EXECUTION
STOCK PURCHASE AGREEMENT
AMONG
MICROLEAGUE MULTIMEDIA, INC.,
HEARST CORPORATION
AND
AMERITECH CORPORATION
_______________________________________
252,633 SHARES OF COMMON STOCK
_______________________________________
Dated as of
June 6, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I - PURCHASE AND SALE OF SHARES 1
Section 1.1 Purchase and Sale 1
Section 1.2 Closing 1
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF COMPANY 2
Section 2.1 Organization 2
Section 2.2 Subsidiaries 2
Section 2.3 Authorization 2
Section 2.4 Capitalization 2
Section 2.5 Financial Statements 3
Section 2.6 No Violation 3
Section 2.7 Consents 3
Section 2.8 Litigation, Orders 3
Section 2.9 Securities Laws 4
Section 2.10 Disclosure 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE INVESTORS 4
Section 3.1 Investment Intent, Etc. 4
Section 3.2 Sales of Company Securities 5
Section 3.3 Authorization 6
Section 3.4 No Violation 6
ARTICLE IV - CONDITIONS TO OBLIGATIONS OF THE INVESTORS 6
Section 4.1 Representations and Warranties 6
Section 4.2 No Proceeding or Litigation 6
Section 4.3 No Injunction 7
Section 4.4 Resolutions of the Company 7
Section 4.5 Incumbency Certificate 7
Section 4.6 Opinion of Counsel 7
Section 4.7 Consummation of Acquisition of KidSoft 7
ARTICLE V - CONDITIONS TO OBLIGATIONS OF THE COMPANY 7
Section 5.1 Representations and Warranties 7
Section 5.2 No Proceeding or Litigation 7
Section 5.3 No Injunction 7
ARTICLE VI - SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION 8
Section 6.1 Survival of Representations 8
Section 6.2 Indemnification 8
Section 6.3 Conditions of Indemnification 8
ARTICLE VII - REGISTRATION RIGHTS 9
Section 7.1 Piggyback Registration Rights 9
Section 7.2 Withdrawal of Shares. 9
Section 7.3 Information Regarding Investors; Underwriting
Arrangements 9
Section 7.4 Restrictions on Sales 10
Section 7.5 Indemnification 10
ARTICLE VIII - MISCELLANEOUS 12
Section 8.1 Expenses 12
Section 8.2 Further Assurances 12
Section 8.3 Parties in Interest 12
Section 8.4 Entire Agreement, Amendments and Waiver 12
Section 8.5 Headings 12
Section 8.6 Notices 12
Section 8.7 Governing Law 13
Section 8.8 Third Parties 13
Section 8.9 Counterparts 13
ARTICLE IX - DEFINED TERMS 14
Section 9.1 Location of Certain Defined Terms 14
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as
of June 6, 1997, among MicroLeague Multimedia, Inc., a
Pennsylvania corporation (the "Company"), Hearst
Corporation, a Delaware corporation ("Hearst"), and
Ameritech Corporation, a Delaware corporation ("Ameritech,"
and, collectively with Hearst, the "Investors").
RECITALS
Hearst and Ameritech indirectly hold significant
membership interests in KidSoft, LLC ("KidSoft"). Pursuant
to an acquisition agreement (the "Acquisition Agreement")
among the Company, KidSoft, L.L.C., Hearst, Ameritech,
KidSoft Holdings, Inc., Ameritech KidSoft Holdings, Inc.,
KidSoft, Inc. Xxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx of even
date herewith, the Company has agreed to acquire all of the
outstanding membership interests of KidSoft. As a condition
to such acquisition, the Investors have agreed to purchase
from the Company an aggregate of 252,633 shares of common
stock, par value $.01 per share (the "Common Stock"), of the
Company.
