EXHIBIT 2
[Preferred]
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of August 24, 2001 between
PRIMEDIA Inc., a Delaware corporation ("PRIMEDIA"), and KKR 1996 Fund L.P., a
Delaware limited partnership (the "Purchaser").
I. STOCK SALE
1.1 Purchase of Stock. Subject to all of the terms and conditions of
this Agreement, the Purchaser hereby agrees to purchase from PRIMEDIA, and
PRIMEDIA agrees to sell to the Purchaser, 1,000,000 shares of $125 Series J
Convertible Exchangeable Preferred Stock, par value $.01 per share (the
"Purchaser Preferred Shares"), for $125 per share, which are convertible into
shares of PRIMEDIA common stock, par value $.01 per share (the "Common
Shares"), at a conversion price of $7 per Common Share, and which are
exchangeable into PRIMEDIA's 12.5% Class J Subordinated Notes (the "Purchaser
Notes"), and the warrants referred to in Section 1.2 for an aggregate purchase
price of $125,000,000 (the "Purchase Price"). The closing of the purchase will
take place at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (the "Closing"). At the Closing, the Purchaser will
pay to PRIMEDIA the Purchase Price, in immediately available funds, against
its receipt of a duly executed stock certificate, representing the Purchaser
Preferred Shares, registered in the name of the Purchaser on the books of
PRIMEDIA.
1.2 Preferred Warrants. PRIMEDIA shall issue to the Purchaser at the
Closing a warrant to purchase 2,620,000 Common Shares at an exercise price of
$7 per Common Share, subject to adjustment, which warrant shall be
substantially in the form of Exhibit A hereto. In addition, if any shares of
the Purchaser Preferred Shares are outstanding on any of the dates set forth
below, PRIMEDIA shall issue to the Purchaser on such date a warrant to
purchase the number of Common Shares set forth opposite such date at an
exercise price of $7 per Common Share, which warrant shall be substantially in
the form of Exhibit A hereto:
Date Number of Shares
---- ----------------
Three Months from Closing 250,000
Six Months from Closing 1,000,000
Nine Months from Closing 1,250,000
First Anniversary of Closing 1,500,000
The Purchaser Preferred Shares, the Common Shares, the Purchaser
Notes, and the warrants are hereinafter referred to collectively as the
"Purchaser Securities".
1.3 Management Rights. After the Closing and for so long as the
Purchaser owns any equity or debt securities of PRIMEDIA, the Purchaser shall
have the right to elect at least one member of the Board of Directors to
PRIMEDIA. The Purchaser shall also have at all times after the Closing the
right to (i) inspect and copy books and records of PRIMEDIA; (ii) visit and
inspect the PRIMEDIA properties; (iii) receive financial statements, operating
reports and budgets of PRIMEDIA; (iv) receive materials sent to the PRIMEDIA
Board of Directors; and (v) consult with and provide non-binding advice to
PRIMEDIA management on significant corporate actions.
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II. PURCHASER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1 Investment Intention. The Purchaser represents and warrants that
it is purchasing the Purchaser Preferred Shares and the warrants solely for
its own account for the purpose of investment and not with a view to or for
sale in connection with any distribution of any thereof. The Purchaser agrees
that it will not, directly or indirectly, offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any of the Purchaser Securities (or
solicit any offers to buy, purchase, or otherwise acquire or take a pledge of
any of the Purchaser Securities), except in compliance with the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations thereunder.
2.2 Purchaser Preferred Shares Legend. The certificate (or
certificates) representing the Purchaser Preferred Shares shall bear the
following legend (until such time as subsequent transfers thereof are no
longer restricted in accordance with the Act):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR
ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND
ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS THEREUNDER."
2.3 Common Shares Legend. The certificate (or certificates)
representing the Common Shares (acquired by conversion of all or any part of
the Purchaser Preferred Shares or exercise of the warrants) shall bear the
following legend (until such time as subsequent transfers thereof are no
longer restricted in accordance with the Act):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR
ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND
ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS THEREUNDER [AND THE WARRANT. A COPY OF THE
FORM OF SAID WARRANT IS ON FILE WITH THE SECRETARY OF
PRIMEDIA INC.]"
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2.4 Purchaser Notes Legend. The note or notes representing the
Purchaser Notes shall bear the following legend (until such time as subsequent
transfers thereof are no longer restricted in accordance with the
Act):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE
WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY
THE PROVISIONS OF, THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE RULES AND REGULATIONS THEREUNDER."
2.5 Warrants Legend. The warrant or warrants shall bear the following
legend (until such time as subsequent transfers thereof are no longer
restricted in accordance with the Act):
"NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF,
AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE
SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND
REGULATIONS THEREUNDER AND THIS WARRANT."
2.6 Federal Securities Laws Matters. The Purchaser represents that it
is familiar with Release No. 5226 issued by the Securities and Exchange
Commission (the "SEC") under the Act, it has consulted with its counsel with
regard thereto, and it is fully aware of the position of the SEC limiting the
resale to the public of any of the Purchaser Securities.
2.7 Compliance with Rule 144. If any of the Purchaser Securities are
disposed of in accordance with Rule 144 under the Act, the Purchaser shall
deliver to PRIMEDIA at or prior to the time of such disposition an executed
copy of Form 144 (if required by Rule 144) and such other documentation as
PRIMEDIA may reasonably require in connection with such sale.
2.8 Ability to Bear Risk. The Purchaser represents and warrants that
(a) the financial situation of the Purchaser is such that it can afford to bear
the economic risk of holding the unregistered Purchaser Securities for an
indefinite period and (b) it can afford to suffer the complete loss of its
investment in the Purchaser Securities.
