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EXHIBIT 10.42
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SERIES D CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Among
AURORA ELECTRONICS, INC.
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.
and
The Several Other Persons Named
In Schedule I Hereto
Dated as of October 24, 1997
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TABLE OF CONTENTS
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I. PURCHASE AND SALE OF THE SERIES D PREFERRED SHARES . . . . . . . . 1
SECTION 1.01. Issuance and Sale of the Series D
Preferred Shares . . . . . . . . . . . . 1
SECTION 1.02. Closing Date . . . . . . . . . . . . . . . . . . . 2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . 2
SECTION 2.01. Organization and Qualification . . . . . . . . . . 2
SECTION 2.02. Subsidiaries . . . . . . . . . . . . . . . . . . . 2
SECTION 2.03. Capitalization . . . . . . . . . . . . . . . . . . 3
SECTION 2.04. Authorization of Agreements, Etc. . . . . . . . . . 4
SECTION 2.05. Validity . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06. Governmental Approvals . . . . . . . . . . . . . . 5
SECTION 2.07. Financial Statements, Etc. . . . . . . . . . . . . 5
SECTION 2.08. SEC Filings . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.09. Absence of Certain Changes or Events . . . . . . . 7
SECTION 2.10. Actions Pending . . . . . . . . . . . . . . . . . . 7
SECTION 2.11. Compliance with Law . . . . . . . . . . . . . . . . 8
SECTION 2.12. Offering of the Securities . . . . . . . . . . . . 8
SECTION 2.13. Brokers . . . . . . . . . . . . . . . . . . . . . . 8
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS . . . . . . . . . 9
SECTION 3.01. Authorization . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02. Validity . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.03. Investment Representations . . . . . . . . . . . . 9
SECTION 3.04. Government Approvals . . . . . . . . . . . . . . . 10
IV. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.01. Conditions Precedent to the Obligations
of the Purchasers . . . . . . . . . . . . . . . . . 10
SECTION 4.02. Condition Precedent to the Obligations
of the Company . . . . . . . . . . . . . . . . . . 12
V. SURVIVAL OF REPRESENTATIONS; INDEMNITY . . . . . . . . . . . . . . 12
SECTION 5.01. Survival of Representations . . . . . . . . . . . . 12
SECTION 5.02. General Indemnity . . . . . . . . . . . . . . . . . 12
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SECTION 5.03. Conditions of Indemnification . . . . . . . . . . . 13
VI. CERTAIN REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . 14
VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.01. Expenses, Etc. . . . . . . . . . . . . . . . . . . 14
SECTION 7.02. Survival of Agreements . . . . . . . . . . . . . . 14
SECTION 7.03. Parties in Interest . . . . . . . . . . . . . . . . 14
SECTION 7.04. Notices . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.05. Entire Agreement; Assignment . . . . . . . . . . . 16
SECTION 7.06. Counterparts . . . . . . . . . . . . . . . . . . . 16
SECTION 7.07. Governing Law . . . . . . . . . . . . . . . . . . . 16
INDEX TO EXHIBITS, SCHEDULES AND ANNEX
Exhibit Description
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A Form of Certificate of Designations
Schedule Description
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I Purchasers and Shares of Series D
Convertible Preferred Stock
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SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT dated
as of October 24, 1997, among AURORA ELECTRONICS, INC., a Delaware corporation
(the "Company"), WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P., a Delaware limited
partnership ("WCAS VII") and the several other persons named in Schedule I
hereto (such persons, together with WCAS VII, being hereinafter called
individually a "Purchaser" and collectively the "Purchasers").
WHEREAS, the Company desires to sell to the Purchasers, and
the Purchasers desire to purchase from the Company, on the terms and subject to
the conditions set forth herein, an aggregate 20,000 shares of Series D
Convertible Preferred Stock, $.01 par value ("Series D Preferred Stock"), of
the Company at a purchase price of $100 per share; and
WHEREAS, in order to induce the Purchasers to consummate the
transactions contemplated by this Agreement, the Company has agreed to grant to
the Purchasers certain registration rights with respect to the shares of Common
Stock, $.03 par value ("Common Stock"), of the Company that will be issuable
upon the conversion of the Series D Preferred Stock being purchased hereunder;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
I.
PURCHASE AND SALE OF
THE SERIES D PREFERRED SHARES
SECTION 1.01. Issuance and Sale of the Series D Preferred
Shares.
