Exhibit D
REGISTRATION RIGHTS AGREEMENT
by and among
THE LEARNING COMPANY, INC.
and
THE PURCHASERS NAMED HEREIN
Dated as of August 26, 1997
TABLE OF CONTENTS
Section Page
1. Introduction................................................... 1
2. Registration under Securities Act, etc......................... 1
2.1 Registration on Request....................................... 1
(a) Request................................................. 1
(b) Registration Statement Form............................. 2
(c) Expenses................................................ 2
(d) Effective Registration Statement........................ 2
(e) Selection of Underwriters............................... 3
(f) Priority in Requested Registrations..................... 3
(g) Limitation on Registration on Request................... 3
2.2 Incidental Registration....................................... 4
(a) Right to Include Registrable Securities................. 4
(b) Priority in Incidental Registrations.................... 5
2.3 Registration Procedures....................................... 5
2.4 Underwritten Offerings........................................ 11
(a) Requested Underwritten Offerings........................ 11
(b) Incidental Underwritten Offerings....................... 12
(c) Holdback Agreements..................................... 12
(d) Participation in Underwritten Offerings................. 13
2.5 Preparation; Reasonable Investigation......................... 13
2.6 Indemnification............................................... 14
(a) Indemnification by the Company.......................... 14
(b) Indemnification by the Sellers.......................... 15
(c) Notices of Claims, etc.................................. 15
(d) Other Indemnification................................... 16
(e) Indemnification Payments................................ 16
(f) Contribution............................................ 16
2.7 Adjustments Affecting Registrable Securities.................. 18
3. Definitions.................................................... 18
4. Rule 144....................................................... 21
5. Amendments and Waivers......................................... 21
6. Nominees for Beneficial Owners................................. 21
7. Notices........................................................ 22
8. Assignment..................................................... 22
9. Descriptive Headings.......................................... 23
10. GOVERNING LAW................................................. 23
11. Counterparts.................................................. 23
12. Entire Agreement.............................................. 23
14. Severability.................................................. 23
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 26, 1997, among THE
LEARNING COMPANY, a Delaware corporation (the "Company"), and each of the
other parties listed on the signature pages hereto (each a "Purchaser" and,
collectively, the "Purchasers").
1. Introduction. The Company is a party to three separate Securities
Purchase Agreements (the "Purchase Agreements"), each dated as of August
26, 1997, with the Purchasers pursuant to which the Purchasers have agreed
to purchase from the Company an aggregate of 750,000 shares of Series A
Convertible Participating Preferred Stock, par value $.01 per share, of the
Company (the "Convertible Preferred Stock"). Certain capitalized terms used
in this Agreement are defined in Section 3 hereof.
2. Registration under Securities Act, etc.
2.1 Registration on Request.
(a) Request. At any time or from time to time after the Applicable
Period, upon the written request of one or more holders (the "Initiating
Holders") of Registrable Securities holding (a) in the case of the first
and second registrations effected pursuant to this Section 2.1 and during
the five-year period commencing on the date hereof, a majority of the
Registrable Securities then outstanding on an as-converted basis, and (b)
in the case of the third and fourth registrations effected pursuant to this
Section 2.1, or the first and second registrations if such registrations
are not effected within five years hereof, at least 15% of the Registrable
Securities then outstanding on an as-converted basis, requesting that the
Company effect the registration under the Securities Act of all or part of
such Initiating Holders' Registrable Securities and specifying the intended
method of disposition thereof, the Company will promptly give written
notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will, subject to the
terms of this Agreement, use its best efforts to effect the registration
under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition
in accordance with the intended method of disposition stated in such
request; and
(ii) all other Registrable Securities the holders of which
shall have made a written request to the Company for registration
thereof within 30 days after the giving of such written notice by the
Company (which request shall specify the intended method of disposition
of such Registrable Securities);
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered.
(b) Registration Statement Form. Registrations under this Section
2.1 shall be on such appropriate registration form of the Commission (i) as
shall be selected by the Company and (ii) as shall permit the disposition
of such Registrable Securities in accordance with the intended method or
methods of disposition specified in their request for such registration.
If, in connection with any registration under this Section 2.1 which is
proposed by the Company to be on Form S-3 or any similar short form
registration statement which is a successor to Form S-3, the managing
underwriters, if any, shall advise the Company in writing that in their
opinion the use of another permitted form is of material importance to the
success of the offering, then such registration shall be on such other
permitted form.
