EXHIBIT B-2
SECURITIES PURCHASE AGREEMENT
Between
THE PURCHASERS NAMED HEREIN
and
THE LEARNING COMPANY, INC., as Issuer
Dated as of August 26, 1997
Series A Convertible Participating Preferred Stock
TABLE OF CONTENTS
Page
----
ARTICLE I
AUTHORIZATION AND SALE OF SHARES................................ 1
Section 1.1 Authorization. ............................. 1
Section 1.2 Issuance and Sale of Shares. ............... 2
ARTICLE II
CLOSING............................................ 2
Section 2.1 Closing Date. .............................. 2
Section 2.2 Further Assurances. ........................ 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 3
Section 3.1 SEC Reports. ............................... 3
Section 3.2 Accountants. ............................... 4
Section 3.3 Financial Statements. ...................... 4
Section 3.4 Absence of Certain Changes. ................ 4
Section 3.5 Authority. ................................. 5
Section 3.6 Non-Contravention. ......................... 5
Section 3.7 Capitalization. ............................ 6
Section 3.8 Subsidiaries. .............................. 6
Section 3.9 Actions. ................................... 7
Section 3.10 Investment Company Act. .................... 7
Section 3.11 Reporting. ................................. 7
Section 3.12 Registration and Qualification. ............ 7
Section 3.13 No Liabilities. ............................ 7
Section 3.14 No Defaults. ............................... 8
Section 3.15 Violations of Law. ......................... 8
Section 3.16 Enforceability of Agreement. ............... 8
Section 3.17 The Capital Stock. ......................... 8
Section 3.18 Properties. ................................ 9
Section 3.19 Intellectual Property. ..................... 10
Section 3.20 Taxes. ..................................... 10
Section 3.21 Insurance. ................................. 10
Section 3.22 Certain Payments............................. 10
Section 3.23 Delaware General Corporations Law Section 203 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................... 11
Section 4.1 Investment. ................................ 11
Section 4.2 Rule 144. .................................. 11
Section 4.3 Organization of Purchaser. ................. 11
Section 4.4 Authority of Purchaser. .................... 12
Section 4.5 Non-Contravention. ......................... 12
Section 4.6 Title to the Notes. ........................ 12
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES.......................... 13
Section 5.1 General Conditions to Obligations of
the Purchasers. ............................ 13
Section 5.2 Registration Rights Agreement. ............. 13
Section 5.3 Officers' Certificates. .................... 13
Section 5.4 Opinions. .................................. 13
Section 5.5 Certificate of Designation. ................ 14
Section 5.6 Material Adverse Effect. ................... 14
Section 5.7 [Intentionally Left Blank]................... 14
Section 5.8 General Conditions to the Obligations
of the Company. ............................ 14
Section 5.9 No Injunction. ............................. 14
Section 5.10 HSR Waiting Period. ........................ 15
Section 5.11 Shareholder Approval. ...................... 15
Section 5.12 Receipt of Consents. ....................... 15
ARTICLE VI
COVENANTS OF THE COMPANY.................................... 15
Section 6.1 Reporting. ................................. 15
Section 6.2 Payment of Expenses. ....................... 15
Section 6.3 Inspection. ................................ 16
Section 6.4 Availability of Common Stock. .............. 16
Section 6.5 Transaction Fee. ........................... 16
Section 6.6 Fleet Bank Consent. ........................ 16
Section 6.7 Proxy Statements; Stockholder Ap-
provals. ................................... 16
Section 6.8 Election to Board of Directors of the
Company. ................................... 17
Section 6.9 No General Solicitation. ................... 19
ARTICLE VII
COVENANTS OF THE PURCHASERS.................................. 19
Section 7.1 Certain Restrictions. ...................... 19
ARTICLE VIII
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES.................... 21
Section 8.1 Restrictive Legend. ........................ 21
Section 8.2 Notice of Proposed Transfers. .............. 22
ARTICLE IX
TERMINATION.......................................... 23
ARTICLE X
INDEMNIFICATION........................................ 23
Section 10.1 Indemnification. ........................... 23
Section 10.2 Terms of Indemnification. .................. 24
ARTICLE XI
MISCELLANEOUS......................................... 25
Section 11.1 Governing Law. ............................. 25
Section 11.2 Survival. .................................. 25
Section 11.3 Successors and Assigns. .................... 25
Section 11.4 Entire Agreement; Amendment. ............... 26
Section 11.5 Notices, Etc. .............................. 26
Section 11.6 Delays or Omissions. ....................... 26
Section 11.7 Counterparts. .............................. 27
Section 11.8 Severability. .............................. 27
Section 11.9 Titles and Subtitles. ...................... 27
Section 11.10 No Public Announcement. .................... 27
Section 11.11 Reasonable Efforts. ........................ 27
Section 11.12 Distributions and Adjustments................ 27
Exhibits
--------
Exhibit A - Certificate of Designation
Exhibit B - Registration Rights Agreement
Exhibit C - Opinion of Counsel for the Company
Exhibit D - Opinion of Xxxx and Xxxx LLP
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made
as of August 26, 1997 between The Learning Company, Inc., a Delaware corporation
(the "Company"), and each of the Purchasers listed on the signature pages hereto
(individually, a "Purchaser" and collectively, the "Purchasers").
The Company is simultaneously entering into securities
purchase agreements (the "Other Purchase Agreements" and, together with this
Agreement, the "Purchase Agreements") with affiliates of Xxxxxx X. Xxx Company
and Centre Partners Management LLC (together, the "Other Purchasers") dated the
date hereof. The Purchase Agreements provide, subject to the terms and
conditions thereof, for the purchase by the Purchasers and the Other Purchasers
of an aggregate of 750,000 shares of Series A Convertible Participating
Preferred Stock, par value $.01 per share, of the Company having the terms set
forth in the Certificate of Designation (the "Certificate of Designation")
attached hereto as Exhibit A (the "Preferred Stock") in exchange for the
surrender of the Company's 5 1/2% Senior Convertible/Exchangeable Notes due 2000
(the "Notes") in an aggregate principal amount of $150,000,000 then to be held
by the Purchasers and the Other Purchasers.
In consideration of the mutual covenants, agreements,
representations and warranties herein set forth, it is hereby agreed between the
Company and the Purchasers as follows:
ARTICLE I
AUTHORIZATION AND SALE OF SHARES
SECTION 1.1 AUTHORIZATION. Subject to the obtaining of any
requisite stockholder approval referred to in Section 5.11, the Company has
heretofore authorized the issuance and sale to the Purchasers pursuant to this
Agreement of an aggregate of 170,732 shares of the Preferred Stock (the
"Shares") and to the Other Purchasers pursuant to the Other Purchase Agreements
of an aggregate of 579,268 shares of Preferred Stock (the "Other Shares").