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2.9 Access to Information; Evaluation of Risks. The Purchaser
represents and warrants that (a) it understands and has taken cognizance of all
the risk factors related to the purchase of the Purchaser Securities, (b) it
has received and carefully reviewed information regarding the business of
PRIMEDIA and has been granted the opportunity to ask questions of, and receive
answers from, representatives of PRIMEDIA concerning the terms and conditions
of the purchase of the Purchaser Securities and to obtain any additional
information which it deems necessary to verify the accuracy or completeness of
the information furnished to it and (c) its knowledge and experience in
financial and business matters is such that it is capable of evaluating the
risks of the investment in the Purchaser Securities.
III. RULE 144
PRIMEDIA agrees that it will use its best efforts to file in a timely
manner all reports required to be filed by it pursuant to the Securities
Exchange Act of 1934, as amended, and, upon request of the Purchaser or a
transferee of Purchaser Securities, will furnish Purchaser with such
information as may be necessary to enable the Purchaser to effect routine
sales pursuant to Rule 144 under the Act.
IV. REGISTRATION RIGHTS
The Purchaser will have such rights to have the Common Shares
registered under the Act as provided in the Second Amended and Restated
Registration Rights Agreement, dated as of August 24, 2001, among the
Purchaser, PRIMEDIA and other holders or purchasers of shares of Common Shares
of PRIMEDIA on or after the date hereof.
V. MISCELLANEOUS
5.1 Notices. All notices and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified mail,
return receipt requested, postage prepaid, to the parties to this Agreement at
the following addresses or to such other address as either party to this
Agreement shall specify by notice to the other:
if to PRIMEDIA, to it at:
PRIMEDIA Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
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if to the Purchaser, to it at:
KKR 1996 Fund L.P.
x/x Xxxxxxxx Xxxxxx Xxxxxxx & Co.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
With a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
All such notices and communications shall be deemed to have been received on
the date of delivery or on the third business day after the mailing thereof.
5.2 Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Except as provided in Article V, nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect
of any agreement or any provision contained herein.
5.3 Waiver. Either party hereto may by written notice to the other
(a) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (b) waive compliance with any of
the conditions or covenants of the other contained in this Agreement; and (c)
waive or modify performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation
by or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representations, warranties,
covenants or agreements contained herein. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as
a waiver of any preceding or succeeding breach and no failure by any party to
exercise any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of such
party's rights to exercise the same at any subsequent time or times hereunder.
5.4 Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Purchaser and
PRIMEDIA.
5.5 Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by PRIMEDIA without the prior written consent of the Purchaser. The
Purchaser may assign its rights and delegate its responsibilities hereunder to
an affiliate and any such delegation shall relieve the Purchaser of its
obligations hereunder.
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5.6 Expenses. PRIMEDIA agrees that, whether or not the transactions
contemplated by this Agreement are consummated, PRIMEDIA will pay or cause to
be paid all costs and expenses arising in connection with the preparation,
execution, administration and enforcement of, and the preservation of rights
under, this Agreement, including, without limitation:
(a) all taxes (other than taxes based on income), fees or other
charges which may be payable in connection with the sale or purchase of
the Purchaser Securities pursuant to this Agreement;
(b) all expenses incurred by the Purchaser in connection with the
maintenance of its books and records, preparation of tax returns and
delivery of tax information to its partners; and
(c) all reasonable travel and other out-of-pocket expenses of the
general partner of the Purchaser incurred in connection with the
Purchaser's ownership of the Purchaser Securities.
In addition, after consummation of the transactions contemplated by this
Agreement and so long as the Purchaser owns any of the Purchaser Securities
acquired pursuant to this Agreement, PRIMEDIA will reimburse the Purchaser or
the general partner of the Purchaser for all costs incurred in transmitting
information regarding PRIMEDIA to the limited partners of the Purchaser or in
distributing dividends or other distributions received from PRIMEDIA to the
limited partners of the Purchaser.
5.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, PRIMEDIA agrees to indemnify and hold harmless the
Purchaser, its limited and general partners and its affiliates (and the
partners, members, directors, officers, affiliates and controlling persons of
each of the foregoing) (each a "Purchaser Indemnitee") from and against any
liabilities, obligations, losses, damages, deficiencies, obligations, fines
and assessments, penalties, actions, judgments, suits, claims, costs,
injuries, demands, proceedings, investigations, arbitrations (including
shareholder claims, actions, injuries, demands, suits, judgments, proceedings,
investigations or arbitrations) and disbursements, including, without
limitation, accountant's and attorney's fees and expenses incurred by a
Purchaser Indemnitee before or after the date of this Agreement and arising
out of, resulting from, or relating to (i) the operations of PRIMEDIA, (ii)
Purchaser's purchase and/or ownership of the Purchaser Securities or (iii) any
litigation to which a Purchaser Indemnitee is made a party in its capacity as
a shareholder or owner (or a partner, member, director, officer, affiliate or
controlling person of a shareholder or owner) of securities of PRIMEDIA.
5.8 Limited Liability of Partners, Members. Notwithstanding any other
provision of this Agreement, neither the general partner, the limited partners
or members nor any future general partner, limited partner or member of the
Purchaser shall have any personal liability for performance of any obligation
of the Purchaser under this Agreement in excess of the respective capital
contribution of such general partner, limited partners and members to the
Purchaser.
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5.9 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
5.10 Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
5.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, PRIMEDIA and KKR 1996 have executed this
Agreement as of the day and year first above written.
PRIMEDIA INC.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Vice-Chairman and
Secretary
KKR 1996 Fund L.P.
By: KKR Associates 1996 L.P.
Its General Partner
By: KKR 1996 GP LLC
Its General Partner
By: /s/ Xxxxxxx Xxxxxx
A Member