(c) Expenses. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this Section 2.1.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective,
and remained effective in compliance with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered
by such registration statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement, provided, that except with respect to any registration statement
on Form S-3 filed pursuant to Rule 415 under the Securities Act, such
period need not exceed 180 days, and provided, further, that a registration
requested pursuant to this Section 2.1 shall be deemed to have been
effected if a registration statement with respect thereto is withdrawn at
the request of the Initiating Holders for any reason other than a material
adverse development involving the Company, (ii) if, after it has become
effective, such registration becomes subject to any stop order, injunction
or other order or requirement of the Commission or other governmental
agency or court for any reason or (iii) the conditions to closing specified
in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied, other than by reason
of some act or omission by such Initiating Holders.
(e) Selection of Underwriters. If a requested registration
pursuant to this Section 2.1 involves an underwritten offering, the
managing or lead underwriter or underwriters thereof shall be selected by
the holders of at least a majority (by number of shares) of the Registrable
Securities as to which registration has been requested and shall be
acceptable to the Company, which shall not unreasonably withhold its
acceptance of any such underwriters.
(f) Priority in Requested Registrations. If a requested
registration pursuant to this Section 2.1 involves an underwritten
offering, and the managing underwriter shall advise the Company in writing
(with a copy to each holder of Registrable Securities requesting
registration) that, in its opinion, the number of securities requested to
be included in such registration exceeds the number which can be sold in
such offering within a price range acceptable to the holders of a majority
of the Registrable Securities requested to be included in such
registration, the Company will include in such registration, to the extent
of the number which the Company is so advised can be sold in such offering,
Registrable Securities requested to be included in such registration by the
holder or holders of Registrable Securities, pro rata among such holders
requesting such registration on the basis of the number of such securities
requested to be included by such holders.
(g) Limitation on Registration on Request. Subject to Sections
1(d) and 1(f), in no event will the Company be required to effect, in the
aggregate, more than four registrations pursuant to this Section 2.1
provided, however, that the Company will be required to effect only one
registration of Option Shares and Related Registrable Securities. If, while
a registration request is pending pursuant to this Section 2.1, the Board
of Directors of the Company makes a good faith determination that the
filing of the requested registration would adversely affect either (i) a
pending transaction of the Company or (ii) a securities offering which the
Company plans to undertake, the Company shall not be required to effect a
registration pursuant to this Section 2.1 until the consummation of such
transaction or registration; provided, however, that the Company may only
assert either of such delays once during any 12-month period, and any such
asserted delay with respect to the Company's obligation to effect a
registration pursuant to this Section 2.1 shall in no event exceed 90 days.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any
time proposes to register, after the Applicable Period, any of its
securities under the Securities Act (other than by a registration on Form
S-4 or S-8, or any successor or similar forms, and other than pursuant to
Section 2.1), whether or not for sale for its own account, it will each
such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 2.2. Upon the written request of any such holder (a "Requesting
Holder") made within 30 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of
by such holder and the intended method of disposition thereof), the Company
will, subject to the terms of this Agreement, use its best efforts to
effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the
holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered, by inclusion of such
Registrable Securities in the registration statement which covers the
securities which the Company proposes to register, provided that if, at any
time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for
any reason either not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
in connection therewith), without prejudice, however, to the rights of any
holder or holders of Registrable Securities entitled to do so to request
that such registration be effected as a registration under Section 2.1, and
(ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 2.2 shall relieve the Company of its obligation
to effect any registration upon request under Section 2.1, nor shall any
such registration hereunder be deemed to have been effected pursuant to
Section 2.1. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 2.2.