SECTION 1.2 ISSUANCE AND SALE OF SHARES. Upon the terms and
subject to the conditions set forth herein, on the Closing Date (as defined
below), (a) the Company will issue and sell to the Purchasers and, in reliance
on the representations and warranties of the Company contained herein, the
Purchasers will purchase from the Company the Shares in exchange for Notes in an
aggregate principal amount of $34,146,400 then to be held by the Purchasers
delivered free and clear of all liens, encumbrances, equities or claims and (b)
the Company will make a cash payment to the Purchasers by wire transfer of
immediately available funds in an amount equal to the interest accrued on the
Notes sold to the Company by the Purchasers from the last interest payment date
on the Notes up to and including the Closing Date (as defined below).
ARTICLE II
CLOSING
SECTION 2.1 CLOSING DATE. The closing (the "Closing") of the
purchase and sale of the Shares contemplated hereby shall take place on such
date and at such time as agreed to by the Company and the Purchasers but in no
event later than three business days following the date upon which all of the
conditions set forth in Article V and all the conditions to closing in the Note
Purchase Agreement (as defined below) are satisfied or waived (the date of the
Closing is hereinafter referred to as the "Closing Date"). The Closing shall be
held at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, One Beacon
Street, Boston, Massachusetts, or at such other place as agreed to by the
Company and the Purchasers. The Closing shall occur simultaneously with the
closing of the transactions contemplated by the Other Purchase Agreements and
the Securities Purchase Agreement among Tribune Company, the Purchasers and the
Other Purchasers dated the date hereof (the "Note Purchase Agreement") and the
closing of each shall be conditioned on the closing of the others.
Delivery of the Shares to be purchased by the Purchasers
pursuant to this Agreement shall be made at the Closing by the Company
delivering to each Purchaser, against payment of the purchase price
therefor, one certificate representing the appropriate number of Shares
(registered in the name of such Purchaser or such other person which shall
be an affiliate of such Purchaser or a nominee of such Purchaser or such
affiliate as such Purchaser may have designated in writing to the Company
at least one business day prior to the Closing Day), unless at least two
business days prior to the Closing Date such Purchaser shall have requested
that the Company deliver more than one certificate representing the Shares,
in which event the Company will deliver to each Purchaser the number of
certificates so requested, registered in such name or names specified in
such request (subject to the foregoing limitation). Payment of the purchase
price for the Shares to be purchased hereunder shall be made by the
Purchaser by delivery of Notes in the aggregate principal amount of
$34,146,400 to the Company duly endorsed for transfer to the Company with
all signatures guaranteed by stock powers or other evidence of transfer
reasonably acceptable to the Company.
SECTION 2.2 FURTHER ASSURANCES. From time to time following
the Closing, upon the request of any Purchaser, the Company shall execute
and deliver, or cause to be executed and delivered, to such Purchaser such
other instruments and take such other action as may be reasonably necessary
to more effectively vest in such Purchaser and put the Purchaser in
possession of the shares of common stock par value $.01 per share, of the
Company (the "Common Stock") issuable upon conversion of the Shares. The
Company shall cooperate with the Purchasers in obtaining as soon as
practicable all necessary governmental consents and approvals, including
approvals under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to the Purchasers to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
represents and warrants to each of the Purchasers as follows:
SECTION 3.1 SEC REPORTS. The Company has filed all documents
required to be filed since January 1, 1995 with the Securities and Exchange
Commission (the "Commission") (the "SEC Reports"). As of their respective
dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act of 1933, as amended (including the rules
and regulations promulgated thereunder, the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (including the rules and
regulations promulgated thereunder, the "Exchange Act"), as the case may
be, and none of the SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein, in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
SECTION 3.2 ACCOUNTANTS. Coopers & Xxxxxxx L.L.P., Xxxxxx
Xxxxxxxx LLP, KPMG Peat Marwick LLP, Price Waterhouse LLP and Deloitte &
Touche LLP, who have expressed their respective opinions with respect to
the financial statements and schedules included in the SEC Reports, are
independent accountants as required by the Securities Act.
SECTION 3.3 FINANCIAL STATEMENTS. (a) The annual audited
financial statements of the Company included in the relevant Report on Form 10-
K for the period ended January 4, 1997 (the "10-K") present fairly in all
material respects the financial position of the Company, as of the respective
date of such financial statements, and the results of operations and changes in
cash flows of the Company for the respective periods covered thereby. Such
statements and related notes have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, in each case, as
certified by one or more of the independent accountants named in Section 3.2.
(b) The unaudited interim financial statements of the Company
included in the Company's Quarterly Report on Form 10-Q for the period ended
July 5, 0000 (xxx "Xxxxxx Xxxxxxx 00-X") present fairly in all material respects
the financial position of the Company, as of the respective dates of such
financial statements, and the results of operations and changes in cash flows of
the Company for the respective periods covered thereby. Such statements and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis except for normal year-end
adjustments and the omission of certain footnote disclosure.
SECTION 3.4 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.4 of a letter dated the date hereof from and previously delivered
by the Company to the Purchasers (the "Disclosure Letter"), (a) since the
date of the latest balance sheet presented in the Second Quarter 10-Q there
has been no material adverse change in the business, properties, prospects,
operations, condition (financial or other) or results of operations of the
Company and its Subsidiaries (as defined herein) taken as a whole, whether
or not arising from transactions in the ordinary course of business,
provided that a decline in the trading price of the Common Stock shall not
be deemed to be such a material adverse change if such decline is not
attributable to a material adverse change in the business, properties,
operations, prospects, condition (financial or other) or results of
operations of the Company and its Subsidiaries taken as a whole, (b) since
the date of the latest balance sheet presented in the Second Quarter 10-Q,
neither the Company nor any of its Subsidiaries has incurred or undertaken
any liabilities or obligations, direct or contingent, except for (i)
liabilities or obligations which are reflected in the Second Quarter 10-Q
and (ii) the transactions contemplated by this Agreement and the Other
Purchase Agreements, (iii) contractual liabilities incurred in the ordinary
course of business, (iv) other liabilities that would not have a material
adverse effect on the business, properties, prospects, operations,
condition (financial or other) or results of operations of the Company and
its subsidiaries taken as a whole and (v) liabilities incurred in
connection with any acquisition of another business entity made by the
Company after the date hereof.
SECTION 3.5 AUTHORITY. The Company has all necessary corporate
power and corporate authority to enter into this Agreement, the Other Purchase
Agreements and the other agreements, documents and instruments to be executed by
the Company in furtherance of the transactions contemplated hereby and thereby,
including without limitation, the Registration Rights Agreement between the
Company and the Purchasers, a form of which is attached hereto as Exhibit B (the
"Registration Rights Agreement") (collectively, the "Transaction Documents"),
and to consummate the transactions contemplated hereby and thereby.
