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EXHIBIT 4.2
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("AGREEMENT") is entered
into as of July 17, 2000, between PLATO LEARNING, INC., a Delaware corporation
(the "COMPANY"), ELLIOTT ASSOCIATES, L.P., a Delaware limited partnership
("ELLIOTT"), and WESTGATE INTERNATIONAL, L.P., a Cayman Islands limited
partnership ("WESTGATE"). Each of Elliott and Westgate are referred to
hereinafter individually as an "INVESTOR" and collectively as the "INVESTORS".
W I T N E S S E T H:
WHEREAS, pursuant to that certain Common Stock Investment
Agreement, dated the date hereof, among the Company and the Investors (the
"INVESTMENT AGREEMENT"), the Company has agreed to sell and issue to the
Investors, and the Investors have agreed to purchase from the Company, inter
alia, an aggregate of 356,125 shares (the "INITIAL SHARES") of the Company's
common stock, $.01 par value ("COMMON STOCK"), and certain warrants, all as more
fully specified and subject to the terms and conditions set forth in the
Investment Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Investment Agreement and this Agreement, the Company and the Investors agree as
follows:
1. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Investment
Agreement and the Common Stock Adjustment Warrant (the "Adjustment Warrant"). As
used in this Agreement, the following terms shall have the following respective
meanings:
"ACCELERATION NUMBER" shall mean the number of Initial Shares
an Investor elects to make subject to the Mandated Acceleration Shares
calculation, but shall never exceed the aggregate number of Initial Shares
received by such Investor, less the number of Initial Shares in respect of which
an Adjustment Period has been completed (if and only if the Adjustment Shares
issuable with respect thereto, if any, have been delivered to the Investors).
"ACCELERATION PRICE" shall mean, with respect to a particular
Interfering Event, 70% of the lowest CBP from the start of that Interfering
Event through and including the Trading Day which is two Trading Days before the
delivery to the Investor of the applicable Mandated Acceleration Shares.
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed
to such terms in the Investment Agreement.
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"COMMISSION" or "SEC" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"HOLDER" and "HOLDERS" shall include the Investors and any
transferee or transferees of the Purchased Shares or Registrable Securities
which have not been sold to the public to whom the registration rights conferred
by this Agreement have been transferred in compliance with this Agreement and
the Investment Agreement.
"MANDATED ACCELERATION SHARES" means, with respect to a
particular Interfering Event, the number of shares of Common Stock resulting
from the following calculation:
<TABLE>
<S><C>
# of Mandated Acceleration Shares = Acceleration Number x (Adjusted Share Price - Acceleration Price)
------------------------------------------
Acceleration Price
</TABLE>
The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"PURCHASED SHARES" means the Initial Shares, Warrant Shares
and the Adjustment Shares issued or issuable.
"REGISTRABLE SECURITIES" shall mean: (i) the Initial Shares;
(ii) the Warrant Shares; (iii) the Adjustment Shares; (iv) the Mandated
Acceleration Shares, (v) the Delay Shares, (vi) securities issued or issuable
upon any stock split, stock dividend, recapitalization or similar event with
respect to the foregoing; and (vii) any other security issued as a dividend or
other distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses; provided such securities will
cease to be Registrable Securities for purposes of this Agreement if and to the
extent they become freely saleable by the Holders pursuant to Rule 144, assuming
a cashless exercise of a Warrant by the Holder thereof.
"REGISTRATION EXPENSES" shall mean all expenses to be incurred
by the Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
"REGISTRATION STATEMENT" shall have the meaning set forth in
Section 2(a)(i) herein.
"REGULATION D" shall mean Regulation D as promulgated pursuant
to the Securities Act, and as subsequently amended.
"SECURITIES ACT" or "ACT" shall mean the Securities Act of
1933, as amended.
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"SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for Holders not included within "Registration
Expenses".