Accordingly, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale. Subject to the terms
and conditions set forth herein and in reliance on the
representations, warranties and covenants set forth herein,
at the Closing (as defined herein), (a) the Company shall
issue and sell to Hearst, and Hearst shall purchase from the
Company, the number of shares of Common Stock, rounded up to
the nearest whole share, having a market value equal to
$800,000, and (b) the Company shall issue and sell to
Ameritech, and Ameritech shall purchase from the Company,
the number of shares of Common Stock, rounded up to the
nearest whole share, having a market value equal to $400,000
(collectively, the "Shares"). For purposes of this
Agreement, the market value of the Common Stock shall be
calculated based on the average of the last sale prices of
the Common Stock as reported on the National Association of
Securities Dealers Automated Quotation System for the five
consecutive trading days immediately preceding the Closing
Date (as defined herein), or, if no sale occurs on any such
day, the average of the closing bid and asked price on such
day as so reported.
Section 1.2 Closing.
(a) Subject to Article IV, the purchase and sale
of the Shares will take place at a closing (the "Closing")
at the offices of Klehr, Harrison, Xxxxxx, Branzburg &
Xxxxxx, to commence at 10:00 A.M. on June 6, 1997, or on
such other date as the Company and the Investors shall
agree, which shall be the date on which the closings under
the Acquisition Agreement occur. The date and time of
Closing are referred to herein as the "Closing Date."
(b) At the Closing, each Investor shall deliver
by wire transfer, to such account of the Company as the
Company shall direct at least one business day before the
Closing Date, same day funds in an amount equal to the
purchase price of the Shares being purchased by such
Investor; provided, however, the purchase price payable by
Ameritech hereunder shall be reduced by $200,000,
representing the amount contributed by Ameritech to KidSoft,
LLC prior to the Closing pursuant to Section 12.10 of the
Acquisition Agreement.
(c) At the Closing, the Company shall deliver to
each Investor against payment of the purchase price
therefor, a certificate representing such Investor's Shares.
The certificates representing such Shares shall be
registered in the name of such Investor or its nominee.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to the Investors as
follows:
Section 2.1 Organization. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania.
The Company has all requisite power and authority to own,
operate and lease its properties and to conduct its business
as currently conducted. The Company is duly qualified or
licensed to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property
or the conduct of its business requires such licensing or
qualification, except to the extent that the failure to be
so qualified or licensed would not have a Material Adverse
Effect. The Company has delivered to the Investors complete
and correct copies of its articles of incorporation and by-
laws, each as in effect on the date hereof. As used in this
Agreement, "Material Adverse Effect" means with respect to
the Company, any Subsidiary or an Investor, any material
adverse effect on the operations, condition (financial or
other), assets, liabilities, earnings or prospects of such
entity or on the transactions contemplated hereby.
Section 2.2 Subsidiaries. Each of AbleSoft, Inc., REP
Acquisition Corporation, and REP Holdings Company, Inc. (the
"Subsidiaries") is duly organized, validly existing and in
good standing under the laws of its jurisdiction of
incorporation. Each Subsidiary has all requisite power and
authority to own, operate and lease it properties and to
conduct its business as currently conducted. Each
Subsidiary is duly qualified or licensed to do business and
is in good standing in each jurisdiction is which its
ownership or leasing of property or the conduct of its
business requires such licensing or qualification, except to
the extent that the failure to be so qualified would not
have a Material Adverse Effect. The Company is the sole
record owner of all of the outstanding capital stock of each
Subsidiary.
Section 2.3 Authorization. The Company has all requisite
power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance by the
Company of its obligations hereunder have been duly
authorized by the Board of Directors of the Company and no
other proceeding therefor on the part of the Company or its
shareholders is required. This Agreement has been duly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by the
Investors, is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its
terms.
Section 2.4 Capitalization.
(a) The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock and of
which 4,568,740 shares are issued and outstanding and
1,000,000 shares of preferred stock, $.01 par value, none of
which are outstanding. Except as set forth on Schedule 2.4,
the Company has not issued and is not obligated to issue any
warrants, options or other rights to purchase or acquire any
shares of its capital stock, or any securities convertible
into any such shares or any warrants, options or other
rights to acquire any such convertible securities.
(b) All of the Shares have been duly authorized
and, when issued in accordance with the term of this
Agreement will be, validly issued, fully paid and
nonassessable and will not be subject to any preemptive
rights. Except as set forth in Schedule 2.4, there are no
preemptive rights, rights of first refusal, put or call
rights or obligations, or anti-dilution rights with respect
to the issuance, sale or redemption of the capital stock of
the Company.