SECTION 3.6 NON-CONTRAVENTION. The execution, delivery, and
performance of the Transaction Documents by the Company and the
consummation of the transactions contemplated thereby by the Company do not
and will not (a) result in a breach of any of the terms and provisions of,
or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its Subsidiaries (as defined below) pursuant to
any agreement, instrument, franchise, license or permit to which the
Company or any of its Subsidiaries is a party or by which any of such
corporations or their respective properties or assets may be bound or (b)
violate any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body applicable
to the Company or any of its Subsidiaries or any of their respective
properties or assets, other than such breaches, defaults or violations that
are not reasonably expected to impair the ability of the Company to
consummate the transactions contemplated by this Agreement. The execution,
delivery and performance of the Transaction Documents by the Company and
the consummation of the transactions contemplated thereby do not and will
not violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, as
currently in effect. Except as set forth in Section 3.6 of the Disclosure
Letter, no consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any government
agency or body applicable to the Company or any of its Subsidiaries or any
of their respective properties or assets is required for the execution,
delivery and performance of the Transaction Documents or the consummation
of the transactions contemplated thereby, including the issuance, sale and
delivery of the Shares to be issued, sold and delivered by the Company
hereunder.
SECTION 3.7 CAPITALIZATION. The Company had, as of July 5,
1997, an authorized and outstanding capitalization as set forth in the Second
Quarter 10-Q.
SECTION 3.8 SUBSIDIARIES. Except for the subsidiaries listed
in Section 3.8 of the Disclosure Letter, the Company does not own or control,
directly or indirectly, any "significant subsidiary" within the meaning of
Regulation S-X of the Commission. The subsidiaries listed in Section 3.8 of the
Disclosure Letter are hereinafter referred to as the "Subsidiaries." Each of the
Company and its Subsidiaries has been duly organized and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its Subsidiaries is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, lease or licensed) or
the nature or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing which will not in the
aggregate have a material adverse effect on the Company and its Subsidiaries
taken as a whole. The Company owns all of the outstanding capital stock of each
of its Subsidiaries, other than the non-voting exchangeable shares of SoftKey
Software Products Inc. and qualifying shares of certain Subsidiaries organized
outside the United States, free and clear of all claims, liens, charges and
encumbrances other than as disclosed in Section 3.8 of the Disclosure Letter.
Each of the Company and its Subsidiaries has all requisite power and authority,
and all necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted, except where the failure to possess
such requisite power and authority would not have a material adverse effect on
the business, properties, prospects, operations, condition (financial or other)
or results of operations of the Company and its Subsidiaries taken as a whole.
SECTION 3.9 ACTIONS. Except as described in Section 3.9 of the
Disclosure Letter, there is no litigation or governmental proceeding to which
the Company or any of its Subsidiaries is a party or to which any property of
the Company or any of its Subsidiaries is subject or which is pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries which could reasonably be expected to have a material adverse
effect on the business, properties, prospects, operations, condition (financial
or other) or results of operations of the Company and its Subsidiaries taken as
a whole.
SECTION 3.10 INVESTMENT COMPANY ACT. Neither the Company nor
any of its Subsidiaries is (i) an "investment company" or a company "controlled"
by an investment company within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to regulation
under the Federal Power Act, the Interstate Commerce Act or any federal or state
statute or regulation limiting its ability to consummate the transactions
contemplated hereby.
SECTION 3.11 REPORTING. The Company is subject to Section 13
of the Exchange Act and is in compliance in all material respects with the
provisions of such section.
SECTION 3.12 REGISTRATION AND QUALIFICATION. Assuming the
accuracy of the representations and warranties made by each of the Purchasers
and set forth in Article IV hereof, it is not necessary in connection with the
offer, sale and delivery of the Shares to the Purchasers in the manner
contemplated by this Agreement to register the Shares or the shares of Common
Stock issuable upon conversion of the Shares, under the Securities Act.
SECTION 3.13 NO LIABILITIES. Neither the Company nor its
Subsidiaries has any liabilities or obligations (direct or indirect,
contingent or absolute, known or unknown, matured or unmatured) of any
nature whatsoever, whether arising out of contract, tort, statute or
otherwise ("Liabilities"), except (i) as reflected or reserved against in
the latest balance sheet of the Company presented in the Second Quarter
10-Q and not heretofore discharged, (ii) as set forth in Section 3.13 of
the Disclosure Letter, (iii) liabilities incurred in the ordinary course of
business since the date of the latest balance sheet presented in the Second
Quarter 10-Q, (iv) contractual liabilities incurred in the ordinary course
of business, (v) liabilities incurred in connection with any acquisition of
another business entity made by the Company after the date hereof or (vi)
other liabilities that would not have a material adverse effect on the
business, properties, prospects, operations, condition (financial or other)
or results of operations of the Company and its subsidiaries taken as a
whole.
SECTION 3.14 NO DEFAULTS. Except as disclosed in Section 3.14
of the Disclosure Letter, neither the Company nor any of its Subsidiaries is in
violation or default under any provision of its certificate of incorporation,
by-laws or other organization documents, or is in breach of or default with
respect to any provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which it is a party or by which it or any of its properties are bound; and
there does not exist an event of default on the part of the Company or any such
Subsidiary as defined in such documents which, with notice or lapse of time or
both, would constitute a default, which such violation or default, in either
such case, would not have a material adverse effect on the business, properties,
prospects, operations, condition (financial or other) or results of operations
of the Company and its subsidiaries taken as a whole.
SECTION 3.15 VIOLATIONS OF LAW. The Company and its
Subsidiaries are in compliance, and have complied at all times during the past
three years, and all transactions pursuant to the Transaction Documents shall
comply with all applicable federal, state and local statutes, codes, ordinances,
rules and regulations of the United States and all other countries and
subdivisions thereof (the "Laws") to the extent applicable, other than
violations which would not have a material adverse effect on the business,
properties, operations, condition (financial or other) or results of operations
of the Company and its Subsidiaries taken as a whole. Neither the Company nor
any of its Subsidiaries has received notice within the past three years of any
violations of any Laws, which violations would be material to the Company and
its subsidiaries taken as a whole.
SECTION 3.16 ENFORCEABILITY OF AGREEMENT. This Agreement has
been, and the other agreements to be executed and delivered by the Company
pursuant hereto have been or will be, duly and validly authorized, executed and
delivered by the Company and this Agreement is, and such other agreements when
so executed and delivered will be, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
SECTION 3.17 THE CAPITAL STOCK. (a) All of the outstanding
shares of Common Stock are duly and validly authorized and issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and were not issued and are not now in violation of
or subject to any preemptive rights. All issued and outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable. Except as disclosed in Section
3.17 of the Disclosure Letter as of the date hereof, neither the Company
nor any Subsidiary has outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. There are currently no shares of the
Company's preferred stock outstanding.
(b) (i) The Shares have been duly and validly authorized by
the Company and the Shares, when issued, sold and delivered in accordance
with this Agreement, will be duly and validly issued, fully paid and
nonassessable. The shares of Common Stock issuable upon conversion of the
Shares have been duly and validly authorized by the Company and, when
issued in accordance with the terms of the Shares, will be duly and validly
issued, fully paid and nonassessable. The shares of Common Stock issuable
on conversion of the Shares at the initial conversion price have been
reserved for issuance, and no further approval or authority of the
stockholders or the Board of Directors of the Company (the "Board of
Directors") under the Delaware General Corporation Law will be required for
such issuance of Common Stock following the Closing. No preemptive rights
or other rights to subscribe for or purchase securities exist with respect
to the issuance and sale of the Shares by the Company pursuant to this
Agreement or the issuance of Common Stock on conversion of the Shares.
