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EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made as of June 1, 1998 between IDG Enterprises, Inc.,
a Delaware corporation (the "Original Stockholder"; together with its permitted
successors and assigns, the "Stockholders"), and IDG BOOKS WORLDWIDE, INC., a
Delaware corporation (the "Company").
Preliminary Statement
The Original Stockholder currently owns all of the outstanding Class A
common stock, $.001 par value, of the Company ("Class A Common Stock"). The
Original Stockholder and the Company contemplate that the Company will issue to
the public shares of Class A Common Stock pursuant to a registration statement
under the Securities Act of 1933 filed with the Commission on May 22, 1998 (the
"IPO").
The Company and the Original Stockholder desire to provide for certain
arrangements with respect to the registration by the Company under the
Securities Act of 1933 of shares of Class A Common Stock held by the
Stockholders following the public offering. The purpose of this Agreement is to
set forth the understanding of the parties with respect to the registration
rights to be granted to the Stockholders by the Company as of the effective date
of the IPO (the "Effective Date").
Agreements
IT IS MUTUALLY agreed by the parties hereto as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Registration Statement" means a registration statement filed by
the Company with the Commission for a public offering and sale of Class A Common
Stock (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a
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similar limited purpose, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation).
"Registration Expenses" means the expenses described in
Section 4.
"Registrable Shares" means (a) the shares of Class A Common Stock
that are owned as of the date of this Agreement by the Original Stockholder, (b)
any shares of Class A Common Stock hereafter acquired by the Original
Stockholder in any transaction whatsoever, including without limitation on
conversion of shares of Class B common stock, $.001 par value, of the Company
hereafter acquired by the Original Stockholder pursuant to a Share Exchange
Agreement dated as of May 21, 1998 to which the Company the Original Stockholder
are parties, (c) any shares of Class A Common Stock referred to in (a) or (b)
that are transferred to, and with respect to which the rights provided by this
Agreement are assigned to, a successor Stockholder by virtue of Section 9 of
this Agreement, and (d) any other shares of Class A Common Stock issued in
respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations or similar events); provided, however, that
shares of Class A Common Stock which are Registrable Shares shall cease to be
Registrable Shares (i) upon any sale pursuant to a Registration Statement or
pursuant to Rule 144 under the Securities Act, (ii) if, in the written opinion
of counsel to the Company addressed to the Stockholder, all of such Shares held
by the Stockholder may be sold without restriction pursuant to Rule 144(k) under
the Securities Act, or (iii) upon any sale in any manner to a person or entity
which is not entitled, by virtue of Section 9 of this Agreement, to the rights
provided by this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
2. Registration.
2.1 Whenever the Company proposes to file a Registration Statement
(either for its own account or in order to register stock held by any other
stockholder) at any time and from time to time (other than in connection with
its IPO), it will, prior to such filing, give written notice to all Stockholders
of its intention to do so and, upon the written request of a Stockholder or
Stockholders given within 15 days after receipt of such notice from the Company
(which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its reasonable best efforts to cause
all Registrable Shares which the Company has been requested by such Stockholder
or Stockholders to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such
Stockholder or Stockholders; provided that the Company shall have the right to
postpone or withdraw any registration effected pursuant to this Section 2
without obligation to any Stockholder.
2.2 In connection with any registration under this Section 2
involving a firm commitment underwriting, the Company shall not be required to
include any Registrable Shares in such registration unless the holders thereof
accept the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it. If in the opinion (which shall be either written
or, if not written, presented orally to the Board of Directors of International
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Group, Inc., who shall have an opportunity to discuss the rationale of the
opinion) of the managing underwriter selected by the Board of Directors of the
Company, if there is only one managing underwriter of such an underwriting, or
in the opinion of a majority of the managing underwriters selected by the Board
of Directors of the Company, if there is more than one, it is appropriate
because of marketing factors to limit the number of Registrable Shares to be
included in the offering, then the Company shall be required to include in the
registration only that number of Registrable Shares, if any, which the majority
of such principal underwriters believes should be included therein. If the
number of Registrable Shares to be included in the offering in accordance with
the foregoing is less than the total number of shares which the holders of
Registrable Shares have requested to be included, then the holders of
Registrable Shares who have requested registration and other holders of
securities entitled to include them in such registration shall participate in
the registration pro rata based upon their total ownership of shares of Class A
Common Stock. If any holder would thus be entitled to include more securities
than such holder requested to be registered, the excess shall be allocated among
other requesting holders pro rata in the manner described in the preceding
sentence.