Section 2.5 Financial Statements. The Company has
previously delivered to each Investor complete and correct
copies of the Company's audited balance sheets, statements
of income and statements of cash flows for each of the years
ended December 31, 1994, 1995 and 1996. All such financial
statements were prepared in conformity with generally
accepted accounting principles applied on a consistent
basis, are complete, correct and consistent in all material
respects with the books and records of the Company, contain
notations for all significant accruals or contingencies and
fairly present the financial position of the Company as of
the dates thereof and the results of operations and cash
flows of the Company for the periods shown therein.
Section 2.6 No Violation. Neither the execution and
delivery of this Agreement by the Company nor the
performance by the Company of its obligations hereunder will
(i) conflict with or result in any breach of any provision
of its articles of incorporation or by-laws, (ii) result in
a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default or give rise to
any lien or encumbrance on the Company's properties or
assets or any right of termination, cancellation or
acceleration under any of the terms or conditions of any
note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Company is a party or
by which it or any of its properties or assets may be
bound, or (iii) violate any statute, law, rule, regulation,
writ, injunction, judgment, order or decree of any court,
administrative agency or governmental authority binding on
the Company or any of its properties or assets, excluding
from the foregoing clauses (ii) and (iii) violations,
breaches and defaults that, individually and in the
aggregate, would not have a Material Adverse Effect.
Section 2.7 Consents. Except for consents that have been
obtained, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental
or regulatory authority or other person or entity is
required to be made or obtained by the Company in connection
with the execution and delivery of this Agreement by the
Company or the performance by the Company of its obligations
hereunder, other than such consents, approvals,
authorizations, declarations, filings or registrations, the
failure of which to make or obtain, individually and in the
aggregate, would not have a Material Adverse Effect.
Section 2.8 Litigation, Orders. Except as set forth on
Schedule 2.8, there are no claims, actions, suits,
proceedings, investigations or inquiries pending before any
court, arbitrator or governmental or regulatory official or
office, or, to the knowledge of the Company, threatened,
against or affecting the Company or questioning the validity
of this Agreement, the transactions contemplated hereby or
any action taken or to be taken by the Company pursuant to
this Agreement, at law or in equity; nor is there any valid
basis for any such claim, action, suit, proceeding, inquiry
or investigation. The Company is not subject to any
judgment, order or decree entered in any lawsuit or
proceeding that has had or may have a Material Adverse
Effect.
Section 2.9 Securities Laws. The offer, issuance and
sale by the Company of the Shares pursuant to this Agreement
(assuming the accuracy of the representations and warranties
of the Investors contained in Article III) will be exempt
from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), and applicable
state securities laws.
Section 2.10 Disclosure. The representations and
warranties made or contained in this Agreement, the
schedules and exhibits hereto and the certificates and
statements executed or delivered in connection herewith do
not, and the Company's annual report on Form 10-KSB for the
year ended December 31, 1996 (the "Form 10-KSB"), the
Company's quarterly report on Form 10-QSB for the quarter
ended March 31, 1997 (the "1997 Form 10-QSB") and the
information contained under the heading "Risk Factors" in
the draft Private Placement Memorandum, dated May 1, 1997,
relating to the offering by the Company of convertible
preferred stock did not, as of the respective dates thereof,
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make such representations, warranties
or other material not misleading. No event has occurred and
nothing material has come to the attention of the Company
that would indicate that any of such information (together
with any written updates thereof furnished by the Company,
including information in the 1997 Form 10-QSB that updates
information in the Form 10-QSB) is not true and correct in
all material respects as of the date hereof. To the
knowledge of the Company, the projections contained in the
materials furnished to Investors by the Company and the
assumptions underlying such projections were reasonable when
made and continue to be reasonable, and the projections were
based upon good faith and diligent estimates of the
anticipated operating results and financial condition of the
Company. There are no facts known to the Company that
currently or may in the future have a Material Adverse
Effect and that have not been specifically disclosed herein,
in a schedule furnished herewith or in the documents
referred to above, other than economic conditions affecting
the industry of the Company generally.