2. Registration Requirements. The Company shall use its best
efforts to effect the registration of the Registrable Securities (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act) as would permit or facilitate the sale or distribution
of all the Registrable Securities in the manner (including manner of sale) and
in all states reasonably requested by any Holder. Such best efforts by the
Company shall include, without limitation, the following:
(a) The Company shall, as expeditiously as possible after the
Closing Date:
(i) But in any event within forty-five (45) calendar days after the
Closing, prepare and file a registration statement with the Commission
pursuant to Rule 415 under the Securities Act on Form S-3 under the
Securities Act (or in the event that the Company is ineligible to use
such form, such other form as the Company is eligible to use under the
Securities Act) covering resales by the Holders of the Registrable
Securities ("REGISTRATION STATEMENT"). Thereafter the Company shall use
its best efforts to cause such Registration Statement and other filings
to be declared effective as soon as possible, and in any event prior to
ninety (90) days following the Closing Date; provided that if the SEC
reviews and gives comments on the Registration Statement requiring
changes and amendments thereto before it will declare the Registration
Statement effective, then the Company shall use its best efforts to
have the Registration Statement and other filings declared effective no
later than 120 days following the Closing Date. Without limiting the
foregoing, the Company will promptly respond to all SEC comments,
inquiries and requests, and shall request acceleration of effectiveness
at the earliest possible date.
(ii) Prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection with
such Registration Statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement and promptly notify the Holders
of the filing and effectiveness of such Registration Statement and any
amendments or supplements.
(iii) Furnish to each Holder such numbers of copies of a current
prospectus conforming with the requirements of the Act, copies of the
Registration Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other documents as
such Holder may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such Holder.
(iv) Register and qualify the securities covered by such Registration
Statement under the securities or "Blue Sky" laws of all domestic
jurisdictions.
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(v) Notify each Holder immediately of the happening of any event (but
not the substance or details of any such events unless specifically
requested by a Holder) as a result of which the prospectus (including
any supplements thereto or thereof) included in such Registration
Statement, as then in effect, includes an untrue statement of material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its best efforts to promptly
update and/or correct such prospectus.
(vi) Notify each Holder immediately of the issuance by the Commission
or any state securities commission or agency of any stop order
suspending the effectiveness of the Registration Statement or the
threat or initiation of any proceedings for that purpose. The Company
shall use its best efforts to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(vii) Permit counsel to the Holders to review and comment upon the
Registration Statement and all amendments and supplements thereto
within a reasonable period of time (but not less than five (5) full
trading days) prior to each filing, and shall not file any document in
a form to which such counsel reasonably objects and will not request
acceleration of the Registration Statement without prior notice to such
counsel.
(viii) List the Registrable Securities covered by such Registration
Statement with all securities exchange(s) and/or markets on which the
Common Stock is then listed and prepare and file any required filings
with the Nasdaq National Market System or any exchange or market where
the Common Stock is traded.
(ix) Take all steps necessary to enable Holders to avail themselves of
the prospectus delivery mechanism set forth in Rule 153 (or successor
thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events that
may arise that the parties consider will interfere with the full enjoyment by
the Investors of their rights under this Agreement and the Investment Agreement
(the "INTERFERING EVENTS"), and (II) certain remedies applicable in each of
these events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a non-exclusive remedy to the Investors if an
Interfering Event occurs and provide that the Investors may require that the
Company issue additional shares of Common Stock.
Paragraph (v) provides, inter alia, that if default
adjustments required as the remedy in the case of certain of the Interfering
Events are not provided when due, the Company may be required by the Investors
issue additional shares of Common Stock.
Paragraph (vi) provides, inter alia, that the Investors have
the right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to
serve only as an introduction to this Section 2(b), are for convenience only,
and are not to be considered in applying, construing or interpreting this
Section 2(b).
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(i) Delay in Effectiveness of Registration Statement.
(A) In the event that such Registration Statement has not been
declared effective within the periods specified in Section 2(a)(i),
then the Company shall pay each Holder a Monthly Delay Payment (as
defined below) for each 30 day period (or portion thereof) that
effectiveness of the Registration Statement is delayed. In addition to
the foregoing, if for any reason the Registration Statement has not
been declared effective within 180 days after the Closing Date, then
each Holder shall have the right but not the obligation to receive from
the Company (for no additional consideration), and the Company shall
have the obligation to deliver to such Holder upon Holder's demand, at
any time after the 180th day after the Closing Date, the Mandated
Acceleration Shares.