(b) Priority in Incidental Registrations. If (i) a registration
pursuant to this Section 2.2 involves an underwritten offering of the
securities so being registered, whether or not for sale for the account of
the Company, to be distributed (on a firm commitment basis) by or through
one or more underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (ii) the Registrable Securities so
requested to be registered for sale for the account of holders of
Registrable Securities are not also to be included in such underwritten
offering (either because the Company has not been requested so to include
such Registrable Securities pursuant to Section 2.4(b) or, if requested to
do so, is not obligated to do so under Section 2.4(b), and (iii) the
managing underwriter of such underwritten offering shall inform the Company
and holders of the Registrable Securities requesting such registration by
letter of its belief that the distribution of all or a specified number of
such Registrable Securities concurrently with the securities being
distributed by such underwriters would interfere with the successful
marketing of the securities being distributed by such underwriters (such
writing to state the approximate number of such Registrable Securities
which may be distributed without such effect), then the Company may, upon
written notice to all holders of such Registrable Securities, reduce pro
rata (if and to the extent stated by such managing underwriter to be
necessary to eliminate such effect) the number of such Registrable
Securities the registration of which shall have been requested by each
holder of Registrable Securities so that the resultant aggregate number of
such Registrable Securities so included in such registration shall be equal
to the number of shares stated in such managing underwriter's letter.
2.3 Registration Procedures. If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2 the
Company shall, as expeditiously as possible:
(i) prepare and as soon as reasonably practicable file with
the Commission the requisite registration statement to effect such
registration (including such audited financial statements as may be
required by the Securities Act or the rules and regulations promulgated
thereunder) and thereafter use its reasonable efforts to cause such
registration statement to become and remain effective, provided however
that the Company may discontinue any registration of its securities
which are not Registrable Securities (and, under the circumstances
specified in Section 2.2(a), its securities which are Registrable
Securities) at any time prior to the effective date of the registration
statement relating thereto, provided further that before filing such
registration statement or any amendments thereto, the Company will
furnish to the counsel selected by the holders of Registrable
Securities which are to be included in such registration copies of all
such documents proposed to be filed, which documents will be subject to
the review of such counsel;
(ii) 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 and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration
statement; provided, that except with respect to any such registration
statement on Form S-3 filed pursuant to Rule 415 under the Securities
Act, such period need not exceed 180 days;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement and each underwriter, if any, of
the securities being sold by such seller such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller and underwriter, if any, may reasonably
request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities laws or blue sky
laws of such jurisdictions as any seller thereof and any underwriter of
the securities being sold by such seller shall reasonably request, to
keep such registrations or qualifications in effect for so long as such
registration statement remains in effect, and to take any other action
which may be reasonably necessary or advisable to enable such seller
and underwriter to consummate the disposition in such jurisdictions of
the securities owned by such seller, except that the Company shall not
for any such purpose be required to qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would not but for
the requirements of this subdivision (iv) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary in the opinion of counsel to the Company and counsel to
the seller or sellers of Registrable Securities to enable the seller or
sellers thereof to consummate the disposition of such Registrable
Securities;
(vi) notify each seller of Registrable Securities and the
managing underwriter or underwriters, if any, promptly and confirm such
advice in writing promptly thereafter:
(v) when the registration statement, the prospectus or
any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed, and, with
respect to the registration statement or any post-effective
amendment thereto, when the same has become effective;
(w) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;
(x) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or
the initiation of any proceedings by any Person for that purpose;
(y) if at any time the representations and warranties
of the Company made as contemplated by Section 2.4 below cease to
be true and correct; and
(z) of the receipt by the Company of any notification
with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky
laws of any jurisdiction or the initiation or threat of any
proceeding for such purpose.
(vii) notify each seller of Registrable Securities covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of
which, the prospectus included in such 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 at the request of any such seller
promptly prepare and furnish to such seller and each underwriter, if
any, a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(viii) use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the
earliest possible moment;
(ix) 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 twelve months, but not more
than eighteen months, beginning with the first day of the Company's
first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder, and will
furnish to each such seller at least five business days prior to the
filing thereof a copy of any amendment or supplement to such
registration statement or prospectus and shall not file any thereof to
which any such seller shall have reasonably objected on the grounds
that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the rules or
regulations thereunder;
(x) make available for inspection by a representative
or representatives of the holders of Registrable Securities, any
underwriter participating in any disposition pursuant to the
registration statement and any attorney or accountant retained by such
selling holders or underwriter (each, an "Inspector"), all financial
and other records, pertinent corporate documents and properties of the
Company (the "Records"), and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
such Inspector in connection with such registration in order to permit
a reasonable investigation within the meaning of Section 11 of the
Securities Act;
(xi) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the
effective date of such registration statement;
(xii) enter into such agreements and take such other
actions as sellers of such Registrable Securities holding a majority of
the shares so to be sold shall reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities;
(xiii) use its best efforts to list all Registrable Secu-
rities covered by such registration statement on any securities
exchange on which any of the securities of the same class as the
Registrable Securities are then listed and, if no such Registrable
Securities are so listed, on any national securities exchange on which
the Common Stock is then listed; and
(xiv) use its best efforts to provide a CUSIP number for the
Registrable Securities, not later than the effective date of the
registration statement.