(ii) Except as set forth in Section 3.17 of the Disclosure
Letter, no security holder of the Company has any right which has not been
satisfied or waived to require the Company to register the sale of any
securities owned by such security holder under the Securities Act.
SECTION 3.18 PROPERTIES. The Company or the applicable
Subsidiary holds its leased properties under valid and binding leases, with such
exceptions as are not materially significant in relation to the business of the
Company. Except as disclosed in Section 3.18 of the Disclosure Letter, the
Company owns or leases all such properties as are necessary to its operations as
now conducted.
SECTION 3.19 INTELLECTUAL PROPERTY. Except as disclosed in
Section 3.19 of the Disclosure Letter, the Company and its Subsidiaries have
sufficient trademarks, trade names, patent rights, copyrights, licenses,
approvals and governmental authorizations to conduct their businesses
substantially as now conducted; and the Company has no knowledge of any
infringement by it or its Subsidiaries of any trademark, trade name, patent,
copyright, licenses, trade secret or other similar rights of others, and there
is no claim being made against the Company or its Subsidiaries regarding
trademark, trade name, patent, copyright, license, trade secret or other
infringement, in any such case which could reasonably be expected to have a
material adverse effect on the business, properties, prospects, operations,
condition (financial or otherwise) or results of operations of the Company and
it or its Subsidiaries taken as a whole.
SECTION 3.20 TAXES. The Company and its Subsidiaries have
filed all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes shown as due thereon; and the Company has no knowledge
of any tax deficiency which has been asserted or threatened against the Company
or its Subsidiaries which could have a material adverse effect on the business,
properties, prospects, operations, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries taken as a whole.
SECTION 3.21 INSURANCE. The Company and its Subsidiaries
maintain insurance of the types and in the amounts generally deemed adequate for
its business and that of its Subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
SECTION 3.22 CERTAIN PAYMENTS. To the knowledge of the
Company, neither the Company nor any of its Subsidiaries has at any time (i)
made any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
SECTION 3.23 DELAWARE GENERAL CORPORATION LAW SECTION 203.
Section 203 of the Delaware General Corporation Law will not, prior to the
termination of this Agreement and the Other Purchase Agreements, apply to such
Agreements or the transactions contemplated hereby and thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
As an inducement to the Company to enter into this Agreement
and to consummate the transactions contemplated hereby, each of the Purchasers
hereby represents and warrants to the Company as follows:
SECTION 4.1 INVESTMENT. Purchaser is acquiring the Shares and
the shares of Common Stock issuable upon conversion of the Shares for investment
for its own account, and not with a view to any distribution thereof. Purchaser
understands that the Shares and the shares of Common Stock issuable upon
conversion of the Shares have not been registered under the Securities Act by
reason of specific exemptions therefrom which depend upon, among other things,
the bona fide nature of the investment intent and the accuracy of Purchaser's
representations as expressed herein.
Purchaser's financial condition and investments are such that
it is in a position to hold the Shares and the shares of Common Stock issuable
upon conversion of the Shares for an indefinite period, bear the economic risks
of the investment and to withstand the complete loss of the investment.
Purchaser has extensive knowledge and experience in financial and business
matters and has the capability to evaluate the merits and risks of any Shares
and the shares of Common Stock issuable upon conversion of the Shares. Purchaser
qualifies as an "accredited investor" as such term is defined in Section 2(15)
of the Securities Act and Regulation D promulgated thereunder.
SECTION 4.2 RULE 144. Purchaser acknowledges that the Shares
and the shares of Common Stock issuable upon conversion of the Shares must be
held indefinitely unless subsequently registered under the Securities Act or any
applicable state securities laws or unless exemptions from such registrations
are available. Purchaser is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of securities purchased in
a private placement subject to the satisfaction of certain conditions.
SECTION 4.3 ORGANIZATION OF PURCHASER. Purchaser is duly
organized and validly existing under the laws of the jurisdiction of its
organization.
SECTION 4.4 AUTHORITY OF PURCHASER. Purchaser has the power
and authority (corporate or similar) to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to comply with the terms,
conditions and provisions hereof.
The execution, delivery and performance of this Agreement by
Purchaser has been duly authorized and approved by Purchaser and does not
require any further authorization or consent of Purchaser or its beneficial
owners. This Agreement is the legal, valid and binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms.
SECTION 4.5 NON-CONTRAVENTION. The execution, delivery and
performance of this Agreement by Purchaser and the consummation of any of the
transactions contemplated hereby by Purchaser will not (a) conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of Purchaser pursuant to
any agreement, instrument, franchise, license or permit to which Purchaser is a
party or by which any of its properties or assets may be bound or (b) violate or
conflict with any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body applicable to
Purchaser or any of its properties or assets, other than such breaches, defaults
or violations that are not reasonably expected to impair the ability of
Purchaser to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby by Purchaser do not and
will not violate or conflict with any provision of the organizational documents
of Purchaser, as currently in effect. Except for filings under the HSR Act, no
consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any government agency or body
applicable to Purchaser is required for the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated hereby.
SECTION 4.6 TITLE TO THE NOTES. Upon consummation of the
transactions contemplated by the Note Purchase Agreement, the Purchasers
will have good and valid title to the Notes to be surrendered to the
Company hereunder, free and clear of all liens, encumbrances, equities or
claims; and, upon delivery of the Notes to the Company, good and valid
title to the Notes, free and clear of all liens, encumbrances, equities or
claims, will pass to the Company, assuming that the Company is acquiring
the Notes in good faith and without notice of any "adverse claims" within
the meaning of Article 8 of the Uniform Commercial Code.
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
A. OBLIGATIONS OF THE PURCHASERS
SECTION 5.1 GENERAL CONDITIONS TO OBLIGATIONS OF THE
PURCHASERS. The obligation of each of the Purchasers to consummate the
transactions contemplated herein is subject to the accuracy of the
representations and warranties of the Company herein contained, as of the date
hereof and as of the Closing Date, and to the performance in all material
respects by the Company of its obligations hereunder (including the covenants
contained in Article VI of this Agreement).
SECTION 5.2 REGISTRATION RIGHTS AGREEMENT. The obligation of
each of the Purchasers to consummate the transactions contemplated herein is
subject to the Registration Rights Agreement continuing to be in full force and
effect.
SECTION 5.3 OFFICERS' CERTIFICATES. The obligation of each of
the Purchasers to consummate the transactions contemplated herein is subject to
each of the Purchasers at the Closing Date receiving a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company, dated the Closing
Date, to the effect that (i) as of the date hereof and as of the Closing Date,
the representations and warranties of the Company set forth in Article III
hereof are accurate and (ii) as of the Closing Date, the obligations of the
Company to be performed hereunder on or prior to the Closing Date have been
duly performed in all material respects.