(B) As used in this Agreement, a "MONTHLY DELAY PAYMENT" shall
be a payment in immediately available funds equal to .5% of the Share
Purchase Price of the Purchased Shares held by a Holder for the initial
30 day period (or portion thereof) that the specified condition in this
Section 2(b) has not been fulfilled or the specified deficiency has not
been remedied, and an additional .5% of the Share Purchase Price of the
Purchased Shares held by a Holder for each subsequent such 30 day
period (or portion thereof), up to a maximum of 2% per 30 day period
(or portion thereof). If the aggregate amount of Monthly Delay Payments
payable in cash by the Company pursuant to any section of this
Agreement is capped (which cap shall never be less than $250,000 in the
aggregate) by the Company's secured credit arrangements existing as of
the date hereof, then all Monthly Delay Payments in excess of such cap
limit shall be paid to the Holders in shares of Common Stock. The
number of shares of Common Stock so payable by the Company to the
Holder (the "DELAY SHARES") shall be calculated by dividing the portion
of the Monthly Delay Payment not payable in cash by a number equal to
70% of the lowest CBP during the period from and including the
commencement of the relevant Interfering Event until the end of that
Interfering Event. Payment of the Monthly Delay Payments and delivery
of the Mandated Acceleration Shares and the Delay Shares shall be due
and payable from the Company to such Holder within five (5) business
days of demand therefor. Without limiting the foregoing, if delivery of
the Mandated Acceleration Shares and the Delay Shares is not made
within such 5 business day period, the Holder may revoke and withdraw
in whole or in part its election to cause the Company to deliver such
Mandated Acceleration Shares and Delay Shares at any time prior to its
receipt of those Mandated Acceleration Shares and Delay Shares, without
prejudice to its ability to elect to receive those or other Mandated
Acceleration Shares and Delay Shares in the future.
(ii) No Listing; Mandated Acceleration Shares for Delisting of Class of
Shares.
(A) In the event that the Company fails, refuses or for any
other reason is unable to cause the Registrable Securities covered by
the Registration Statement to be listed with Nasdaq National Market
System or another Approved Market at all times during the period
("LISTING PERIOD") from the 90th day
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following the Closing Date until the third (3rd) anniversary of the
Closing Date, then the Company shall provide to each Holder a Monthly
Delay Payment (or Delay Shares, if applicable) in respect of each
Purchased Share or Warrant not so repurchased, for each 30-day period
or portion thereof during which such listing is not in effect. The
provisions of Section 2(b)(i)(B) shall apply to this Section
2(b)(ii)(A).
(B) In the event that shares of Common Stock of the Company
are not listed on any of the Approved Markets at all times following
the Closing Date, or are otherwise suspended from trading and remain
unlisted or suspended for three (3) consecutive days, or if the
Registrable Securities are not listed for three (3) consecutive days
following the Closing, then at the option of each Holder and to the
extent such Holder so elects, each Holder shall have the right but not
the obligation to receive (for no additional consideration) from the
Company and the Company shall have the obligation to deliver to such
Holder upon Holder's demand the applicable number of Mandated
Acceleration Shares on the terms set forth in Section 2(b)(i)(B) above.
(iii) Blackout Periods. In the event any Holder's ability to sell
Registrable Securities under the Registration Statement is suspended
for more than (i) five (5) consecutive days or (ii) an aggregate of ten
(10) days in any calendar year ("SUSPENSION GRACE PERIOD"), including
without limitation by reason of any suspension or stop order with
respect to the Registration Statement or the fact that an event has
occurred as a result of which the prospectus (including any supplements
thereto) included in such Registration Statement then in effect
includes an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing (a "BLACKOUT"), then the Company shall provide to each Holder
a Monthly Delay Payment (or Delay Shares, if applicable) for each 30
day period or portion thereof from and after the expiration of the
Suspension Grace Period, on the terms set forth in Section 2(b)(i)(B)
above. In addition, if at any time following the expiration of the
Suspension Grace Period the Blackout continues for more than five (5)
additional consecutive days, a Holder shall have the right but not the
obligation to receive (for no additional consideration) from the
Company, and the Company shall have the obligation to deliver to the
Holder upon Holder's demand, the Mandated Acceleration Shares, on the
terms set forth in Section 2(b)(i)(B) above.
(iv) Exercise Deficiency. In the event that the Company does not have a
sufficient number of shares of Common Stock available to satisfy the
Company's obligations to any Holder upon receipt of a notice of
exercise of a Warrant from an Investor, or is otherwise unable or
unwilling for any reason to issue Common Stock as required by the
Warrants or the Investment Agreement (each, an "EXERCISE DEFICIENCY"),
then:
(A) The Company shall provide to each Holder a Monthly Delay
Payment (or Delay Shares, if applicable) for each 30 day period or
portion thereof following the Exercise Deficiency, on the terms set
forth in Section 2(b)(i)(B) above.