3. Registration Procedures.
If and whenever the Company is required by the provisions of this
Agreement to use its reasonable best efforts to effect the registration of any
of the Registrable Shares under the Securities Act, the Company shall:
3.1 file with the Commission a Registration Statement with respect to
such Registrable Shares and, subject to the provisions of section 2.1 of this
Agreement, use its reasonable best efforts to cause that Registration Statement
to become and remain effective;
3.2 as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective, in the case of a firm commitment underwritten
public offering, until each underwriter has completed the distribution of all
securities purchased by it and, in the case of any other offering, until the
earlier of the sale of all Registrable Shares covered thereby or 180 days after
the effective date thereof;
3.3 as expeditiously as possible furnish to each selling Stockholder
such reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the selling Stockholder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by the selling Stockholder; and
3.4 as expeditiously as possible use its reasonable best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the selling Stockholders
shall reasonably request, and do any and all other acts and things that may be
reasonably necessary to enable the selling Stockholders to consummate
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the public sale or other disposition in such states of the Registrable Shares
owned by the selling Stockholder; provided, however, that the Company shall not
be required in connection with this Section to qualify as a foreign corporation
or execute a general consent to service of process in any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
selling Stockholders and after having done so the prospectus is amended or
supplemented to comply with the requirements of the Securities Act, the Company
shall promptly notify the selling Stockholders and, if requested, the selling
Stockholders shall immediately cease making offers of Registrable Shares and
return all prospectuses to the Company. The Company shall promptly provide the
selling Stockholders with revised prospectuses and, following receipt of the
revised prospectuses, the selling Stockholders shall be free to resume making
offers of the Registrable Shares.
4. Allocation of Expenses.
The Company will pay all Registration Expenses of all registrations
under this Agreement. For purposes of this Section 4, the term "Registration
Expenses" shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
exchange and Nasdaq listing fees, printing expenses, fees and expenses of
counsel for the Company, state Blue Sky fees and expenses, and the expense of
any special audits incident to or required by any such registration, but
excluding underwriting discounts, selling commissions and the fees and expenses
of selling Stockholders' own counsel, if any.
5. Indemnification and Contribution.
5.1 In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the seller of such Registrable Shares, each underwriter of
such Registrable Shares, and each other person, if any, who controls such seller
or underwriter within the meaning of the Securities Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
such seller, underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such seller, underwriter
and each such controlling person for any legal or any other expenses reasonably
incurred by such seller, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company
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will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus or final
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by or on
behalf of such seller, underwriter or controlling person specifically for use in
the preparation thereof.
5.2 In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of each such Stockholder to
the Company hereunder shall be limited to an amount equal to the net proceeds to
such Stockholder of Registrable Shares sold in connection with such
registration.
5.3 Each party entitled to indemnification under this Section 5 (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 or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party who shall conduct the defense of such claim or litigation shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); 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 5 except to the extent that the failure to give
such notice has caused actual harm to the Indemnifying Party. The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. 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
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settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment or settle such claim or litigation without the
prior written consent of the Indemnifying Party.
5.4 In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Registrable Shares exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling Stockholder or any such controlling
person in circumstances for which indemnification is provided under this Section
5; then, in each such case, the Company and such Stockholder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportions so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Shares offered by the Registration Statement
bears to the public offering price of all securities offered by such
Registration Statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the net proceeds to it of all
Registrable Shares sold by it pursuant to such Registration Statement, and (B)
no person or entity guilty of fraudulent misrepresentation within the meaning of
Section 11(f) of the Securities Act shall be entitled to contribution from any
person or entity who is not guilty of such fraudulent misrepresentation.
6. Information by Holder.
Each Stockholder including Registrable Shares in any registration shall
furnish to the Company such information regarding such Stockholder and the
distribution proposed by such Stockholder as the Company may reasonably request
in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
7. Reports Under the Exchange Act.
With a view to making available to the Stockholders the benefits of Rule
144 under the Securities Act and any other rule or regulation of the Commission
that may at any time permit a Stockholder to sell securities of the Company to
the public without registration, the Company agrees to use its reasonable best
efforts to:
7.1 make and keep public information available, as those terms are
understood and defined in Rule 144, at all times subsequent to 90 days after the
effective date of the first Registration Statement covering an underwritten
public offering filed by the Company;
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7.2 file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
7.3 furnish to any Stockholder promptly upon request a written
statement by the Company that it has complied with the reporting requirements of
Rule 144 (at any time after 90 days after the effective date of said first
Registration Statement filed by the Company), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as may be
reasonably requested in availing any such holder to take advantage of any rule
or regulation of the Commission permitting the selling of any such securities
without registration.
