EXHIBIT 3
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (including the Exhibits hereto, this
"Agreement"), dated as of November 10, 1997 is entered into by and among the
Investors listed on Exhibit A hereto (each an "Investor" or jointly the
"Investors") and MEDICAL GRAPHICS CORPORATION, a Minnesota corporation (the
"Company").
AGREEMENTS
1. SUBSCRIPTION FOR SHARES
1.1 NUMBER OF SHARES AND PURCHASE PRICE
Subject to the terms and conditions hereof, each Investor agrees, severally
and not jointly, to purchase at each Closing and the Company agrees to issue and
sell to each Investor that number of shares of the Company's Common Stock set
forth opposite each Investor's name on Exhibit A hereto (the "Shares") at a
price of $4.125 per share, which was equal to the average closing price of the
Company's Common Stock as quoted on the Nasdaq SmallCap Market for the ten days
prior to October 30, 1997 (the "Purchase Price").
1.2 INITIAL CLOSING
The purchase and sale of the Shares at the Initial Closing (as defined
below) shall be deemed to take place at the offices of Xxxxxxxxx & Xxxxxx
P.L.L.P., 4200 IDS Center, 00 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
at 1:00 p.m., on November 12, 1997, or at such other time and place as the
Company and Investors mutually agree upon orally or in writing (which time and
place are designated as the "Initial Closing"). At the Initial Closing the
Company shall deliver to each Investor a certificate representing the Shares
which such Investor is purchasing at the Initial Closing (as set forth on
Exhibit A hereto) against delivery to the Company by such Investor of a check or
wire transfer in the amount of the purchase price therefor payable to the
Company's order.
1.3 SUBSEQUENT CLOSING
The purchase and sale of an aggregate of the remaining Shares shall take
place at a subsequent closing or closings to be held at the offices of Xxxxxxxxx
& Xxxxxx P.L.L.P., as set forth above on either of the following dates: (a)
five business days from the date that the Company receives notice from any
Investor that such Investor elects to purchase such number of Shares as is set
forth opposite such Investor's name on Exhibit A under the "Subsequent Closing"
provided that such closing occurs on or prior to February 23, 1998; or (b) five
business days from the date that the Investors receive notice from the Company
that the Board of Directors of the
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Company has voted to consummate the Subsequent Closing (as defined below),
provided, however, that such closing occurs on or prior to February 23, 1998; or
(c) such other time and place as the Company and Investors shall mutually agree
in writing (which time and place are designated as the "Subsequent Closing").
At the Subsequent Closing, the Company shall deliver to an Investor a
certificate representing the Shares which such Investor is purchasing at such
Subsequent Closing (as set forth on Exhibit A hereto) against delivery to the
Company by such Investor of a check or wire transfer in the amount of the
purchase price therefor payable to the Company's order. If, by the close of
business on February 23, 1998, an Investor has not provided notice to the
Company of its intent to purchase additional shares and the Company has not
given the Investors notice that the Board of Directors has voted to consummate
the transaction, then the obligation of the Company to sell shares to such
Investor and the obligation of such Investor to purchase the shares shall be
terminated.
1.4 CONDITIONS TO SUBSEQUENT CLOSING
Notwithstanding anything to the contrary in this Agreement, the obligation
of each Investor to purchase the Shares set forth on Exhibit A hereto at the
Subsequent Closing shall be subject to the fulfillment of the following
conditions:
(1) There shall not have occurred since the execution of this Agreement
any material adverse change in the business, assets, financial
condition, result of operations, affair, or prospects of the Company;
(2) The Representations and Warranties of the Company set forth in Section
2 shall be true and correct as of the date of such closing and the
Company shall have performed all obligations required to be performed
by it prior to such Subsequent Closing;
(3) There shall be no action or suit pending or to the knowledge of the
Company, threatened against the Company, that questions the validity
of this Agreement or the issuance of any security hereunder, or the
right of the Company to enter into this Agreement or to consummate the
transactions contemplated hereby.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Investor as follows:
2.1 ORGANIZATION AND STANDING
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Minnesota. The Company has all
requisite power and authority to own and operate its properties and assets and
to carry on its business as currently conducted and as proposed to be conducted.