The Company may require each seller of Registrable Securities as
to which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing.
The Company will not file any registration statement or amendment
thereto or any prospectus or any supplement thereto (including such
documents incorporated by reference and proposed to be filed after the
initial filing of the registration statement) to which the holders of a
majority of the Registrable Securities covered by such registration
statement or the underwriter or underwriters, if any, shall reasonably
object, provided that the Company may file such document in a form required
by law or upon the advice of its counsel.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in Section
2.3(viii), such holder will forthwith discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement relating
to such Registrable Securities until such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 2.3(viii)
and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in Section 2.1(d)
and Section 2.3(ii) shall be extended by the length of the period from and
including the date when each seller of any Registrable Securities covered
by such registration statement shall have received such notice to the date
on which each such seller has received the copies of the supplemented or
amended prospectus contemplated by Section 2.3(viii).
If any such registration statement refers to any holder of
Registrable Securities by name or otherwise as the holder of any securities
of the Company, then such holder shall have the right to require (i) the
insertion therein of language, in form and substance satisfactory to such
holder, to the effect that the holding by such holder of such securities is
not to be construed as a recommendation by such holder of the investment
quality of the Company's securities covered thereby and that such holding
does not imply that such holder will assist in meeting any future financial
requirements of the Company, or (ii) in the event that such reference to
such holder by name or otherwise is not required by the Securities Act or
any similar federal statute then in force, the deletion of the reference to
such holder.
2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 2.1, the
Company will enter into an underwriting agreement with such underwriters
for such offering, such agreement to be satisfactory in substance and form
to the Company, each such holder and the underwriters, and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in Section
2.6. The holders of the Registrable Securities will cooperate with the
Company in the negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company regarding the
form thereof, provided that nothing herein contained shall diminish the
foregoing obligations of the Company. The holders of Registrable Securities
to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of such holders of Registrable Securities. Any such holder
of Registrable Securities shall not be required to make any representations
or warranties to or agreements with the Company or the underwriters other
than representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities as provided in Section 2.2 and
subject to the provisions of Section 2.2(b), use its reasonable efforts to
arrange for such underwriters to include all the Registrable Securities to
be offered and sold by such holder among the securities to be distributed
by such underwriters, provided that if the managing underwriter of such
underwritten offering shall inform the holders of the Registrable
Securities requesting such registration by letter of its belief that
inclusion in such underwritten distribution of all or a specified number of
such Registrable Securities would interfere with the successful marketing
of the securities (other than such Registrable Securities) by the
underwriters (such writing to state the basis of such belief and the
approximate number of such Registrable Securities which may be included in
such underwritten offering without such effect), then the Company may, upon
written notice to all holders of such Registrable Securities, exclude pro
rata from such underwritten offering (if and to the extent stated by such
managing underwriter to be necessary to eliminate such effect) the number
of such Registrable Securities so that the resultant aggregate number of
such Registrable Securities shall be equal to the approximate number of
shares stated in such managing underwriter's letter. The holders of
Registrable Securities to be distributed by such underwriters shall be
parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such holders of Registrable Securities and that
any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of such holders of Registrable Securities.
(c) Holdback Agreements.
(i) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities, if so required by the
managing underwriter, not to sell, make any short sale of, loan, grant
any option for the purchase of, effect any public sale or distribution
of or otherwise dispose of any equity securities of the Company, during
the 90 days after any underwritten registration pursuant to Section 2.1
or 2.2 has become effective, except as part of such underwritten
registration, whether or not such holder participates in such
registration. Notwithstanding the foregoing sentence, each holder of
Registrable Securities subject to the foregoing sentence shall be
entitled to sell during the foregoing period securities in a private
sale as long as the purchaser agrees to be bound by the provisions of
this Section 2.4(c)(i) for the balance of such 90 day period.