Section 2.11 Other Registration Rights. Except as set
forth in this Agreement, the Acquisition Agreement and
Schedule 2.11, the Company is not obligated to register the
offer and sale of any of its outstanding capital stock or
other securities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor represents and warrants to the Company
(solely as to itself) as follows:
Section 3.1 Investment Intent, Etc.
(a) Such Investor is acquiring the Shares to be
acquired by it hereunder for its own account for investment
only and not with a view to or for sale in connection with
the distribution thereof.
(b) Such Investor 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 Company contemplated by this Agreement and making an
informed investment decision with respect thereto.
(c) Such Investor is an "accredited investor" as
such term is defined in Rule 501 under the Securities Act.
(d) Such Investor has received copies of and has
reviewed (i) the Company's Quarterly Report on Form 10-QSB
with respect to the quarter ended September 30, 1996; (ii)
the 1997 Form 10-QSB, (iii) Form 10-KSB; (iv) a draft,
dated May 1, 1997, of the Company's Proxy Statement with
respect to its 1997 annual meeting of shareholders; (v) a
draft of the Private Placement Memorandum of the Company,
dated May 1, 1997; and (vi) press releases issued by the
Company since May 23, 1996.
(e) Such Investor understands that certain of the
information provided by the Company in connection with the
transactions contemplated hereby contains forward-looking
statements regarding potential future events and
developments affecting the Company's business. Such
statements relate to, among other things, (i) competition
for customers for its products and services; (ii) the
uncertainty of developing or obtaining rights to new
products that will be accepted by the market and the timing
of the introduction of new products into the market;
(iii) the limited market life of the Company's products;
(iv) the uncertainty of consummating potential acquisitions
or entering into joint ventures; and (v) the availability of
financing to fund working capital and expansion needs. Such
Investor further understands that the Company's ability to
predict results or the effect of any pending events on the
Company's operating results is inherently subject to various
risks and uncertainties, including those discussed in the
Form 10-KSB under "Description of Business" and
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and in the Memorandum under "Risk
Factors". Such Investor further understands that the
projected financial information regarding the Company's
future performance is merely an estimate based on various
assumptions concerning the occurrence of future events, many
of which are beyond the Company's control. Accordingly,
such Investor understands that the Company's actual results
in all likelihood will differ from projected results, and
such differences may be material.
(f) Such Investor has had the opportunity to ask
questions of and receive answers from the Company concerning
its business and operations, the terms and conditions of the
acquisition of securities hereunder, as well as the
opportunity to obtain additional information necessary to
verify the accuracy of information furnished in connection
therewith that the Company possesses or can acquire without
unreasonable effort or expense.
(g) Such Investor understands that the Shares to
be acquired by such Investor pursuant to this Agreement have
not been registered under the Securities Act or any state
securities laws, and may not be transferred unless
subsequently registered thereunder or pursuant to an
exemption from registration, and that a legend indicating
such restrictions will be placed on the certificates
representing such securities.
Section 3.2 Sales of Company Securities. If the Company
determines to effect a public offering of Common Stock or
securities convertible into or exercisable for Common Stock,
upon the request of the managing underwriter for such
offering, such Investor shall not offer or sell, or agree to
offer or sell, any Common Stock or securities convertible
into or exercisable for Common Stock during the period
requested by such underwriter, which shall not exceed 180
days.
Section 3.3 Authorization. Such Investor has all
requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement and the performance
by such Investor of its obligations hereunder have been duly
authorized by the Board of Directors of Investor. This
Agreement has been duly executed and delivered by such
Investor and, assuming the due authorization, execution and
delivery hereof by the Company, is a valid and binding
obligation of such Investor, enforceable against Investor in
accordance with its terms.
Section 3.4 No Violation. Neither the execution and
delivery of this Agreement by such Investor nor the
performance by it of its obligations hereunder will (i)
conflict with or result in any breach of any provision of
the certificate of incorporation or by-laws of such
Investor, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or
both) a default or give rise to any lien or encumbrance on
any of their respective properties or assets or any right of
termination, cancellation or acceleration under any of the
terms or conditions of any note, bond, mortgage, lease,
license, agreement or other instrument or obligation to
which Investor is a party or by which Investor or any of its
properties or assets may be bound, or (iii) violate any
statute, law, rule, regulation, writ, injunction, judgment,
order or decree of any court, administrative agency or
governmental authority binding on such Investor or any of
its properties or assets, excluding from the foregoing
clauses (ii) and (iii) violations, breaches and defaults
that, individually and in the aggregate, would not have a
Material Adverse Effect on Investor.