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(B) At any time five (5) days after the commencement of the
running of the first 30-day period described above in clause (A) of
this paragraph (iv), at the request of any Holder, the Company promptly
shall deliver (for no additional consideration) to such Holder upon
Holder's demand the Mandated Acceleration Shares on the terms set forth
in Section 2(b)(i)(B) above.
(v) Mandated Acceleration Shares for Defaults.
(A) The Company acknowledges that any failure, refusal or
inability by the Company to perform the obligations described in the
foregoing paragraphs (i) through (iv) will cause the Holders to suffer
significant damages in an amount that will be difficult to ascertain,
including without limitation damages resulting from the loss of
liquidity in the Registrable Securities and the additional investment
risk in holding the Registrable Securities. Accordingly, the parties
agree, after consulting with counsel, that it is appropriate to include
in this Agreement the foregoing provisions for Monthly Delay Payments,
Delay Shares and Mandated Acceleration Shares in order to compensate
the Holders for such damages. The parties acknowledge and agree that
the Monthly Delay Payments, Delay Shares and Mandated Acceleration
Shares set forth above represent the parties' good faith effort to
quantify such damages and, as such, agree that the form and amount of
such payments and the number of Delay Shares and Mandated Acceleration
Shares are reasonable and will not constitute a penalty.
(B) In the event that the Company fails to pay any Monthly
Delay Payment (or deliver Delay Shares, if applicable) within 5
business days of demand therefor, each Holder shall have the right but
not the obligation to receive (for no additional consideration), and
the Company shall have the obligation to deliver to the Holder upon
Holder's demand, the Mandated Acceleration Shares on the terms set
forth in Section 2(b)(i)(B) above.
(vi) Cumulative Remedies. The Monthly Delay Payments, the Delay Shares
and the Mandated Acceleration Shares provided for above are in addition
to and not in lieu or limitation of any other rights the Holders may
have at law, in equity or under the terms of the Investment Agreement,
the Warrants and this Agreement, including without limitation the right
to monetary contract damages and specific performance. Notwithstanding
the foregoing, the Holders may not receive Mandated Acceleration
Shares, pursuant to one or more subsections of this Section 2(b), in
respect of more than the maximum Acceleration Number. Each Holder shall
be entitled to specific performance of any and all obligations of the
Company in connection with the registration rights of the Holders
hereunder without the necessity of posting a bond or surety.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by nationally or
regionally recognized investment bankers reasonably satisfactory to the Company.
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(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the Registrable Securities are to be sold in an underwritten offering:
(i) make such representations and warranties to the Holders and the
underwriter or underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of Registrable Securities and
the underwriter or underwriters, if any, opinions of independent
outside counsel to the Company, on and dated as of the effective day
(or in the case of an underwritten offering, dated the date of delivery
of any Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following the end
of each fiscal year thereafter, which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Holders
and the underwriter(s), if any, and their counsel and covering, without
limitation, such matters as the due authorization and issuance of the
securities being registered and compliance with securities laws by the
Company in connection with the authorization, issuance and registration
thereof and other matters that are customarily given to underwriters in
underwritten offerings, addressed to the Holders and each underwriter,
if any;
(iii) cause to be delivered, immediately prior to the effectiveness of
the Registration Statement (and, in the case of an underwritten
offering, at the time of delivery of any Registrable Securities sold
pursuant thereto), and at the beginning of each fiscal year following a
year during which the Company's independent certified public
accountants shall have reviewed any of the Company's books or records,
a "comfort" letter from the Company's independent certified public
accountants addressed to the Holders and each underwriter, if any,
stating that such accountants are independent public accountants within
the meaning of the Securities Act and the applicable published rules
and regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are customarily
covered by letters of the independent certified public accountants
delivered in connection with secondary offerings; such accountants
shall have undertaken in each such letter to update the same during
each such fiscal year in which such books or records are being reviewed
so that each such letter shall remain current, correct and complete
throughout such fiscal year; and each such letter and update thereof,
if any, shall be reasonably satisfactory to the Holders;
(iv) if an underwriting agreement is entered into, the same shall
include customary indemnification and contribution provisions to and
from the underwriters and procedures for secondary underwritten
offerings; and
(v) deliver such documents and certificates as may be reasonably
requested by the Holders of the Registrable Securities being sold or by
the managing underwriter or
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underwriters, if any, to evidence compliance with clause (i) above and
with any customary conditions contained in the underwriting agreement,
if any.