(ii) The Company agrees if so requested by the managing
underwriter not to sell, make any short sale of, loan, grant any option
for the purchase of, effect any public sale or distribution of or
otherwise dispose of its equity securities or securities convertible
into or exchangeable or exercisable for any of such securities during
the seven days prior to and the 90 days after any underwritten
registration pursuant to Section 2.1 or 2.2 has become effective,
except as part of such underwitten registration and except in
connection with a stock option plan, stock purchase plan, managing
directors' plan, or savings or similar plan, or an acquisition of a
business, merger or exchange of stock for stock or any private
placement of stock in which the purchaser agrees to be bound by the
provisions of this Section 2.4(c)(ii) for the balance of such 90 day
period.
(d) Participation in Underwritten Offerings. No Person may
participate in any underwritten offering hereunder unless such Person (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved, subject to the terms and conditions
hereof, by the holders of a majority of Registrable Securities to be
included in such underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and other documents
(other than powers of attorney) required under the terms of such
underwriting arrangements.
2.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the holders of
Registrable Securities registered under such registration statement, their
underwriters, if any, each Requesting Holder and their respective counsel
and accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
2.6 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does agree to, indemnify and hold harmless in the
case of any registration statement filed pursuant to Section 2.1 or 2.2,
the holder of any Registrable Securities covered by such registration
statement, its directors and officers, each other Person who participates
as an underwriter in the offering or sale of such securities and each other
Person, if any, who controls such holder or any such underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such director,
officer, underwriter or controlling Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, 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 securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any 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 the
Company will reimburse such holder, director, officer, underwriter and
controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding, provided that the Company shall not be
liable to any such holder, director, officer, underwriter or controlling
Person, as the case may be, in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by such holder or underwriter, as the case may be, specifically
stating that it is for use in the preparation thereof and, provided further
that the Company shall not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or to any
other Person, if any, who controls such underwriter within the meaning of
the Securities Act, in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of such Person's failure to send or give a copy of the
final prospectus, as the same may be then supplemented or amended, to the
Person asserting the existence of an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any such director,
officer, underwriter or controlling Person and shall survive the transfer
of such securities by such holder.
(b) Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration
statement filed pursuant to Section 2.3, that the Company shall have
received an undertaking satisfactory to it from the prospective seller of
such Registrable Securities, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 2.6(a)) the Company,
each director of the Company, each officer of the Company and each other
person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company through
an instrument duly executed by such seller specifically stating that it is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement,
provided, however, that the liability of such indemnifying party under this
Section 2.6(b) shall be limited to the amount of proceeds received by such
indemnifying party in the offering giving rise to such liability. Any such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such
securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
2.6, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of
the commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 2.6, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to
the extent that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the consent of
the indemnified party, consent to entry of any judgment or enter into any
settlement of any such action 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 to such claim or
litigation. No indemnified party shall consent to entry of any judgment or
enter into any settlement of any such action the defense of which has been
assumed by an indemnifying party without the consent of such indemnifying
party.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 2.6 (with
appropriate modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any Federal or state law or regulation of
any governmental authority, other than the Securities Act.
(e) Indemnification Payments. The indemnification required by this
Section 2.6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in this
Section 2.6 is unavailable to an indemnified party in respect of any
expense, loss, claim, damage or liability referred to therein, then each
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 expense, loss, claim, damage or liability (i) in such
proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the holder or underwriter, as the case may
be, on the other from the distribution of the Registrable Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and of the holder or underwriter, as
the case may be, on the other in connection with the statements or
omissions which resulted in such expense, loss, damage or liability, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the holder or underwriter, as
the case may be, on the other in connection with the distribution of the
Registrable Securities shall be deemed to be in the same proportion as the
total net proceeds received by the Company from the initial sale of the
Registrable Securities by the Company to the purchasers pursuant to the
Purchase Agreements bear to the gain, if any, realized by the selling
holder or the underwriting discounts and commissions received by the
underwriter, as the case may be. The relative fault of the Company on the
one hand and of the holder or underwriter, as the case may be, on the other
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission to state a
material fact relates to information supplied by the Company, by the holder
or by the underwriter and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission, provided that the foregoing contribution agreement shall not
inure to the benefit of any indemnified party if indemnification would be
unavailable to such indemnified party by reason of the provisions contained
in the first sentence of Section 2.6(a), and in no event shall the
obligation of any indemnifying party to contribute under this Section
2.6(f) exceed the amount that such indemnifying party would have been
obligated to pay by way of indemnification if the indemnification provided
for under Section 2.6(a) or (b) had been available under the circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section
2.6(f) were determined by pro rata allocation (even if the holders,
Requesting Holders and any underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in the preceding sentence and Section 2.6(c), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 2.6(f), no holder of
Registrable Securities or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the case of any such holder,
the net proceeds received by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at which
the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any
damages that such holder or underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. 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.