SECTION 5.4 OPINIONS. The obligation of each of the Purchasers
to consummate the transactions contemplated herein is subject to each of the
Purchasers receiving at the Closing Date the opinion of Xxxx X. Xxxxxx, General
Counsel for the Company, to the effect of the matters set forth in Exhibit C and
the opinion of Xxxx and Xxxx LLP, special counsel for the Company, to the effect
of the matters set forth in Exhibit D.
SECTION 5.5 CERTIFICATE OF DESIGNATION. The obligation of each
of the Purchasers to consummate the transactions contemplated herein is subject
to the Certificate of Designation attached hereto as Exhibit A being duly
adopted by the Company and filed with the Secretary of State of the State of
Delaware.
SECTION 5.6 MATERIAL ADVERSE EFFECT. The obligation of each of
the Purchasers to consummate the transactions contemplated herein is subject to
there being since the date of the last balance sheet presented in the Second
Quarter 10-Q no fact or condition which would have, or insofar as reasonably can
be foreseen could have, a material adverse effect on the business, properties,
prospects, operations, condition (financial or other) or results of operations
of the Company and its Subsidiaries taken as a whole; provided, that a decline
in the trading price of the Common Stock shall not be deemed to be such a
material adverse effect if such decline is not attributable to a material
adverse change in the business, properties, prospects, operations, condition
(financial or other) or results of operations of the Company and its
subsidiaries taken as a whole.
SECTION 5.7 [Intentionally Left Blank].
B. OBLIGATIONS OF THE COMPANY
SECTION 5.8 GENERAL CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY. The obligation of the Company to sell the Shares to each of the
Purchasers shall be subject to the accuracy of the representations and
warranties of each of the Purchasers herein contained except to the extent any
inaccuracies do not materially impair the ability of the Purchasers to
consummate the transaction contemplated by the Agreement, as of the date hereof
and as of the Closing Date, and to the performance in all material respects by
each of the Purchasers of its obligations hereunder.
C. OBLIGATIONS OF EACH OF THE COMPANY AND THE PURCHASERS
SECTION 5.9 NO INJUNCTION. The obligations of each of the
Company and the Purchasers to consummate the transactions contemplated
herein are subject to the condition that no temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction prohibiting or preventing consummation of the
transactions contemplated herein shall be in effect.
SECTION 5.10 HSR WAITING PERIOD. The obligations of each of
the Company and the Purchasers to consummate the transactions contemplated
herein are subject to the condition of the expiration or early termination of
the application waiting periods under the HSR.
SECTION 5.11 SHAREHOLDER APPROVAL. The obligations of each of
the Company and the Purchasers to consummate the transactions contemplated
herein are subject to the approval of the issuance of the Shares, the Other
Shares and the shares of Common Stock issuable upon conversion of the
Shares and the Other Shares by the Company's stockholders in accordance
with the requirements of the New York Stock Exchange ("NYSE").
SECTION 5.12 RECEIPT OF CONSENTS. The obligation of each of
the Company and the Purchasers to consummate the transactions contemplated by
this Agreement are subject to the receipt by the Company of all governmental or
third-party consents shown in Section 5.12 of the Disclosure Letter the
transactions.
ARTICLE VI
COVENANTS OF THE COMPANY
As an inducement to the Purchasers to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
hereby covenants with each of the Purchasers as follows:
SECTION 6.1 REPORTING. The Company will, so long as the Shares
or the shares of Common Stock issuable upon conversion thereof are outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, file reports and other information with the Commission under
Section 13 or 15 (d) of the Exchange Act.
SECTION 6.2 PAYMENT OF EXPENSES. Whether or not the
transactions contemplated in this Agreement are consummated or this
Agreement is terminated, the Company hereby agrees to pay (i) all costs and
expenses incident to the performance of the obligations of the Company
hereunder, including those in connection with (a) the issuance, transfer
and delivery of the Shares or the shares of Common Stock issuable upon
conversion thereof to each of the Purchasers, including any transfer or
similar taxes payable therein, (b) the qualification of Shares or the
shares of Common Stock issuable upon conversion thereof under state or
foreign securities or Blue Sky laws, (c) the cost of printing the Shares or
the shares of Common Stock issuable upon conversion thereof and (d) the
cost and charges of any transfer agent, registrar, trustee or fiscal paying
agent and to promptly pay (ii) all documented out-of-pocket costs and
expenses, including attorneys', accountants' and consultants' fees,
incurred by each of the Purchasers in connection with the negotiation and
consummation of this Agreement, the Note Purchase Agreement, the
Registration Rights Agreement and the transactions contemplated thereby up
to $800,000 in the aggregate for all Purchasers and Other Purchasers under
this Section 6.2 and Section 6.2 of the Other Purchase Agreements.
SECTION 6.3 INSPECTION. Prior to and following the Closing,
the Company will permit each of the Purchasers and their representatives to
visit and inspect any of the Company's properties, to examine its books and
records and to make copies and to take extracts therefrom, and to discuss its
business affairs and finances with its officers and key employees, all at such
reasonable times as the Purchasers may request.
SECTION 6.4 AVAILABILITY OF COMMON STOCK. The Company shall at
all times reserve and keep available out of its authorized but unissued
Common Stock, for the purpose of effecting the conversion of the Shares,
the full number of shares of Common Stock then issuable upon the conversion
of the Shares. The Company will, from time to time, in accordance with the
laws of the State of Delaware, increase the authorized amount of Common
Stock if at any time the number of shares of Common Stock remaining
unissued and available for issuance shall be insufficient to permit
conversion of the Shares.
SECTION 6.5 TRANSACTION FEE. Upon the execution of this
Agreement, the Company shall pay the Purchasers an aggregate fee equal to
$140,000. On the Closing Date, the Company shall pay the Purchasers an
additional aggregate fee equal to $280,000.
SECTION 6.6 FLEET BANK CONSENT. The Company will use its best
efforts to obtain the consent of Fleet Bank of Massachusetts, N.A. referred to
in Section 5.12 of the Disclosure Letter, within 10 days after the date hereof.
SECTION 6.7 PROXY STATEMENTS; STOCKHOLDER APPROVALS. The
Company acting through the Board of Directors, shall, in accordance with
applicable law and its Certificate of Incorporation and By-Laws:
(a) promptly and duly call, give notice of, convene and hold
as soon as practicable following the clearance of the proxy statement to be
issued in connection with the transactions contemplated herein (the "Proxy
Statement") with the SEC, but in no event later than the Closing Date, a
meeting of its stockholders for the purpose of voting to approve the
issuance of the Shares and the shares of Common Stock issuable upon
conversion thereof and shall use its best efforts, except to the extent the
Board of Directors determines in good faith, after consultation with
outside counsel, that contrary action is required by the Board of
Directors' fiduciary duties under applicable law, to obtain stockholder
approval;
(b) except to the extent the Board of Directors determines in
good faith, after consultation with outside counsel, that contrary action is
required by the Board of Directors' fiduciary duties under applicable law,
recommend approval of the issuance of the Shares and the shares of Common Stock
issuable upon conversion thereof, and include in the Proxy Statement such
recommendation, and take all lawful action to solicit such approvals; and
(c) as promptly as practicable following the signing of this
Agreement, prepare and file with the SEC a preliminary Proxy Statement and
respond to any comments of the SEC with respect to the preliminary Proxy
Statement and cause the definitive Proxy Statement to be mailed to its
stockholders.