8. Effective Date and Termination.
This Agreement shall commence on the Effective Date and shall remain in
effect so long as any Registrable Shares are outstanding. This Agreement may be
terminated by the written agreement of the Company and the holders of at least
90% in interest of the voting power of the Registrable Shares. In the event that
the Company shall not have closed the IPO by December 31, 1998, this Agreement
shall not become effective and shall no longer be binding on either party hereto
in any respect.
9. Transfers of Rights.
This Agreement, and the rights and obligations of the Stockholders
hereunder, may be assigned by the Stockholders as follows:
9.1 by the Original Stockholder, to any person or entity (a) to whom
or which the Original Stockholder transfers Registrable Shares or grants the
right or option to purchase Registrable Shares, and (b) who or which is an
officer or director of the Original Stockholder or an "affiliate" or "associate"
(as such terms are defined under the Securities Act) of the Original Stockholder
(an "IDG Affiliated Stockholder"), in which event the rights provided to the
Original Stockholder under this Agreement shall automatically and without
further action be assigned to such transferee or grantee in respect of such
shares;
9.2 by any IDG Affiliated Stockholder, to any other person or entity
to whom the IDG Affiliated Stockholder transfers Registrable Shares and who is
also an IDG Affiliated Stockholder, in which event the rights provided to
Stockholders under this Agreement shall automatically and without further action
be assigned to such transferee in respect of such shares;
9.3 by any Stockholder, to any person or entity, other than a
transferee pursuant to Section 9.1 or 9.2, to whom the Stockholder transfers
Registrable Shares, in which event the rights provided to Stockholders under
this Agreement may be assigned to such transferee in respect of such shares;
provided that the number of Registrable Shares so transferred is not less than
100,000 shares (as adjusted for future stock splits, stock dividends,
reclassifications, recapitalization or similar events); and provided further
that the Company receives written notice
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from such transferee within 30 days of such transfer and assignment to the
effect that such transferee has been assigned the rights provided to
Stockholders under this Agreement.
In any case in which rights are assigned pursuant to this Section 9, the
transferee shall be deemed a "Stockholder" for purposes of this Agreement and be
bound by all the obligations to which Stockholders are bound under this
Agreement.
10. General.
10.1 Notices.
(a) All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered by hand, by
guaranteed overnight delivery by means of a nationally recognized overnight
delivery service, by fax, or by first class certified or registered mail, return
receipt requested, postage prepaid, to the following addresses:
(i) If to the Company, at 000 Xxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx
000, Xxxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxx Xxxxxxxx, Vice
President and Chief Financial Officer, or at such other address or
addresses as may have been furnished in writing by the Company to the
Stockholder or Stockholders, with a copy to Xxxxx X. Xxx, Esq., Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000;
(ii) If to the Original Stockholder, at Xxx Xxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxx, Vice
President - Finance, or at such other address or addresses as may have
been furnished to the Company in writing by the Original Stockholder,
with a copy to Xxxxxx X. Xxxxxx, Xx. Esq., Xxxxx, Xxxx & Xxxxx LLP, Xxx
Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; and
(iii) If to a Stockholder other than IDG Enterprises, Inc., at
such address or addresses as may have been furnished to the Company by
such Stockholder or, if no such address has been furnished, at the
address specified in subparagraph (ii).
(b) Notices provided in accordance with this Section 10 shall
be deemed delivered upon personal delivery, upon actual receipt or on the third
business day after deposit in the mail.
10.2 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
10.3 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the holders of at least 90% in interest of
the voting power of the Registrable Shares; provided, however, that this
Agreement may be amended with the consent of the holders of less than all
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Registrable Shares only in a manner which affects all Registrable Shares in the
same fashion. No waivers of or exceptions to any term, condition or provision of
this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
10.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
10.5 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
10.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the substantive laws of Delaware, without regard to its
principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
IDG ENTERPRISES, INC.
By:_____________________________________
Name:
Title:
IDG BOOKS WORLDWIDE, INC.
By:_____________________________________
Name:
Title:
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