(e) The Company shall make available for inspection by the
Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders' due diligence examination
of the Company and review of any Registration Statement, all SEC Documents (as
defined in the Investment Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
with such Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, the Company may suspend the
use of any prospectus used in connection with the Registration Statement only in
the event, and for such period of time as, such a suspension is required by the
rules and regulations of the Commission. The Company will use its best efforts
to cause such suspension to terminate at the earliest possible date.
(g) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved Registrable Securities within
five (5) business days of any stockholders or directors meeting formally
authorizing same and shall use its best efforts to cause such Registration
Statement to become effective within thirty (30) days of such stockholders
meeting. If the Holders receive any Registrable Securities that were not already
included in a Registration Statement, subsequent to the date such Registration
Statement is declared effective, and the Company is unable under the securities
laws to add such securities to the then effective Registration Statement, the
Company shall promptly file, in accordance with the procedures set forth herein,
an additional Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (i) cause any such
additional Registration Statement, when filed, to become effective under the
Securities Act, and (ii) keep such additional Registration Statement effective
during the period described in Section 5 below and cause such Registration
Statement to become effective within 30 days of that date that the need to file
the Registration Statement arose. All of the registration rights and remedies
under this Agreement shall apply to the registration of such newly reserved
shares and such new Registrable Securities, including without limitation the
provisions providing for default payments and mandatory redemptions contained
herein.
3. Expenses of Registration. All Registration Expenses in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3. The Company shall use its best
efforts to remain qualified for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible to use
such form, such form as the Company is eligible to use under the Securities Act.
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5. Registration Period. In the case of the registration
effected by the Company pursuant to this Agreement, the Company will use its
best efforts to keep such registration effective until the earlier of the third
(3rd) anniversary of the Closing Date or the date upon which such Registrable
Securities including Warrant Shares, assuming a cashless exercise by the Holders
thereof, may be sold freely and without limitation by the Holders under Rule
144(k) (provided that the Company's transfer agent has accepted an irrevocable
instruction from the Company to such effect, a copy of which shall have been
given and be reasonably acceptable to the Holders and their counsel). As long as
any Registrable Securities are outstanding, the Company shall do all things
necessary to make Rule 144 available to the Holders.
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder,
each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within
the meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, any underwriter, against all claims, losses, damages, expenses
(including the costs of enforcing this provision) 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 prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on 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 in light of the circumstances under which they were made,
or any violation by the Company of the Securities Act or any state securities
law or in either case, any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse each
Holder, each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to a Holder to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by such Holder or the
underwriter (if any) therefor and stated to be specifically for use therein. The
indemnity agreement contained in this Section 6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent will
not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not
jointly, if Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, agents and partners, and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, each other Holder (if any), and each of their officers,
directors and partners, and each person
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controlling such other Holder(s) against all claims, losses, damages 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 such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading in light of the circumstances under which they were made, and will
reimburse the Company and such other Holder(s) and their directors, officers and
partners, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein, and provided that the maximum amount
for which such Holder shall be liable under this indemnity shall not exceed the
net proceeds received by such Holder from the sale of the Registrable Securities
pursuant to the registration statement in question. The indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement of
any such claims, losses, damages or liabilities if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld).
(c) Procedure. Each party entitled to indemnification under
this Section 6 (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 to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at its own expense, and provided further that
the failure of 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 Indemnifying Party is materially and adversely affected by
such failure to provide notice. 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
to such claim or litigation. Each Indemnified Party shall furnish such
non-privileged information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
7. Contribution. If the indemnification provided for in
Section 6 herein is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein (other than by reason
of the exceptions provided 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 or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or
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<PAGE> 12
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of any Holder 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 or alleged omission to
state a material fact relates to information supplied by the Company or by such
Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Holders or the underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraphs. 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 paragraphs shall be deemed to include, subject to the
limitations set forth above, 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, no Holder or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of any Holder, the net proceeds received by such Holder
from the sale of Registrable Securities pursuant to the registration statement
in question 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 or alleged 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.