ARTICLE IV
CONDITIONS TO OBLIGATIONS OF THE INVESTORS
The obligations of the Investors under this Agreement
are subject to the satisfaction, at or before the Closing,
of each of the following conditions:
Section 4.1 Representations and Warranties. The
representations and warranties of the Company shall be true
and correct in all material respects as of the date when
made and as of the date of Closing as though made at that
time (except for representations and warranties that
expressly relate to a different date) and the Company shall
have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to the Closing.
The Investors shall have received a certificate, executed by
the Chief Executive Officer of the Company, dated as of the
Closing Date, to the foregoing effect.
Section 4.2 No Proceeding or Litigation. There shall not
be threatened, instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any
court or governmental or other regulatory or administrative
agency or commission requesting or looking toward an order,
judgment or decree that (a) restrains or prohibits the
consummation of any of the transactions contemplated hereby
or (b) could have a Material Adverse Effect on the Company.
Section 4.3 No Injunction. On the Closing Date, there
shall be no effective injunction, writ, preliminary
restraining order or other order issued by a court of
competent jurisdiction restraining or prohibiting the
consummation of the transactions contemplated hereby.
Section 4.4 Resolutions of the Company. The Company
shall have executed and delivered to the Investors copies of
resolutions of the Company's Board of Directors, certified
by the Secretary of the Company as in full force and effect
on the Closing Date, authorizing, among other things, the
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
Section 4.5 Incumbency Certificate. The Company shall
have delivered to each Investor a certificate of the
Secretary of the Company, dated as of the Closing Date, as
to the incumbency and signatures of the officers of the
Company executing this Agreement and the related
certificates.
Section 4.6 Opinion of Counsel. Each Investor shall have
received from Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx,
counsel to the Company, an opinion, dated as of the Closing
Date, in form and substance reasonably satisfactory to such
Investor, with respect to the matters set forth in
Section 2.1, 2.2, 2.3, 2.4, 2.6, 2.7, 2.8 and 2.9.
Section 4.7 Consummation of Acquisition of KidSoft. The
transactions contemplated by the Acquisition Agreement shall
have been consummated or shall be consummated simultaneously
with the transactions contemplated hereby.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF THE COMPANY
Section 5.1 Representations and Warranties. The
representations and warranties of each Investor shall be
true and correct in all material respects as of the date
when made and as of the date of the Closing as though made
at that time (except for representations and warranties that
expressly relate to a different date) and the Investors
shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or
complied with by the Investors at or prior to the Closing.
The Company shall have received a certificate, executed by
the Chief Executive Officer of each Investor (or other
officer reasonably acceptable to the Company), dated as of
the Closing Date, to the foregoing effect.
Section 5.2 No Proceeding or Litigation. There shall not
be threatened, instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any
court or governmental or other regulatory or administrative
agency or commission requesting or looking toward an order,
judgment or decree that restrains or prohibits the
consummation of any of the transactions contemplated hereby.
Section 5.3 No Injunction. On the Closing Date, there
shall be no effective injunction, writ, preliminary
restraining order or other order issued by a court of
competent jurisdiction restraining or prohibiting the
consummation of the transactions contemplated hereby.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 6.1 Survival of Representations. All
representations, warranties and agreements made by any party
to this Agreement or pursuant hereto shall survive the
Closing and any investigation made by or on behalf of any
party hereto for a period of one year following the Closing
Date.
Section 6.2 Indemnification. Subject to the terms
and conditions of this Article VI, the Company shall
indemnify, defend and hold harmless each Investor, each
person who controls such party within the meaning of the
Exchange Act, and each of the respective partners, officers,
directors, employees and agents of the foregoing in their
respective capacities as such (collectively, the
"Indemnified Parties") from and against all demands, claims,
assessments, losses, damages, liabilities, costs and
expenses, including interest, penalties and reasonable
attorneys' fees and expenses (collectively, "Damages"),
asserted against, resulting to, imposed upon or incurred by
any such Investor Indemnified Party, directly or indirectly,
by reason of or resulting from a breach of any
representation, warranty or agreement of the Company
contained in or made pursuant to this Agreement (each, a
"Claim"); provided, however, the Company's liability
pursuant to this Section 6.2 and the Acquisition Agreement
shall not exceed, in the aggregate, $2,000,000.
