party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and each
Investor agree that it would not be just and equitable if contribution pursuant
to this Section 7 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to above. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages, liabilities or expenses (or actions in
respect thereof) referred to above in this Section 7 or in Section 6 shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim.
(b) Notwithstanding anything to the contrary contained
herein, the obligation of each Holder to contribute pursuant to this Section 7
is several and not joint and no Holder shall be required to contribute any
amount in excess of the amount by which the total price at which the shares of
such Holder were offered to the public exceeds the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue
statement (or alleged untrue statement) or omission (or alleged omission).
(c) No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Rule 144 Requirements. The Company shall make whatever filings
with the Commission or otherwise and undertake to make publicly available and
available to the Holder, pursuant to Rule 144 of the Commission under the
Securities Act (or any successor rule or regulation), such information as is
necessary to enable the Holder to make sales of Registrable Securities pursuant
to that Rule. The Company shall furnish to the Holder, upon request, a written
statement executed by the Company as to the steps it has taken to comply with
the current public information requirements of Rule 144.
9. Survival and Termination of Rights. The agreements and covenants
contained in this Agreement shall be continuing and shall survive any
conversion of any shares of the Series C Preferred Stock or exercise of the
Warrants. However, the rights of any particular Holder to cause the Company to
register its Registrable Securities hereunder shall terminate with respect to
such securities and such securities shall no longer be deemed to be Registrable
Securities following a bona fide, firmly underwritten public offering of such
Registrable Securities under the Securities Act or at such time as such Holder
is able to dispose of all of its Registrable Securities in one three-month
period pursuant to the provisions of Rule 144.
10. Miscellaneous.
(a) Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement between the parties with
respect to the subject matter hereof, and no party shall be liable or bound to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein. The terms and
8
9
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any third party 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 Delaware as applied to agreements
among Delaware residents made and to be performed entirely within the State of
Delaware.
(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) Headings. The headings used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
(e) Notices. Any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery or delivery by telecopier or five days after deposit with the
United States postal authorities, by first-class mail, postage prepaid,
addressed (i) if to the Company, at:
UOL Publishing, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
or at such other address as the Company shall have furnished to the Investors
in writing, and (ii) if to an Investor, at such Investor's address as is set
forth on the books and records of the Company.
(f) Severability. Any invalidity, illegality or limitation of the
enforceability with respect to any Investor of any one or more of the
provisions of this Agreement, or any part thereof, whether arising by reason
of the law of any such Investor's domicile or otherwise, shall in no way affect
or impair the validity, legality or enforceability of this Agreement with
respect to other Investors. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
9
10
(g) Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company or any Investor upon any breach,
default or noncompliance of any Investor, or the Company under this Agreement,
shall impair any such right, power or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent or approval
of any kind or character on the part of the Company or the Investors of any
breach, default or noncompliance under this Agreement or any waiver on the
Company's or the Investors' part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing and that all remedies, either under this
Agreement, by law, or otherwise afforded to the Company and the Investors,
shall be cumulative and not alternative.
(h) Amendments and Waivers. No term of this Agreement may be
amended, nor may the observance of any terms of this Agreement be waived
(either generally or in a particular instance and either retroactively or
prospectively), without the written consent of the Company and the holders of
not less than 50% of the Shares affected thereby. Notwithstanding the
foregoing, any party purchasing Series C Preferred Stock and Warrants from the
Company after the date hereof may, by executing a counterpart hereof, become an
Investor and the shares of Common Stock underlying their Series C Preferred
Stock and Warrants become Registrable Securities for purposes hereof.
(i) Authorization. Each of the parties to this Agreement represents
that this Agreement has been duly authorized, executed and delivered by such
party and constitutes the legal, valid and binding obligation of such party
enforceable against it in accordance with its terms.
10
11
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement.
COMPANY UOL PUBLISHING, INC.
By: (SEAL)
--------------------------------
Title:
-----------------------------
INVESTORS
-------------------------------------
By: (SEAL)
--------------------------------
Title:
-----------------------------
11
