EXHIBIT 10.23
NATIONAL EDUCATION CORPORATION
DEBENTURE CONVERSION AGREEMENT
This Debenture Conversion Agreement (the "Agreement") is made and
entered into as of the 31st day of August, 1995, by and among National
Education Corporation, a Delaware corporation (the "Company") and each of the
holders identified on Schedule A attached hereto and made a part hereof by
this reference (collectively the "Holders" and singly a "Holder").
RECITALS
A. The Company has previously issued $20 million aggregate principal
amount of its Senior Subordinated Convertible Debentures due 2006 (the
"Debentures").
B. The Holders are the recordholders of the Debentures, each Holder in
the principal amount set forth adjacent to his or its name on Schedule A.
C. The rights, preferences, privileges and restrictions pertaining to
the Debentures are set forth in the Indenture dated May 15, 1993 (the
"Indenture") between the Company and IBJ Xxxxxxxx Bank & Trust Company (the
"Trustee").
D. Pursuant to the Indenture, and particularly ARTICLES TWO and TWELVE
thereof, the Debentures are convertible into shares of the Company's Common
Stock. Also pursuant to the Indenture, and particularly ARTICLES TWO and
ELEVEN, the Company can redeem the Debentures provided certain conditions are
satisfied. The principal condition is that the closing price of the
Company's Common Stock as reported on the NYSE Composite Tape for any 20
trading days during any 30 consecutive trading day period equals or exceeds
$6.00 per share.
E. The Company desires to provide for an orderly and efficient
conversion of the Debentures into Common Stock. The Conversion Price as of
the date of this Agreement is $4.00 per share of Common Stock. Defined terms
used in this Agreement (identified by initial capital letters) and not
otherwise defined herein shall have the meanings given those terms in the
Indenture.
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AGREEMENT
NOW, THEREFORE, for valuable consideration the receipt of which is
hereby acknowledged, the parties mutually agree as follows:
1. Conversion. Within five Trading Days following expiration of any
period of 30 consecutive Trading Days during which on at least 20 of such
Trading Days the reported Closing Price of the Common Stock on the NYSE
Composite Tape equaled or exceeded 150% of the then effective Conversion
Price, each Holder shall surrender for conversion his Debentures, duly
endorsed or assigned to the Company or in blank, at the offices of the
Trustee in the City of New York as specified in Section 1002 of the
Indenture. Such surrender shall be accompanied by each Holder's irrevocable
notice of election to convert and such other items and information as may be
required by the Indenture. Promptly upon such surrender, the Debentures
shall be converted into Company Common Stock in accordance with the terms and
provisions of the Indenture.
2. Payment of Accrued Interest in Stock. Provided the Debentures have
been timely surrendered as provided in Section 1 above, within 30 days after
the date of conversion the Company shall pay to the Holders interest on the
Debentures at the then applicable rate from the Interest Payment Date
immediately preceding the date of conversion through the earlier of: (i) the
date of conversion; and (ii) the date three months after the Interest Payment
Date immediately preceding the date of conversion (the "Accrued Interest").
The Accrued Interest shall be paid in Company Common Stock. Each Holder, as
payment for Accrued Interest shall receive that number of shares of Company
Common Stock derived by dividing the Accrued Interest by the Current Market
Value for a share of Company Common Stock. Current Market Value means the
lower of: (i) the per share closing price of the Company Common Stock as
reported on the NYSE Composite Tape on the date of conversion; and (ii) the
average closing price of the Company's Common Stock as reported on the NYSE
Composite Tape for the 20 Trading Days ending on (and including) the date of
conversion. The date of conversion shall be the date the Holder surrenders
the Debentures to the Trustee duly endorsed for conversion together with the
notice of conversion and other items required by the Indenture.
3. General Provisions.
(a) Assignment and Binding Effect. The rights of each Holder
under this Agreement are personal to each such Holder with respect to the
Debentures held of record by each such Holder as shown on Schedule A and may
not be assigned without the prior written consent of the Company. The
obligations of each Holder under this Agreement are binding on each Holder
severally but not jointly, and shall be binding upon their respective
successors and permitted assigns.
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(b) Termination. This Agreement may be terminated by the Company
by written notice to the Holders at their addresses as set forth on Schedule
A at any time after September 30, 1995 provided such termination shall not be
effective with respect to any Holder who has duly surrendered his or its
Debentures for conversion in accordance with the terms of this Agreement
prior to the Company's notice of termination. Except for the Company's right
to terminate as herein specified, this Agreement shall remain in effect until
the Maturity of the Debentures.
(c) Counterparts. This Agreement may be executed in on or more
counterparts, all of which taken together shall be deemed one and the same
agreement.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
NATIONAL EDUCATION CORPORATION
By: _________________________________
Xxxxx X. Xxxxx
Vice President, Chief Financial
Officer and Treasurer
BK CAPITAL PARTNERS II, L.P.
By Xxxxxxx X. Xxxx & Associates, L.P., a
California limited partnership, its general
partner
By Xxxxxxx X. Xxxx & Associates, Inc., a
California corporation, its general
partner
By: _______________________________
Xxxxxx X. Xxxxxx
Chief Financial Officer
and Managing Director
BK CAPITAL PARTNERS III, L.P.
By Xxxxxxx X. Xxxx & Associates, L.P., a
California limited partnership, its general
partner
By Xxxxxxx X. Xxxx & Associates, Inc., a
California corporation, its general
partner
By: _______________________________
Xxxxxx X. Xxxxxx
Chief Financial Officer
and Managing Director
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BK NEC II
By BK-NEC, L.P., a California limited
partnership, its general partner
By Xxxxxxx X. Xxxx & Associates, L.P., a
California limited partnership, its
general partner
By Xxxxxxx X. Xxxx & Associates,
Inc., a California corporation, its
general partner
By:_____________________________
Xxxxxx X. Xxxxxx
Chief Financial Officer
and Managing Director
__________________________________
XXXXXXXX X. XXXXX
THE BONDERMAN FAMILY
LIMITED PARTNERSHIP
By: ______________________________
Xxxxx X'Xxxxx
Attorney-in-Fact
THE COMMON FUND
By Xxxxxxx X. Xxxx & Associates, L.P., a
California limited partnership, its investment
adviser
By: ________________________________
Xxxxxx X. Xxxxxx
Chief Financial Officer
and Managing Director
UNITED CONGREGATION MESORAH
By Xxxxxxx X. Xxxx & Associates, L.P., a
California limited partnership, its investment
adviser
By: ________________________________
Xxxxxx X. Xxxxxx
Chief Financial Officer
and Managing Director
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