Exhibit 10.1(n)
March 19, 1996
Page
March 19, 1996
Mr. Xxxxxxx Xxxxx
c/o Affinity Group, Inc.
0000 Xxxxx Xxx Xxx Xxxxx
Xxxxxxx, XX 00000
Dear Xxxxx:
This letter agreement (the "Amendment") is made by and between
Xxxxxxx Xxxxx or his designated assignee ("Purchaser"), and The Xxxxxx Group,
Inc., a Delaware corporation (the "Company" or "Xxxxxx"), for the purpose of
amending that certain Stock Purchase Agreement between Purchaser and Xxxxxx
dated December 26, 1995, (the "Stock Purchase Agreement" or "Agreement"), with
the effective date of such amendment to be December 26, 1995 (the "Effective
Date").
A G R E E M E N T:
Purchaser and Xxxxxx hereby agree to modify the Stock Purchase
Agreement as herein set forth as of the Effective Date. Except as modified
hereby, all of the terms and conditions of the Stock Purchase Agreement shall
remain in full force and effect.
Section 4 is modified in its entirety to read as follows:
4. Purchaser Sophistication; Access to Information. Purchaser's
acquisition of the Xxxxx Shares is the result of negotiations between the
parties. By executing the Stock Purchase Agreement, Purchaser acknowledges that
(i) Purchaser has been provided with or has had full and complete access and
opportunity to obtain all information concerning the Company and its business,
and all other items deemed relevant by Purchaser, to evaluate the merits and
risks of an investment in the Common Stock and (ii) Purchaser has had an
opportunity to ask questions of, and receive satisfactory answers from, the
Company concerning the Common Stock, the Company and the transactions
contemplated hereby. Any questions raised by Purchaser concerning the Common
Stock, the Company, and the transactions contemplated hereby have been answered
to the satisfaction of Purchaser. Purchaser or Purchaser's representatives are
knowledgeable and experienced in financial and business matters and are in a
position to make an informed investment decision concerning an investment in the
Common Stock. Consequently, based upon the information received by the Purchaser
from the Company, Purchaser has reached its own conclusions as to the viability
of the business contemplated by the
March 19, 1996
Page 2
Company.
Section 5 is modified so that the title of the Section reads as follows:
"5. Representations and Warranties of the Purchaser."
The following is added to the Agreement as Section 5A:
5A. Representations and Warranties of the Company. The Company
hereby, by its acknowledgement, execution and delivery of this Agreement,
represents and warrants to the Purchaser that, as of the Effective Date:
(a) American Consumer Service Network ("ACSN") is owned and operated by
the Company; provided that Purchaser understands that the Company in certain
territories is contemplating a business structure pursuant to which certain
rights related to ACSN may be licensed to and operated by entities other than
the Company. No operations related to ACSN are conducted, and no rights in
respect of ACSN are owned by the Principals (as defined herein) or any affiliate
of the Principals.
(b) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has corporate power
to own its properties and assets and to carry on its business as is now being
conducted and is proposed to be conducted, and is duly qualified or licensed to
conduct business in each state where the business currently conducted by the
Company requires such qualification or license. The authorized capital stock of
the Company consists of: 1,000,000 shares of Common Stock, $.01 par value, of
which 239,850 shares are validly issued and outstanding (exclusive of any Xxxxx
Shares); and 20,000 shares of 8.25% Convertible Exchangeable Preferred Stock
("Preferred Stock"), authorized pursuant to the Certificate of the Designations,
Preferences and Relative Participating, Optional and Other Special Rights,
Qualifications, Limitations and Restrictions of 8.25% Convertible Exchangeable
Preferred Stock, as amended, of which 6,000 shares are issued and outstanding.
All of the outstanding shares of the Common Stock (exclusive of any Xxxxx
Shares) and Preferred Stock are duly authorized, validly issued and
non-assessable. The Xxxxx Shares have been or will be duly authorized and
validly issued and, upon payment by the Purchaser of the Purchase Price, the
Xxxxx Shares will be fully paid and non-assessable. The Company has outstanding
warrants to purchase 3,100 shares of Common Stock. The Company has a 1993 Stock
Option Plan (the "1993 Plan") and a 1994 Stock Option Plan (the "1994 Plan").