The Company is duly qualified to do business as a foreign corporation
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in all jurisdictions in which the failure to be so qualified would have a
material adverse effect on the Company's properties or business as now conducted
or as proposed to be conducted.
2.2 CORPORATE POWER
The Company has all requisite legal and corporate power to execute and
deliver this Agreement and the other agreements contemplated hereby, to issue
the Shares hereunder, and to carry out and perform its obligations under the
terms of this Agreement.
2.3 CAPITALIZATION
The authorized capital stock of the Company, the designation(s) of classes
of stock and the rights and preferences of stock are set forth on Schedule 2.3.
All issued and outstanding shares of the Company's capital stock as of the date
hereof have been duly authorized and validly issued, are fully paid and
nonassessable, and were issued in compliance with applicable federal and state
securities laws. Except as otherwise provided in the Certificate of Rights and
Preferences of the Class A Stock, no shareholder of the Company has any rights
or preferences not afforded all shareholders of the Company. No shareholder has
any pre-emptive or approval right pertaining to the sale and purchase of the
Shares by statute, contractual obligation or otherwise.
2.4 AUTHORIZATION
All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization, execution, delivery and
performance by the Company of this Agreement; the authorization, issuance, sale
and delivery of the Shares, and the performance of all of the Company's
obligations hereunder has been taken. This Agreement, when executed and
delivered by the Company and Investor shall constitute a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency or creditors' rights and rules of law governing specific performance,
injunctive relief or other equitable remedies.
2.5 VALID ISSUANCE
The Shares, when issued, sold and delivered in accordance with this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable, will be free and clear of any liens or encumbrances.
2.6 COMPLIANCE WITH OTHER INSTRUMENTS
Except as set forth on Schedule 2.6, the Company is not in violation of any
term of the Articles or its Bylaws, any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree, order to which the
Company is subject or any statute, rule or regulation applicable to the Company.
The execution, delivery, and performance of and compliance with this
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Agreement and the consummation of the transactions contemplated hereby will not
result in any such violation, or require consent under or be in conflict with or
constitute, with or without the passage of time or giving of notice or both, a
breach or default under any such term, or result in the creation of any lien,
mortgage, pledge, encumbrance or charge upon any of the properties or assets of
the Company.
2.7 LITIGATION
Except as set forth on Schedule 2.7 hereof, there are no actions, suits,
proceedings or investigations pending against the Company or any of its
properties before any court or governmental agency (nor, to the Company's
knowledge, is there any reasonable basis therefor or threat thereof). The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment, or decree of any court or governmental agency or
instrumentality. There is no action, suit, proceeding, or investigation by the
Company currently pending or that the Company intends to initiate.
2.8 TAX RETURNS
The Company has filed all federal, state and other tax returns required to
have been filed by it and has paid all taxes which have become due and payable.
The Company has not been advised that any of its returns, federal, state or
other, have been or are being audited as of the date thereof. There are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment of any tax or deficiency against the Company, nor
are there any actions, suits, proceedings or claims now pending against the
Company in respect of any tax or assessment. There is no pending or, to the
Company's knowledge, threatened investigation of the Company by any federal,
state, foreign or local authority relating to any taxes or assessments, or any
claims for additional taxes or assessments asserted by any such authority.
2.9 GOVERNMENTAL CONSENTS
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement or the offer, sale or issuance of the
Shares or the consummation of any other transaction contemplated hereby under
applicable state securities laws, which filings and qualifications, if required,
will be accomplished within the required statutory period, and the filing
pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended (the "1933 Act"), which filing will be made within 15 days of the
execution hereof.
2.10 ACCURACY OF INFORMATION
The information which has been furnished to the Investors is true and
correct and accurate in all material respects as of the date hereof except for
financial data which is accurate as of the
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date shown therein. Other than those listed on Schedule 2.10, there are no
employment agreements, stock option plans or compensation plans of the Company.
2.11 USE OF PROCEEDS
The proceeds received from the sale of Shares shall be used for general
business purposes of the Company. No commissions are payable in connection with
the sale of the Shares.