SECTION 6.8 ELECTION TO BOARD OF DIRECTORS OF THE COMPANY.
Simultaneously with the Closing, the Company shall (a) take all actions
necessary to ensure that one representative of each of the following
Purchaser groups is appointed to the Board of Directors promptly after the
consummation of the transactions contemplated herein: (i) Xxxxxx X. Xxx
Equity Fund III, L.P., Xxxxxx X. Xxx Foreign Fund III, L.P., Xxxxxx X. Xxx
Company and affiliates (collectively, the "Xxx Purchaser Group"); (ii) Xxxx
Capital Fund V, L.P., Xxxx Capital Fund V-B, L.P., BCIP Associates, L.P.,
BCIP Trust Associates, L.P. and affiliates (collectively, the "Bain
Purchaser Group"); and (iii) Centre Capital Investors II, L.P., Centre
Capital Tax-Exempt Investors II, L.P., Centre Capital Offshore Investors
II, L.P., State Board of Administration of Florida, Centre Parallel
Management Partners, L.P., Centre Partners Coinvestment, L.P. and
affiliates (collectively, the "Centre Purchaser Group"); (b) use best
efforts to cause each of the directors appointed in accordance with
subsection (a) hereof and the representative of the Xxxxxx X. Xxx Company
currently serving on the Board of Directors (and any successor nominees
thereof) (collectively, the "Purchasers' Representatives") to be
renominated and reelected when their initial and any subsequent term
expires, (c) use best efforts to cause the election of two nominees from
the four Purchasers' Representatives to each of the executive, compensation
and audit committees of the Board of Directors, in each case except to the
extent the Board of Directors determines in good faith, after consultation
with outside counsel, that contrary action is required by the Board of
Directors' fiduciary duties under applicable law; provided, however that if
(i) the Xxx Purchaser Group, in the aggregate, holds less than 40% or 20%
of the Shares initially owned by the Xxx Purchaser Group (or if any of such
Shares have been converted and after making appropriate adjustment for any
stock dividend, split-up, recapitalization, rights, merger or other change
in the corporate or capital structure of the Company (a "Restructuring"),
shares of Common Stock and shares of Common Stock issuable upon conversion
of the Shares representing less than 40% or 20% of the Common Stock
originally issuable upon conversion of the Shares), the Xxx Purchaser Group
shall only be entitled to nominate one or no such nominees to the Board of
Directors, respectively; (ii) the Bain Purchaser Group holds less than 40%
of the Shares initially owned by the Bain Purchaser Group (or if any of
such Shares have been converted and after making appropriate adjustment for
any Restructuring, shares of Common Stock and Shares of Common Stock
issuable upon conversion of the Shares representing less than 40% of the
Common Stock originally issuable upon conversion of the Shares), the Bain
Purchaser Group shall not be entitled to nominate any nominees to the Board
of Directors; and (iii) the Centre Purchaser Group holds less than 40% of
the Shares initially owned by the Centre Purchaser Group (or if any of such
Shares have been converted and after making appropriate adjustment for any
Restructuring, shares of Common Stock and shares of Common Stock issuable
upon conversion of the Shares representing less than 40% of the Common
Stock originally issuable upon conversion of the Shares), the Centre
Purchaser Group shall not be entitled to nominate any nominees to the Board
of Directors; and provided, further that (i) if at any time there are only
two Purchasers' Representatives serving on the Board of Directors, the
Company will use its best efforts to cause the election of only one of such
Purchasers' Representatives to each of the executive, compensation and
audit committee and (ii) if at any time there is only one Purchasers'
Representative serving on the Board of Directors, the Company is not
obligated to use its best efforts to cause the election of such Purchasers'
Representative to any of the committees. Each of the Purchasers and the
Other Purchasers will designate the representatives who will sit on the
executive, compensation and audit committees of the Board of Directors
based on a vote of a majority in interest of the Purchasers and the Other
Purchasers.
SECTION 6.9 NO GENERAL SOLICITATION. None of the Company, its
affiliates (as defined in Rule 501(b) of the Securities Act) or any person
acting on their behalf will solicit any offer to buy or offer or sell the
Shares by means of any form or general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act that would require the registration of the Shares
under the Securities Act.
ARTICLE VII
COVENANTS OF THE PURCHASERS
SECTION 7.1 CERTAIN RESTRICTIONS.
(a) Each of the Purchasers covenants with the Company that,
without the consent of the Company, for a period commencing on the date hereof
and continuing through the fifth anniversary of the date hereof, none of the
Purchasers, singly or as part of a group, directly or indirectly, through one or
more intermediaries or otherwise, will:
(i) purchase or acquire, or offer, propose or agree to
purchase or acquire, directly or indirectly, any of the Common Stock
(other than by conversion of any of the Shares), any option, warrant or
other right to acquire, directly or indirectly, any Common Stock or any
securities which are convertible into or exchangeable or exercisable
for Common Stock (other than the exercise of options under the Stock
Option Agreement dated the date hereof; provided, however, that
notwithstanding anything to the contrary contained herein, the
foregoing restriction shall not be deemed to be violated or applicable
if a Purchaser is not otherwise in breach of this Agreement and (A) the
amount of the outstanding Common Stock beneficially owned, in the
aggregate, by such Purchaser is increased as a result of any stock
dividend, stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of the Company or any
other action taken solely by the Company or (B) the Company breaches
its obligations under Section 6.8 hereof; and provided, further, that
at any time when the percentage of the outstanding Common Stock owned
by a Purchaser on a fully diluted basis is less than the percentage of
the outstanding Common Stock owned by such Purchaser on a fully diluted
basis on the Closing Date (the "Maximum Amount") such Purchaser may
purchase additional shares of Common Stock up to the Maximum Amount;
(ii) solicit, or encourage any other person to solicit,
"proxies" or become a "participant" or otherwise engage in any
"solicitation" (as such terms are defined or used in Regulation 14A
under the Exchange Act) in opposition to a recommendation of a majority
of the directors of the Company with respect to any matter; seek to
advise or influence any person (within the meaning of Section 13(d)(3)
of the Exchange Act) with respect to the voting of any securities of
the Company; or execute any written consent in lieu of a meeting of
holders of securities of the Company or any class thereof;
(iii) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to the
Company, as described in Rule 14a-8 under the Exchange Act;
(iv) except as results from the Purchase Agreements or from
arrangements among the Purchasers and the Other Purchasers, directly or
indirectly participate in or encourage the formation of any "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) owning or
seeking to acquire beneficial ownership of securities of the Company or
affect control of the Company;
(v) except as results from the Purchase Agreements or from
arrangements among the Purchasers and the Other Purchasers, otherwise
act, directly or indirectly, alone or in concert with others, to seek
to control or influence in any manner the management, business,
operations, board of directors, policies or affairs of the Company, or
propose or seek to effect any form of business combination transaction
with the Company or any affiliate thereof or any restructuring,
recapitalization or other similar transaction with respect to the
Company; or
(vi) (a) encourage any person, firm, corporation, group or
other entity to engage in any of the actions covered by clauses (i)
through (v) of this Section 7.1 or make any public arrangement (or make
other communication with or to the Company or otherwise which, in the
opinion of counsel to the Company, would require public announcement)
with respect to any matter set forth in clause (i) through (v) of this
Section 7.1; provided, however, that actions taken by any
representative of the Purchaser on the Board of Directors of the
Company, acting in his or her capacity as such a director, shall not
violate this Section 7.1.