Both the 1993 Plan and the 1994 Plan permit the granting of incentive stock
options and non-qualified options. A total of 4,000 shares of the Company's
Common Stock have been reserved for issuance for options that may be granted
under the 1993 Plan, and options to purchase 3,406 shares of Common Stock are
outstanding. A total of 8,000 shares of the Company's Common Stock have been
reserved for issuance for options that may be granted under the 1994 Plan.
Options for the purchase of 1,200 shares of Common Stock have been exercised
under the 1994 Plan, and there are zero (0) options currently outstanding under
the 1994 Plan.
(c) All necessary corporate proceedings of the Company have been or will
be duly and validly taken to authorize the execution, delivery and performance
of the Agreement and this Amendment by the Company and the issuance of the
Xxxxx' Shares as contemplated by the
March 19, 1996
Page 3
Agreement. The Agreement and this Amendment have been or will be duly and
validly authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligations of the Company and are enforceable (except
as such enforceability may be limited by bankruptcy, insolvency and other laws,
legal and equitable principles) in accordance with their respective terms.
(d) The execution and delivery of the Agreement and this Amendment do not,
and the consummation of the transactions contemplated by the Agreement will not,
violate or constitute a default under any provision of the Articles of
Incorporation or Bylaws of the Company, or to the best of the Company's
knowledge any provisions of, or result in the acceleration of any obligation
under, any mortgage, deed of trust, indenture, note, lien, lease, franchise,
license, permit, agreement, instruments, order, arbitration award, judgment or
decree, or in the termination of any material license, franchise, lease or
permit to which the Company is a party or is bound and to the best of the
Company's knowledge will not violate or conflict with any other restriction of
any material kind or character to which the Company is subject.
(e) Xxxxx has received a copy of the Company's annual financial statements
for the fiscal year ended December 31, 1994 (the "Financial Statements"). The
Financial Statements present fairly in all material respects the financial
position of the Company as of such dates and the results of its operations for
such periods then ended and have been prepared in all material respects with
generally accepted accounting principles applied on a consistent basis.
(f) The Company is not a party to, subject to, or threatened with, any
judgment, decree or order, or any suit or proceeding brought by any governmental
agency or by any other person in which an adverse result would have material
adverse effect on the assets, business or operation of the Company. The Company
has not received notice of, and to the best of the Company's knowledge has not
been investigated for or threatened with a charge for possible violation of any
provision of any foreign, Federal, state or local law or administrative ruling
or regulation relating to any aspect of the Company's business or operations.
(g) Neither the Agreement, this Amendment, the Joinder Agreement (executed
in connection with the Agreement by Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxx (the
"Principals")), the Registration Rights Agreement, the Financial Statements, any
other document, certificate, schedule or statement attached hereto or thereto
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading, taking into account the circumstances under which such statements
were made.
The representations, warranties and covenants of the Company contained
herein shall survive the issuance of the Xxxxx' Shares by the Company to
Purchaser.
The following is added to the Agreement as Section 5B:
5B. Covenants of the Company. The Company hereby covenants and
agrees that:
(a) Purchaser shall have a right, subject to the terms and conditions set
forth below and
March 19, 1996
Page
the Certificate of Incorporation of the Company, to subscribe to and purchase
any additional non-public issue of Common Stock from the Company or any security
convertible into such Common Stock in an amount necessary to maintain
Purchaser's then existing percentage of ownership of Common Stock represented by
the Xxxxx Shares held by Purchaser plus any shares of Common Stock (or other
security convertible into Common Stock) purchased through the exercise of this
right and held by Purchaser, on a fully diluted basis, assuming conversion of
all then outstanding warrants, options and convertible securities, and the
Company shall take such action as is required under applicable law to provide
such right to the Purchaser. Such right shall not apply to the issuances of
stock, options, warrants or securities convertible into Common Stock, issued by
the Company to employees (provided that, with respect to issuances to the
Principals, Section 5B(b) below applies) or third parties, including without
limitation underwriters, officers, directors and consultants, as an incentive or
as partial or total compensation for services. In the event of any proposed
issuance as to which the foregoing right would apply, the Company shall notify
Purchaser in writing of the existence of such proposed issuance and the material
terms thereof. If such issuance is proposed to be made pursuant to a written
offer or other written understanding, such notice shall contain a true, correct
and complete copy of such writing. The Company agrees to take all necessary and
appropriate corporate actions in order to effect the foregoing right and the
issuance of shares to the Purchaser upon exercise by Purchaser of such rights.