Section 6.3 Conditions of Indemnification. The
obligations of the Company to indemnify the Indemnified
Parties under Section 6.2 with respect to Claims made by
third parties shall be subject to the following terms and
conditions:
(a) The Indemnified Party shall give the Company
prompt notice of any such Claim, and the Company shall have
the right to undertake the defense thereof by
representatives chosen by it;
(b) If the Company, within a reasonable time
after notice of any such Claim, fails to defend any
Indemnified Party against which such Claim has been
asserted, such Indemnified Party shall (upon further notice
to the Company) have the right to undertake the defense,
compromise or settlement of such Claim on behalf of and for
the account and 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; and
(c) Anything in this Section 6.3 to the contrary
notwithstanding, (i) if there is a reasonable probability
that a Claim may materially and adversely affect an
Indemnified Party other than as a result of money damages or
other money payments, such Indemnified Party shall have the
right, at its own cost and expense, to defend, compromise or
settle such Claim; provided, however, that if such Claim is
settled without the Company's consent (which consent shall
not be unreasonably withheld) such Indemnified Party shall
be deemed to have waived all rights hereunder against the
Company for money damages arising out of such Claim, and
(ii) the Company shall not, without the written consent of
such Indemnified Party, settle or compromise any Claim or
consent to the entry of any judgment that does not include
as an unconditional term thereof the giving by the claimant
or the plaintiff to such Indemnified Party a release from
all liability in respect to such Claim.
ARTICLE VII
REGISTRATION RIGHTS
Section 7.1 Piggyback Registration Rights. If, at
any time, the Company proposes to register any shares of
Common Stock under the Securities Act other than pursuant to
a registration effected to implement (a) an employee benefit
plan or (b) a transaction to which Rule 145 or any similar
rule of the SEC under the Securities Act applies, whether or
not for sale for its own account, the Company shall give
written notice thereof to the Investors and upon the written
request of any Investor, given within 15 days after the
receipt of any such written notice, the Company will include
in such registration statement any or all of the shares of
Common Stock acquired pursuant to this Agreement then owned
by such Investor or acquired by such Investor upon the
exercise of warrants of the Company issued in connection
with the transactions contemplated hereby; provided,
however, that (i) the maximum number of shares to be sold
shall not exceed the number which the managing underwriter
considers, in good faith, to be appropriate based on market
conditions and other relevant factors (including pricing);
and (ii) if the total number of shares desired to be sold
exceeds such amount, the Company shall be entitled to
include in such registration statement the full amount of
shares that it desires to include, and the Investors,
together with any other shareholders who elect to
participate in the offering, shall be entitled to sell up to
any remaining amount of shares pro rata in proportion to the
number of shares requested to be included therein.
Section 7.2 Withdrawal of Shares. If the number of
shares to be included in a registration statement pursuant
to this Article VII is reduced as provided in Section 7.1,
any Investor that previously had elected to participate in
such offering may withdraw its shares from such registration
statement by giving written notice to such effect to the
Company at any time prior to the effective date thereof. At
any time prior to such effective date, the Company shall
have the right to withdraw such registration statement for
any reason whatsoever.
Section 7.3 Information Regarding Investors;
Underwriting Arrangements.