(b) No Purchaser shall, without the Company's
consent, sell, transfer, effect a short sale of, grant any option for
the purchase of, or loan any Shares or Common Stock for a period of 18
months from the date of issuance of the Shares except to an affiliate
or the Other Purchasers or an affiliate thereof; provided that this
restriction on each Purchaser's ability to sell or transfer any Shares
will cease to apply upon a conversion of the Shares pursuant to Section
8.10.1 of the Certificate of Designation; provided further, that each
Purchaser may sell its Shares or Common Stock in any tender offer or
exchange offer made for any Company securities.
ARTICLE VIII
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
SECTION 8.1 RESTRICTIVE LEGEND. Each certificate representing
(a) the Shares, (b) shares of the Common Stock issuable upon conversion of
any Shares, and (c) any other securities issued in respect of the Shares or
Common Stock issued upon conversion of any Shares upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event
(each of the foregoing securities in (a) through (c) being referred to
herein as "Restricted Securities"), shall (unless otherwise permitted by
the provisions of Section 8.2 below) be stamped or otherwise imprinted with
a legend substantially in the following form (in addition to the legend
required under any applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATIONS OR EXEMPTIONS
THEREFROM UNDER SAID ACT OR LAWS. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SHARES AND THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY.
The Company will promptly, upon request, remove any such legend when no longer
required by the terms of this Agreement or by applicable law.
SECTION 8.2 NOTICE OF PROPOSED TRANSFERS. Prior to any
proposed transfer of any Restricted Securities, unless there is in effect a
registration statement under the Securities Act covering the proposed
transfer, the Purchaser proposing such a transfer shall give written notice
to the Company of its intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied by either (a) a written opinion
of legal counsel (who shall be reasonably satisfactory to the Company)
addressed to the Company to the effect that the proposed transfer of the
Restricted Securities may be effected without registration under the
Securities Act or (b) a "no action" letter from the Commission to the
effect that the transfer of such securities without registration will not
result in a recommendation by the staff of the Commission that action be
taken with respect thereto, whereupon, in each case, such Purchaser shall
be entitled to transfer such Restricted Securities in accordance with the
terms of the notice delivered by such Purchaser to the Company. Unless
there is in effect a registration statement under the Securities Act
covering the proposed transfer, each certificate evidencing the Restricted
Securities transferred as herein provided shall bear the appropriate
restrictive legend set forth in Section 8.1 above except that such
certificate shall not bear such restrictive legend if, (i) in the opinion
of counsel for such Purchaser, such legend is not required in order to
establish compliance with any provisions of the Securities Act, (ii) a
period of at least one year has elapsed since the later of the date the
Restricted Securities were acquired from the Company or from an affiliate
of the Company, and such Purchaser represents to the Company that it is not
an affiliate of the Company and has not been an affiliate during the
preceding three months and shall not become an affiliate of the Company
without resubmitting the Restricted Securities for reimposition of the
legend, or (iii) the restricted Securities have been sold pursuant to Rule
144(k) and the certificate is accompanied by a representation by such
Purchaser that it is not an affiliate of the Company, has not been an
affiliate during the three-month period prior to the sale and has held the
Restricted Securities for more than two years.
ARTICLE IX
TERMINATION
Notwithstanding anything contained herein to the contrary,
this Agreement may be terminated at any time prior to the Closing Date:
(a) by the mutual written consent of the Purchasers and the
Company;
(b) by any Purchaser or the Company if the Closing has not
occurred on or before six months from the date hereof and this Agreement
has not previously been terminated; provided, however, that the right to
terminate the Agreement under this Section 9(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on
or before such date; or
(c) by any Purchaser or the Company if any of the Other
Purchase Agreements or the Note Purchase Agreement are terminated; or
(d) by any Purchaser 10 days after the Company's shareholders,
at a duly held meeting at which such shareholders vote on the issuance of
the Preferred Stock to the Purchasers or the Other Purchasers, fail to
approve such issuance.
In the event that this Agreement shall be terminated pursuant
to this Article IX, all further obligations of the parties under this
Agreement other than the obligations set forth in Article X and Sections
6.2, 6.5 and 11.10 shall be terminated without further liability of any
party to any other party, provided that nothing herein shall relieve any
party from liability for its willful breach of this Agreement.
ARTICLE X
INDEMNIFICATION
SECTION 10.1 INDEMNIFICATION. The Company hereby agrees to
indemnify, defend and hold harmless each Purchaser from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses (collectively, "Claims"), including without
limitation, interest, penalties and attorneys' fees and expenses, asserted
against, resulting to, or imposed upon or incurred by such Purchaser
directly or indirectly, in connection with the transactions contemplated
hereby.
SECTION 10.2 TERMS OF INDEMNIFICATION. The obligations and
liabilities of the Company with respect to Claims by third parties will be
subject to the following terms and conditions:
(a) a Purchaser will give the Company prompt notice of any
Claims asserted against, resulting to, imposed upon or incurred by a
Purchaser, directly or indirectly, and the Company will undertake the
defense thereof by representatives of their own choosing which are
reasonably satisfactory to such Purchaser; provided that the failure of any
Purchaser to give notice as provided in this Section 10.2 shall not relieve
the Company of its obligations under this Article X, except to the extent
that such failure has materially and adversely affected the rights of the
Company;
(b) if within a reasonable time after notice of any Claim, the
Company fails to defend, such Purchaser will have the right to undertake
the defense, compromise or settlement of such Claims on behalf of and for
the account and at the risk of the Company, subject to the right of the
Company to assume the defense of such Claim at any time prior to
settlement, compromise or final determination thereof;
(c) if there is a reasonable probability that a Claim may
materially and adversely affect a Purchaser other than as a result of money
damages or other money payments, such Purchaser will have the right at its
own expense to defend (provided that the indemnifying party shall continue
to control the defense and the indemnified party shall have the right to
participate in such defense), or co-defend, such Claim;
(d) the Company on one hand and the Purchasers on the other
will not, without the prior written consent of the other, settle or
compromise any Claim or consent to entry of any judgment relating to any
such Claim;
(e) with respect to any Claims asserted against a Purchaser,
such Purchaser will have the right to employ one counsel of its choice in
each applicable jurisdiction (if more than one jurisdiction is involved) to
represent such Purchaser if, in such Purchaser's reasonable judgment, a
conflict of interest between such Purchaser and the indemnifying party
exists in respect of such Claims, and in that event the fees and expenses
of such separate counsel shall be paid by such indemnifying party;
(f) the Company will provide each Purchaser reasonable access
to all records and documents of the Company relating to any Claim; and
(g) any Claim, in so far as it is related to any of the
representations and warranties of the Company contained in this Agreement,
must be made within one year of the Closing Date.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts, without regard to the conflict of laws rules thereof.