2.7 Adjustments Affecting Registrable Securities. The Company will
not effect or permit to occur any combination or subdivision of Shares
which would adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in any registration of
its securities contemplated by this Section 2 or the marketability of such
Registrable Securities under any such registration.
3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Applicable Period: In the case of a proposed registration by an
Initiating Holder or Requesting Holder, as the case may be, of (a)
Conversion Shares and any Related Registrable Securities, 18 months
from the Closing Date, (b) Convertible Preferred Stock and any Related
Registrable Securities, 30 months from the Closing Date and (c) Option
Shares and any Related Registrable Securities, the period ending on the
date of first issuance of Option Shares; provided, however, that the
Applicable Period shall immediately cease upon a mandatory conversion
of the Convertible Preferred Stock pursuant to Section 8.10.1 of the
Certificate of Designation for the Convertible Preferred Stock.
Closing Date: The date on which the Convertible Preferred Stock is
first issued.
Commission: The Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act.
Common Stock: The common stock, par value $.01 per share, of the
Company.
Company: As defined in the introductory paragraph of this Agreement.
Conversion Shares: The shares of Common Stock issued or issuable upon
conversion of the Convertible Preferred Stock.
Convertible Preferred Stock: As defined in Section 1 of this Agreement.
Exchange Act: The Securities Exchange Act of 1934, 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. Reference
to a particular section of the Securities Exchange Act of 1934 shall
include a reference to the comparable section, if any, of any such
similar Federal statute.
Initiating Holders: As defined in Section 2.1 of the Agreement.
Option Shares: Shares of Common Stock issued pursuant to the Stock
Option Agreements dated as of the date hereof between the Company and
affiliates of the Purchasers.
Person: A corporation, an association, a partnership, an organiza-
tion, business, an individual, a governmental or political subdivi-
sion thereof or a governmental agency.
Purchase Agreements: As defined in Section 1.
Registrable Securities: (i) any Conversion Shares and any Related
Registrable Securities, (ii) any Convertible Preferred Stock and any
Related Registrable Securities and (iii) any Option Shares and any
Related Registrable Securities. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale
of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (b) they shall have been sold as permitted by
Rule 144 (or any successor provision) under the Securities Act, (c)
they shall have been otherwise transferred, new certificates for them
not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent public distribution of them
shall not require registration of them under the Securities Act, or (d)
they shall have ceased to be outstanding. In calculating a percentage
of Registrable Securities held, each share of Convertible Preferred
Stock shall be deemed to be equivalent to the number of shares of
Common Stock into which it is then convertible.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with Section 2, including, without
limitation, all registration, filing and NASD fees, all stock exchange
listing fees, all fees and expenses of complying with securities or
blue sky laws, all word processing, duplicating and printing expenses,
messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including
the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, the reasonable fees
and disbursements of one counsel retained by the holder or holders of a
majority of the Registrable Securities being registered, but excluding
underwriting discounts and commissions and transfer taxes, if any,
provided, however, that in the event that the Company shall, in
accordance with Section 2.2(a), not register any securities with
respect to which it had given written notice of its intention to so
register to holders of Registrable Securities, notwithstanding anything
to the contrary in the foregoing, all of the costs incurred by
Requesting Holders in connection with such registration shall be deemed
Registration Expenses.
Related Registrable Securities: With respect to Conversion Shares,
Convertible Preferred Stock or Option Shares, any securities of the
Company issued or issuable with respect to any Conversion Shares,
Convertible Preferred Stock or Option Shares by way of a dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidated or other reorganization or
otherwise.
Requesting Holder: As defined in Section 2.2.
Securities Act: The Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder,
all as of the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933 shall include a
reference to the comparable section, if any, of any such similar
Federal statute.