(a) Each Investor participating in a
registration hereunder shall furnish to the Company such
information regarding such Investor and the distribution of
such Investor's securities as the Company may from time to
time request in order to comply with the Securities Act and
the rules and regulations of the Securities and Exchange
Commission thereunder. Each Investor shall notify the
Company as promptly as practicable of any inaccuracy or
change in information previously furnished by such Investor
to the Company or of the happening of any event as a result
of which any prospectus relating to such registration
contains an untrue statement of a material fact regarding
such Investor or the distribution of such securities or
omits to state any material fact regarding such Investor or
the distribution of such securities required to be stated
therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, and shall promptly furnish to the Company any
additional information required to correct or update any
previously furnished information or required so that such
prospectus shall not contain, with respect to such Investor
or the distribution of such securities, an untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(b) Each Investor participating in a registration
hereunder shall, if requested by the Company or the managing
underwriter(s) in connection with such registration,
(i) subject to Section 7.4, agree to sell its shares on the
basis provided in any underwriting arrangements entered into
in connection therewith and (ii) complete and execute all
questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents customary in
similar offerings.
Section 7.4 Restrictions on Sales. In connection with
any registration under this Article VII, no Investor shall
sell any shares of Common Stock or securities convertible
into or exercisable for Common Stock, except pursuant to
such registration, for the period following the effective
date of the applicable registration statement that the
managing underwriter of the offering determines is necessary
to effect the offering, which period shall not exceed 180
days.
Section 7.5 Indemnification.
(a) Indemnification by the Company. In
connection with any registration pursuant to this Section 7,
the Company shall indemnify, defend and hold harmless each
Investor participating in such registration, each person who
controls such Investor within the meaning of the Securities
Act, and each of the partners, officers, directors,
employees and agents of the foregoing in their respective
capacities as such (the "Indemnitees"), to the full extent
lawful, from and against all actions, suits, claims,
proceedings, costs, damages, judgments, amounts paid in
settlement and expenses (including, without limitation,
reasonable attorneys' fees and disbursements), whether joint
or several (collectively, a "Loss"), to which any such
Indemnitee may become subject under the Securities Act or
any other statute or common law, insofar as any such Loss
may arise out of or be based upon any untrue statement or
alleged untrue statement of any material fact contained in
any registration statement under which such securities were
registered, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement thereto,
or in any filing made in connection with the qualification
of the offering under blue sky or other securities laws of
jurisdictions in which the Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading and the Company will reimburse each
Indemnitee for any legal or other expenses reasonably
incurred in connection with investigating or defending such
Loss; provided, however, that such indemnification covenant
shall not (i) apply to any Loss arising out of, or based
upon, any such untrue statement or alleged untrue statement,
or any such omission or alleged omission, if such statement
or omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf
of such Indemnitee for use in connection with preparation of
the registration statement, any preliminary prospectus or
final prospectus contained in the registration statement,
any such amendment or supplement thereto or any Blue Sky
Filing or (ii) inure to the benefit of any Indemnitee to the
extent that any such Loss arises out of such Indemnitee's
failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the person
asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written
confirmation of the sale of the securities to such person if
such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf
of any Indemnitee and shall survive the transfer of such
securities by any Indemnitee.
(b) Indemnification by the Sellers. As a
condition to including any securities in any registration
statement filed pursuant to Section 7.1, the Company shall
have received an undertaking satisfactory to it from the
prospective seller of such securities to indemnify, defend
and hold harmless (in the same manner and to the same extent
as set forth in subsection (a) of this Section 7.5) the
Company, each director of the Company, each officer of the
Company and each other person, if any, who controls the
Company within the meaning of the Securities Act, with
respect to any untrue statement or alleged untrue statement
in, or omission or alleged omission from, such registration
statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein or any Blue Sky Filing,
or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such seller for
use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, in
no event shall the liability of any seller under this
paragraph (b) exceed the net proceeds received by such
seller (after the payment of underwriting discounts and
commissions) from the sale of its securities pursuant to
such registration statement. Such indemnity shall remain in
full force and effect regardless of any investigation made
by or on behalf of the Company or any such director, officer
or controlling person and shall survive the transfer of such
securities by such seller.