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR
Each Investor hereby represents and warrants, severally and not jointly, to
the Company as follows:
3.1 AUTHORIZATION
This Agreement, when executed and delivered by Investor and the Company,
will constitute a valid and legally binding obligation of Investor, enforceable
against Investor in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency or creditors' rights and rules of
law governing specific performance, injunctive relief or other equitable
remedies.
3.2 EXPERIENCE
Investor has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its investment
in the Company and has the capacity to protect its own interests. Investor
acknowledges that the Shares are a speculative risk. Investor is able to fend
for itself in the transactions contemplated by this Agreement, can bear the
economic risk of its investment in the Shares (including possible complete loss
of such investment) for an indefinite period of time and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment in the Shares.
3.3 INVESTMENT PURPOSE
Investor is acquiring the Shares for investment for its own account, not as
a nominee or agent, and not with a view to, or for resale in connection with,
any distribution thereof. Investor understands that the Shares have not been
registered under the 1933 Act by reason of a specific exemption from the
registration provisions of the 1933 Act, the availability of which depends upon,
among other things, the bona fide nature of the investment intent and the
accuracy of such Investor's representations as expressed herein. The Investor
understands that the Shares are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving any public offering and that under such laws and
applicable regulations the Shares may be resold without registration under the
1933 Act only in certain limited circumstances.
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3.4 ACCESS TO DATA
Investor and its representatives have been afforded access to corporate
books, financial statements, records, contracts, documents and other information
concerning the Company (to the extent such exists), and to its offices and
facilities, have been afforded an opportunity to ask such questions of the
Company's officers, employees, agents, accountants and representatives
concerning the Company's existing and proposed business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable, and have been given all such information as has been
requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein. Investor further represents and acknowledges
that it has been solely responsible for its own "due diligence" investigation of
the Company and its management and business, for its own analysis of the merits
and risks of this investment, and for its own analysis of the fairness and
desirability of the terms of the investment. The foregoing, however, does not
limit or modify the representations and warranties of the Company in Section 2
hereof.
3.5 RESIDENCY
For purposes of the application of state securities laws, Investor
represents that it is a resident of the state or country set forth opposite its
name on Exhibit A hereto.
4. REGISTRATION RIGHTS
The Shares shall have the registration rights set forth in Exhibit B
hereto.
5. MISCELLANEOUS
5.1 GOVERNING LAW
This Agreement shall be governed by and construed under the laws of the
State of Minnesota.
5.2 SURVIVAL
The representations, warranties, covenants, and agreements made herein
shall survive any investigation made by Investor and shall survive the Closing.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto shall be
deemed to be representations and warranties by the Company hereunder as of the
date of such certificate or instrument.
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5.3 SUCCESSORS AND ASSIGNS
Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors, and administrators of the parties hereto.
5.4 ENTIRE AGREEMENT
This Agreement, including the Exhibits hereto, constitute the full and
entire understanding and agreement among the parties with regard to the subjects
hereof and no party shall be liable or bound to any other party in any manner by
and representations, warranties, covenants, or agreements except as specifically
set forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
5.5 AMENDMENT AND WAIVER
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) only with the written consent of the
Company and Investor.
5.6 NOTICES
All notices and other communications required or permitted hereunder shall
be in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission or deposit with the United States Post Office, by first
class mail, postage prepaid, addressed: (a) if to Investor, at Investor's
address set forth or at such other addresses as Investor shall have furnished to
the Company in writing, or (b) if to the Company, at 000 Xxx Xxxxx Xxxxxxx, Xx.
Xxxx, XX 00000, or at such other address as the Company shall have furnished to
Investor in writing.
5.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
instrument.
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MEDICAL GRAPHICS CORPORATION
By:
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Its: Chief Financial Officer
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FAMCO II LIMITED LIABILITY COMPANY
By its Manager
Family Financial Strategies, Inc.
By:
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Its: Chief Executive Officer
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SPECIAL SITUATIONS FUND III, L.P.
By:
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Its: Individual General Partner
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SPECIAL SITUATIONS PRIVATE EQUITY
FUND, L.P.
By:
-----------------------------------
Its: Individual General Partner
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SPECIAL SITUATIONS CAYMAN FUND L.P.
By:
----------------------------------
Its: Individual General Partner
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