4. Rule 144. The Company shall timely file the reports required to be
filed by it under the Securities Act and the Exchange Act (including but
not limited to the reports under Sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c) of Rule 144 adopted by the Commission under
the Securities Act) (or, if the Company is not required to file such
reports, will, upon the request of any holder of Registrable Securities,
make publicly available other information) and will take such further
action as any holder of Registrable Securities may reasonably request, all
to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities, the Company will deliver
to such holder a written statement as to whether it has complied with the
requirements of this Section 4.
5. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act,
of the holder or holders of a majority of the shares of Registrable
Securities. Each holder of any Registrable Securities at the time or
thereafter outstanding shall be bound by any consent authorized by this
Section 5, whether or not such Registrable Securities shall have been
marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of
such Registrable Securities for purposes of any request or other action by
any holder or holders of Registrable Securities pursuant to this Agreement
or any determination of any number or percentage of shares of Registrable
Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
7. Notices. Except as otherwise provided in this Agreement, all
notices, requests and other communications to any Person provided for
hereunder shall be in writing and shall be given to such Person (a) in the
case of a party hereto other than the Company, addressed to such party in
the manner set forth in the applicable Purchase Agreement or at such other
address as such party shall have furnished to the Company in writing, or
(b) in the case of any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing,
or, until any such other holder so furnishes to the Company an address,
then to and at the address of the last holder of such Registrable
Securities who has furnished an address to the Company, or (c) in the case
of the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to
the attention of its President, or at such other address, or to the
attention of such other officer, as the Company shall have furnished to
each holder of Registrable Securities at the time outstanding. Each such
notice, request or other communication shall be effective (i) if given by
mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means (including, without limitation, by air courier), when delivered
at the address specified above, provided that any such notice, request or
communication to any holder of Registrable Securities shall not be
effective until received.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are
for the benefit of the parties hereto other than the Company shall also be
for the benefit of and enforceable by any subsequent holder of any
Registrable Securities, subject to the provisions respecting the minimum
numbers or percentages of shares of Registrable Securities required in
order to be entitled to certain rights, or take certain actions, contained
herein and provided that the rights of the Purchasers hereunder may only be
assigned to holders of at least 75,000 shares of Convertible Preferred
Stock or underlying Conversion Shares. Any assignee must agree in writing
to be bound by the provisions of this Agreement.
9. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not limit or otherwise affect the meaning hereof.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT REFERENCE TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
11. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument.
12. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Company and each other party hereto relating to
the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
13. Severability. If any provision of this Agreement, or the
application of such provisions to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such
provision to Persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed under seal and delivered by their respective officers thereunto duly
authorized as of the date first above written.
THE LEARNING COMPANY, INC.
By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
_______________________________
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
PURCHASERS:
▇▇▇▇▇▇ ▇. ▇▇▇ EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited Partnership,
as General Partner
By: THL Equity Trust III,
as General Partner
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇. ▇▇▇ FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇. ▇▇▇ COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇ CAPITAL FUND V, L.P.
By: ▇▇▇▇ Capital Partners V, L.P.,
as General Partner
By: ▇▇▇▇ Capital Investors V, Inc.,
as General Partner
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇ CAPITAL FUND V-B, L.P.
By: ▇▇▇▇ Capital Partners V, L.P.,
as General Partner
By: ▇▇▇▇ Capital Investors V, Inc.,
as General Partner
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
BCIP ASSOCIATES, L.P.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Partner
BCIP TRUST ASSOCIATES, L.P.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
CENTRE CAPITAL INVESTORS II, L.P.
CENTRE CAPITAL TAX-EXEMPT INVESTORS II, L.P.
CENTRE CAPITAL OFFSHORE INVESTORS II, L.P.
By: Centre Partners II, L.P.,
as General Partner
By: Centre Partners Management LLC,
as Attorney-in-fact
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
STATE BOARD OF ADMINISTRATION OF FLORIDA
By: Centre Parallel Management Partners, L.P.,
as Manager
By: Centre Partners Management LLC,
as Attorney-in-fact
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
______________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
CENTRE PARALLEL MANAGEMENT PARTNERS, L.P.
CENTRE PARTNERS COINVESTMENT, L.P.
By: Centre Partners II LLC,
as General Partner
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director