(c) Notices of Claims. Promptly after receipt by
an indemnified party of notice of the commencement of any
action or proceeding involving a claim hereunder, such
indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party, give written notice
to the latter of the commencement of such action, provided
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of
its obligations under this Section 7.5 unless the
indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled
to participate in and, unless a conflict of interest between
such indemnified and indemnifying parties exists in respect
of such claim, to assume the defense thereof, jointly with
any other indemnifying party similarly notified to the
extent that the indemnifying party may wish, and after
notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred
by the latter in connection with the defense thereof. In
the event that the indemnifying party advises an indemnified
party that it will contest a claim for indemnification
hereunder, or fails, within 30 days of receipt of any
indemnification notice to notify, in writing, such person of
its election to defend, settle or compromise any action,
proceeding or claim (or discontinues its defense at any time
after it commences such defense), then the indemnified party
may, at its option, defend, settle or otherwise compromise
or pay such action or claim with the consent of the
indemnifying party, which consent shall not be unreasonably
withheld. The indemnified party shall cooperate fully with
the indemnifying party in connection with any negotiation or
defense of any such action or claim by the indemnifying
party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party
that relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all
times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying
party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such
defense with counsel of its choice at its sole cost and
expense. If the indemnifying party does not assume such
defense, the indemnified party shall keep the indemnifying
party apprised at all times as is reasonably practicable as
to the status of the defense. No indemnifying party shall
be liable for any settlement of any action, claim or
proceeding effected without its written consent; provided,
however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying
party shall, without the consent of the indemnified party
(not to be unreasonably withheld), consent to entry of any
judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Expenses. Each party hereto shall pay
all fees and expenses incurred by it in connection with the
negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby.
Section 8.2 Further Assurances. From time to time, at
the Company's request and without further consideration,
each party hereto shall execute and deliver to the Company
such documents and take such other action as the Company may
reasonably request in order to consummate more effectively
the transactions contemplated hereby.
Section 8.3 Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by
the respective successors and permitted assigns of the
parties hereto. The rights and obligations of the parties
hereto hereunder may not be assigned without the consent of
the other parties hereto.
Section 8.4 Entire Agreement, Amendments and Waiver.
(a) This Agreement, the exhibits, the schedules
and other writings referred to herein or delivered pursuant
hereto that form a part hereof contain the entire
understanding of the parties with respect to its subject
matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its
subject matter.
(b) This Agreement may be amended only by a
written instrument duly executed by the parties. Any
condition to a party's obligations hereunder may be waived
in writing by such party to the extent permitted by law.
Section 8.5 Headings. The Article and Section headings
contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.6 Notices. All notices, claims, certificates,
requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if
delivered personally, by telex or facsimile transmission or
mailed (registered or certified mail, postage prepaid,
return receipt requested) as follows:
If to the Company to: MicroLeague Multimedia, Inc.
0000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Klehr, Harrison, Xxxxxx, Branzburg
& Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Hearst: The Hearst Corporation
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
If to Ameritech: Ameritech Corporation
00 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Assistant General Counsel -
Transactions
or to such other address as the person to whom notice is to
be given may have previously furnished to the others in
writing in the manner set forth above, provided that notice
of a change of address shall be deemed given only upon
receipt.
Section 8.7 Governing Law. This Agreement shall be
governed by, and construed and enforced in accordance with,
the laws of the Commonwealth of Pennsylvania with regard to
its or any other jurisdiction's conflicts of law rules.
Section 8.8 Third Parties. Nothing herein expressed or
implied is intended or shall be construed to confer upon or
give to any person, other than the parties hereto and their
successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
Section 8.9 Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall
be deemed an original, but all of which together shall
constitute one and the same instrument.
ARTICLE IX
DEFINED TERMS
Section 9.1 Location of Certain Defined Terms. The
following terms used in this Agreement are defined in the
Section indicated below:
Term Section
Acquisition Agreement Forepart
Agreement Forepart
Ameritech Forepart
Blue Sky Filing 7.5(a)
Claim 6.2
Closing 1.2
Closing Date 1.2
Common Stock 1.2
Company Forepart
Company Indemnified Party 6.2
Damages 6.2
Exchange Act 6.2
Hearst Forepart
Indemnified Party 6.3
Indemnitees 7.5(a)
Investor Indemnified Parties 6.2
Investors Forepart
KidSoft Forepart
Loss 7.5(a)
Material Adverse Effect 2.1
Memorandum 2.10
Securities Act 2.9
Subsidiaries 2.2
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered as of the day
and year first above written.
MICROLEAGUE MULTIMEDIA, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
HEARST CORPORATION
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
AMERITECH CORPORATION
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Secretary