Purchaser shall have ten days thereafter to notify the Company of Purchaser's
exercise of the right, and, if Purchaser exercises such right, Purchaser
thereafter shall be obligated to acquire the shares of Common Stock (or other
securities convertible into shares of Common Stock) as to which such right
applies on the same terms and conditions as any other party receiving shares of
Common Stock (or other securities convertible into shares of Common Stock) in
such issuance. In the event of any modification to the material terms of such
transaction, the Company shall promptly notify Purchaser of the modification,
and Purchaser shall have three business days to rescind the exercise of its
right. Purchaser understands that the consummation of any purchase of shares as
a result of the exercise of the foregoing right shall not be effective until all
appropriate corporate actions have been taken. The foregoing right is an
agreement between the Company and Purchaser as identified on the date of the
Agreement, is not transferrable (except that the right may be transferred to no
more than 3 entities at least 51% of the equity securities of which are held,
directly or indirectly, by Xxxxxxx Xxxxx) and is not a characteristic or right
of the Xxxxx Shares. Any attempt to transfer the right granted hereunder (except
in accordance with the preceding sentence) is void. The rights granted under
this Section shall terminate at such time as (i) there have been sold equity
securities of the Company pursuant to a registration statement or statements
filed under the Securities Act of 1933, as amended, in an aggregate amount of at
least $10 million or (ii) the Company is required to register any of its equity
securities pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended.
(b) The Company shall not, directly or indirectly, conduct any business or
enter into any transaction or series of transactions with or for the benefit of
the Principals, except in good faith and upon the approval of directors not
party to such transaction, and (except as to transactions related to employment
and compensation for employment) on terms that are, in the aggregate, no less
favorable to the Company than those that could have been obtained in a
comparable transaction on an arm's length basis from a person not an affiliate
of the Company or such individuals. Until (i) there have been sold equity or
debt securities of the Company pursuant to a registration statement or
statements filed under the Securities Act of 1933, as amended, in an aggregate
amount of at least $10 million or (ii) the Company is required to register any
of its equity or debt securities
March 19, 1996
Page
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, the
Company shall not issue new shares of capital stock of the Company to the
Principals, including under any incentive or non-incentive stock option plan,
except if the Purchaser shall have been afforded the right to purchase shares of
capital stock, in amounts and pursuant to the procedure established in paragraph
(a) above, on identical terms and conditions.
(c) All rights pertaining to ACSN, derived therefrom or developed in
connection therewith constitute a corporate opportunity of the Company and will
not be exploited or otherwise availed of by either of the Principals or any of
their affiliates unless they have first been offered to the Company.
Section 6(c) shall be modified in its entirety to read as follows:
(c) The Company may place "stop transfer" restrictions against the Xxxxx
Shares consistent with the foregoing legend.
March 19, 1996
Page
The parties acknowledge and agree that:
(a) the second installment under Section 2(b) of the Stock Purchase Agreement is
paid concurrently with the execution and delivery of this Amendment, and that
such payment shall be deemed timely made and not in violation of the Stock
Purchase Agreement;
(b) true and correct copies of the Certificate of Incorporation, as amended, and
Bylaws of the Company have been provided to Purchaser.
(c) the Company has disclosed to Purchaser that, subsequent to the Effective
Date, the Company was made party to an action currently pending in Minnesota
State District Court for Hennepin County, Minnesota, as Visual Circuits
Corporation v. The Xxxxxx Group, Inc., the substantive claims of which the
Company denies and which the Company is vigorously defending.
This Amendment may be executed in one or more counterparts, each of which
shall constitute an original, but all of which taken together shall constitute
one instrument.
The parties hereto have executed this Amendment to Stock Purchase
Agreement to be effective as of the Effective Date.
"XXXXXX"
The Xxxxxx Group, Inc., a Delaware
corporation
By:_______________________________
Its:______________________________
"PURCHASER"
__________________________________
Xxxxxxx Xxxxx