SECTION 11.2 SURVIVAL. All representations and warranties,
covenants and agreements of the Company and any Purchaser contained in this
Agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any Purchaser or any controlling
person thereof or by or on behalf of the Company, any of its officers and
directors or any controlling person thereof, and such representations and
warranties shall survive for a period of one year from the Closing Date
hereof.
SECTION 11.3 SUCCESSORS AND ASSIGNS. Except as otherwise
provided herein, the provisions hereof shall inure to the benefit of, and
be binding upon, the successors and permitted assigns of the parties
hereto. No assignment of this Agreement may be made by either party at any
time, whether or not by operation of law, without the other party's prior
written consent, except that each Purchaser may assign any of its rights
hereunder to an affiliate of such Purchaser or to the Other Purchasers or
any of their affiliates without the Company's consent provided that such
affiliate expressly assumes in writing all of the purchaser's obligations
hereunder, and provided that such assignment shall not relieve the
assigning Purchaser of its obligations hereunder.
SECTION 11.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and
the Transaction Documents constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof
provided that the Confidentiality Agreement between the Purchasers and the
Company dated April 18, 1997 shall remain in effect. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
SECTION 11.5 NOTICES, ETC. All notices and other
communications provided for or permitted hereunder shall be made in writing
by hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier or courier guaranteeing overnight
delivery, addressed (a) if to the Purchasers to Xxxx Capital, Inc. at Two
Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxx Xxxxxxxx, or at
such other addresses as shall have been furnished to the Company with a
copy to Xxxxx X. Xxxxxxx of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP at Xxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 and (b) if to the Company, at
Xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xx. Xxxx
X. Xxxxxx, or at such other address as the Company shall have furnished to
the Purchaser in writing with a copy to Xxxx X. Xxxxxx at Xxxx and Xxxx
LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. All such notices and
communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on the next
business day, if timely delivered to a courier guaranteeing overnight
delivery.
SECTION 11.6 DELAYS OR OMISSIONS. Except as expressly provided
herein, no delay or omission to exercise any right, power or remedy
accruing to the Company or any of the Purchasers upon any breach or default
of any party under this Agreement, shall impair any such right, power or
remedy of the Company or any of the Purchasers nor shall it be construed to
be a waiver of any such breach or default, or an acquiescence therein, or
of or in any similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of the Company or
any of the Purchasers of any breach or default under this Agreement, or any
waiver on the part of any such party of any provisions or conditions of
this Agreement, must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to the Company or any of the
Purchasers, shall be cumulative and not alternative.
SECTION 11.7 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which may be executed by only one of the
parties hereto, each of which shall be enforceable against the party actually
executing such counterpart, and all of which together shall constitute one
instrument.
SECTION 11.8 SEVERABILITY. In the event that any provision of
this Agreement becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provisions; provided that no such
severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.
SECTION 11.9 TITLES AND SUBTITLES. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
SECTION 11.10 NO PUBLIC ANNOUNCEMENT. Neither the Company nor
any of the Purchasers shall make any press release or other public
announcement concerning the transactions contemplated by this Agreement
except as and to the extent that any such party shall be obligated to make
any such disclosure by law or by the NYSE and then only after consultation
with the other regarding the basis of such obligation and the content of
such press release or other public announcement or as the parties shall
mutually agree.
SECTION 11.11 REASONABLE EFFORTS. The Company and the
Purchasers shall use all reasonable efforts to consummate the transactions
contemplated by this Agreement, the Other Purchase Agreements and the Note
Purchase Agreement.
SECTION 11.12 DISTRIBUTIONS AND ADJUSTMENTS. If from July 5,
1997 through the Closing Date the Company shall have taken any action which
would entitle the holders of Preferred Stock to a distribution or adjustment in
accordance with the Certificate of Designation if the Preferred Stock were then
outstanding, then the consideration to be received by the Purchasers hereunder
shall be appropriately adjusted.
IN WITNESS WHEREOF, each of the undersigned has caused the
foregoing Agreement to be executed under seal by one of its duly authorized
officers as of the date first above written.
THE LEARNING COMPANY, INC
By /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
XXXX CAPITAL FUND V, L.P.
By: Xxxx Capital Partners V, L.P.,
as General Partner
By: Xxxx Capital Investors V, Inc.,
as General Partner
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
XXXX CAPITAL FUND V-B, L.P.
By: Xxxx Capital Partners V, L.P.,
as General Partner
By: Xxxx Capital Investors V, Inc.,
as General Partner
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
BCIP ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: General Partner
BCIP TRUST ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
Amendment to Securities Purchase Agreement
Amendment dated as of September 16, 1997 to Securities
Purchase Agreement dated as of August 26, 1997 (the "Agreement")
between The Learning Company, Inc., a Delaware corporation (the
"Company") and each of the Purchasers listed on the signature page
hereto (individually, a "Purchaser" and collectively, the
"Purchasers").
For valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree that Section 8.4 of the
Certificate of Designation of Series A Convertible Participating
Preferred Stock setting forth the powers, preferences, rights,
qualifications, limitations and restrictions of such series of
Preferred Stock, attached as Exhibit A to the Agreement, is hereby
amended to read in its entirety as follows:
"Section 8.4 Conversion Price. The initial conversion price
shall be the lower of (i) $10.00 or (ii) the weighted average (based
on daily trading volumes of the Common Stock on the New York Stock
Exchange) of the Closing Prices of the Common Stock for the period of
the 30 consecutive Trading Days immediately preceding the Trading Day
which is three Trading Days before the date on which the proxy
statement is sent to the Company's stockholders with respect to the
approval of the Company's stockholders with respect to the approval of
the issuance of the Series A Preferred Stock (herein called the
"Conversion Price") subject to adjustment as provided in this Section
8."
In all other respects, the Agreement shall remain in full
force and effect.
Executed as of September 16, 1997.
THE LEARNING COMPANY, INC.
By: /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
PURCHASERS:
XXXX CAPITAL FUND V, L.P.
By:
Xxxx Capital Partners V, L.P., as
General Partner
By: Xxxx Capital Investors V, Inc., as
General Partner
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
XXXX CAPITAL FUND V-B L.P.
By:
Xxxx Capital Partners V, L.P., as
General Partner
By:
Xxxx Capital Investors V, Inc., as
General Partner
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
BCIP ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: General Partner
BCIP TRUST ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
