Amendment No. 2 to The Registration Rights Agreement

EX-4.5 7 c93867s1exv4w5.txt AMENDMENT NO. 2 TO THE REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.5 AMENDMENT NO. 2 REGISTRATION RIGHTS AGREEMENT This agreement is Amendment No. 2 (the "Amendment") to the Registration Rights Agreement, dated as of June 16, 1998, as amended by Amendment No. 1 to the Registration Rights Agreement (the "Amendment No. 1") on April 20, 2000 (together, the "Registration Rights Agreement"), by and among CAPELLA EDUCATION COMPANY (formerly known as Learning Ventures International, Inc.), a Minnesota corporation (the "Company") and NCS PEARSON, Inc. (as successor to National Computer Systems, Inc.) (the "Holder"), and is entered into as of the 21st day of February, 2002. RECITALS WHEREAS, the Holder and the Company are parties to a Registration Rights Agreement dated as of June 16, 1998, that was amended by Amendment No. 1 on April 20, 2000; and WHEREAS, the Company proposes to sell and issue up to 1,425,457 shares of its Class F Convertible Preferred Stock pursuant to that certain Stock Purchase Agreement dated as of January 31, 2002 (the "Purchase Agreement"); and WHEREAS, the purchase of the Class F Convertible Preferred Stock under the Purchase Agreement is conditioned upon the Holder and the Company entering into this Amendment; and WHEREAS, the Holder desires that shares of Class F Convertible Preferred Stock be sold by the Company pursuant to the Purchase Agreement; NOW, THEREFORE, the parties agree the Registration Rights Agreement shall be amended as follows: 1. Section 1.1, entitled "Definitions," shall be amended to include the following definition: "Class F Registrable Shares" shall mean the shares of the Company's Class F Convertible Preferred Stock (and shares of Common Stock acquired upon exercise thereof) that are Registrable Shares as defined in that certain Amended and Restated Investor Rights Agreement between the Company, Joseph Gaylord, the purchasers of the Company's Class F Convertible Preferred Stock and the purchasers of the Company's Class E Convertible Preferred Stock of even date herewith." 2. Section 1.1, entitled "Definitions," shall be amended by replacing the definition of "Legg Mason Warrant Shares" with the following definition: "Legg Mason Warrant Shares" shall mean the shares of the Company's capital stock that are "warrant securities" as defined in that certain Warrant to purchase common shares of the Company issued to Legg Mason Wood Walker, Incorporated on June 16, 1998, as amended by Amendment No. 1 on April 20, 2000 and further amended by Amendment No. 2 on the date hereof, and as defined in that certain Warrant to purchase common shares of the Company issued to Legg Mason Wood Walker, Incorporated on May 11, 2000, as amended on the date hereof. 3. Section 1.1, entitled "Definitions," shall be amended by replacing the definition of "Class E Registrable Shares" with the following definition: "Class E Registrable Shares" shall mean the shares of the Company's Class E Convertible Preferred Stock (and shares of Common Stock acquired upon exercise thereof) that are Registrable Shares as defined in that certain Amended and Restated Investor Rights Agreement between the Company, Joseph Gaylord, the purchasers of the Company's Class F Convertible Preferred Stock and the purchasers of the Company's Class E Convertible Preferred Stock of even date herewith." 4. The second sentence of the second paragraph of Section 1.2 shall be revised to read as follows: "Without the written consent of Holder, neither the Company nor any other holder of securities of the Company, other than holders of Class F Registrable Shares, Class E Registrable Shares and Legg Mason Warrant Shares, 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." 5. Section 1.2 shall be amended by replacing the last clause of the third paragraph of Section 1.2, which begins "(ii) the Company may not delay ....", with the following text: "(ii) the Company may not delay or suspend any registration more than one time in any 12-month period." 6. Section 1.3 shall be amended by replacing the fifth and sixth sentences of the section, which begins "If the number of Registrable Securities ....", with the following text: "If the number of Registrable Securities to be included in the underwriting in accordance with the foregoing is less than the total number of shares which the holders of Registrable Securities have requested to be included, then, (A) in the case of a registration statement whose filing was initiated by the Company, the securities to be included in such underwriting shall be allocated (x) first to the Company and (y) second among the holders of Registrable Securities, Class E Registrable Shares, Class F Registrable Shares and Legg Mason Warrant Shares who have requested registration, on a pro rata basis based on the number of such securities included in their respective requests for registration and (B) in the case of a registration statement whose filing was initiated by a selling stockholder, 2 Registrable Securities and Legg Mason Warrant Shares who have requested registration, on a pro rata basis based on the number of shares included in their respective requests for registration. The Company (in the case of a registration statement whose filing was initiated by a selling stockholder) and any other Company stockholders, other than holders of Class E Registrable Shares, Class F Registrable Shares and Legg Mason Warrant Shares (in the case of a registration statement whose filing was initiated by the Company or by a selling stockholder), shall have no right to participate in that event without the consent of the holders of at least a majority of the Registrable Securities participating in such offering." 7. No Other Changes. Except as otherwise expressly provided by this Agreement, all of the terms, conditions and provisions of the Registration Rights Agreement remain unaltered and in full force and effect. This Amendment along with Amendment No. 1 and the Registration Rights Agreement shall be read and construed as one agreement. 8. Effective Time. This Agreement shall become effective at the time of Closing (as defined in the Purchase Agreement). 9. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original but all of which shall be deemed but one and the same instrument. IN WITNESS WHEREOF, the parties hereto each has caused this Amendment to be duly executed in its name and on its behalf, all as of the day and year first above written. COMPANY: CAPELLA EDUCATION COMPANY By: /s/ Stephen Shank ----------------------- Name: Stephen Shank Title: Chairman and CEO HOLDER: NCS PEARSON, INC. By: /s/ David W. Smith ----------------------- Name: David W. Smith Title: CEO 3