8. Survival. The indemnity and contribution agreements
contained in Sections 6 and 7 and the representations and warranties of the
Company referred to in Section 2(d)(i) shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement or the Investment
Agreement or any underwriting agreement, (ii) any investigation made by or on
behalf of any Indemnified Party or by or on behalf of the Company, and (iii) the
consummation of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to the
Company such information regarding such Holder and the distribution and/or sale
proposed by such Holder as the Company may reasonably request in writing and as
shall be reasonably required in connection with any registration, qualification
or compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Investor shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
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<PAGE> 13
10. Replacement Certificates. The certificate(s) representing
the shares Common Stock held by any Investor (or then Holder) may be exchanged
by such Investor (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of shares or Common Stock, as reasonably requested by such Investor (or such
Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
11. Transfer or Assignment. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The rights granted to the
Investors by the Company under this Agreement to cause the Company to register
Registrable Securities may be transferred or assigned (in whole or in part) to a
permitted transferee or assignee of Registrable Securities or Warrants, and all
other rights granted to the Investors by the Company hereunder may be
transferred or assigned to any such transferee or assignee; provided in each
case that the Company must be given written notice by the such Investor at the
time of or within a reasonable time after said transfer or assignment, stating
the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned; and provided further that the transferee or assignee of such rights
agrees in writing to be bound by the registration provisions of this Agreement.
12. Miscellaneous.
(a) Remedies. The Company and the Investors acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof without the necessity of posting a bond or surety,
this being in addition to any other remedy to which any of them may be entitled
by law or equity.
(b) Jurisdiction. EACH OF THE COMPANY AND EACH OF THE
INVESTORS (I) HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE
UNITED STATES SITTING IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II)
HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY AND THE
INVESTORS CONSENT TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING
BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO
IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH
SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW.
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<PAGE> 14
(c) Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
Plato Learning, Inc.
1801 Nesbitt Avenue South
Bloomington, Minnesota 55439
Telephone: (952) 832-1000
Facsimile: (952) 832-1200
Attention: Mr. John Murray
with a copy to:
Winston & Strawn
35 W. Wacker Drive
Chicago, IL 60610
Telephone: (312) 558-5600
Facsimile: (312) 558-5700
Attention: Leland E. Hutchinson,Esq.
to the Investors:
Elliott Associates L.P.
712 Fifth Avenue, 36th Floor
New York, New York 10019
Telephone: (212) 974-6000
Facsimile: (212) 586-9457
Attention: Mr. Brett Cohen
Westgate International, L.P.
c/o Elliott Management Corporation
712 Fifth Avenue, 36th Floor
New York, New York 10019
Telephone: (212) 506-2999
Facsimile: (212) 586-9467
Attention: Mr. Brett Cohen
with copies to:
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue
New York, New York 10176
Telephone: (212) 986-6000
Facsimile: (212) 986-8866
Attention: Christopher P. Davis, Esq.
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<PAGE> 15
Any party hereto may from time to time change its address for notices by giving
at least five days' written notice of such changed address to the other parties
hereto.
(d) Indemnity. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees)
incurred as a result of such parties' breach of any representation, warranty,
covenant or agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter. The representations and warranties and
the agreements and covenants of the Company and each Investor contained herein
shall survive the Closing.
(f) Execution in Counterpart. This Agreement may be executed
in two or more counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the same
counterpart.
(g) Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Investors
without their consent, unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement. The
Company agrees to submit for reasonable review and comment a copy of any public
announcement regarding the matters covered by this Agreement or any agreement or
document executed herewith to the Investors and any public announcement
including the name of the Investors to the Investors, prior to the publication
of such announcements.
(h) Entire Agreement; Amendment. This Agreement, together with
the Investment Agreement, the Warrants and the agreements and documents
contemplated hereby and thereby, contains the entire understanding and agreement
of the parties, and may not be amended, modified or terminated except by a
written agreement signed by the Company plus the Holders of two-thirds (2/3) of
the Registrable Securities (as if all are Warrants were exercised).
(i) Governing Law. THIS AGREEMENT AND THE VALIDITY AND
PERFORMANCE OF THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT TO THE EXTENT THAT THE LAW OF
THE STATE OF DELAWARE REGULATES THE COMPANY'S ISSUANCE OF SECURITIES.
(j) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(k) Unconditional Obligation. The obligations of the Company
hereunder are unconditional and no alleged claim against the Investors shall
excuse the Company from its obligations hereunder (without prejudice to the
Company's right to commence an action against the Investors to assert any such
claims).
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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
PLATO LEARNING, INC.
By:
-------------------------------------------------
Name:
Title:
INVESTORS:
ELLIOTT ASSOCIATES, L.P.
By: Elliott Capital Advisor
By: Braxton Associates, Inc., as General Partners
By:
-------------------------------------------------
Name:
Title:
WESTGATE INTERNATIONAL, L.P.
By: ELLIOTT INTERNATIONAL CAPITAL
ADVISORS INC.
Attorney-in-Fact
By:
-------------------------------------------------
Name:
Title:
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
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