(a) Subject to the terms and conditions set forth herein,
on the Closing Date (as hereinafter defined) the Company shall issue, sell and
deliver to each Purchaser, and each Purchaser shall purchase from the Company,
the number of shares of Series D Preferred Stock set forth opposite the name of
such Purchaser on Schedule I hereto under the caption "Series D Preferred
Shares" (the aggregate number of shares of Series D
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Preferred Stock so purchased are referred to herein as the "Series D Preferred
Shares"), for a purchase price of $100 per share. On the Closing Date, the
Company shall issue a certificate or certificates in definitive form,
registered in the name of each Purchaser, representing the number of Series D
Preferred Shares being purchased by it hereunder.
(b) As payment in full for the Series D Preferred Shares
being purchased by it hereunder, and against delivery of the certificate or
certificates therefor as aforesaid, on the Closing Date each Purchaser shall
transfer immediately available funds by wire transfer to an account designated
by the Company, an amount equal to $100 multiplied by the number of Series D
Preferred Shares to be purchased by such Purchaser in accordance with paragraph
(a) above.
SECTION 1.02. Closing Date. The transfer, sale and delivery
of the Series D Preferred Shares (the "Closing") shall take place at the
offices of Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol, 00 Xxxxxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx, xx October 24, 1997 (such date and time of the Closing
being herein called the "Closing Date").
II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as
follows:
SECTION 2.01. Organization and Qualification. The Company is
a corporation validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own or lease
and operate its properties and assets and to carry on its business as it is now
being conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
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have a material adverse effect on the properties, assets, financial condition,
prospects, operating results or business of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Effect").
SECTION 2.02. Subsidiaries. (a) Except as set forth on
Schedule 2.02 hereto, neither the Company nor any of its subsidiaries owns of
record or beneficially, directly or indirectly, (i) any shares of outstanding
capital stock or securities convertible into capital stock of any other
corporation or (ii) any participating interest in any partnership, joint
venture or other non-corporate business enterprise. Each subsidiary of the
Company is a corporation validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and assets and to carry on
its business as it is now being conducted. Each subsidiary of the Company is
duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction in which the character of its properties owned
or leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not have a Material Adverse
Effect. All the outstanding shares of capital stock of the Company's
subsidiaries are duly authorized, validly issued, fully paid and nonassessable
and, except as set forth on Schedule 2.02, are owned by the Company or by a
wholly-owned subsidiary of the Company, free and clear of any liens, claims,
charges, restrictions, rights of others, security interests, prior assignments
or other encumbrances (collectively, "Claims"), and there are no proxies,
voting or transfer agreements or understandings outstanding with respect to any
such shares.
(b) Schedule 2.02 includes a complete and accurate list
of each subsidiary of the Company, indicating the jurisdiction of
incorporation, each jurisdiction in which such subsidiary is qualified as a
foreign corporation, its capital structure (including all authorized and
outstanding shares), and the nature and level of ownership in such subsidiary
by the Company, any subsidiary of the Company and any other person (for
purposes of this Agreement, "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, or an
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unincorporated organization). Complete and correct copies of the Certificate
of Incorporation and By-laws of the Company and of each subsidiary of the
Company have previously been delivered to the Purchasers.
(c) For purposes of this Agreement, the term
"subsidiary", when used with respect to the Company, shall mean any corporation
or other business entity, a majority of whose outstanding equity securities is
at the time owned, directly or indirectly, by the Company and/or one or more
other subsidiaries of the Company.
SECTION 2.03. Capitalization.
(a) The authorized capital stock of the Company consists of
(i) 50,000,000 shares of Common Stock and (ii) 1,000,000 shares of Preferred
Stock, $.01 par value ("Preferred Stock"), of the Company of which 400,000
shares have been designated Convertible Preferred Stock, 25,000 shares have
been designated Series B Convertible Preferred Stock and 25,000 shares have
been designated Series C Convertible Preferred Stock. As of the date hereof,
6,847,563 shares of Common Stock, 400,000 shares of Convertible Preferred
Stock, 25,000 shares of Series B Convertible Preferred Stock and 25,000 shares
of Series C Convertible Preferred Stock are issued and outstanding, all of
which were duly authorized and validly issued and are fully paid and
nonassessable.
(b) Upon the filing with the Secretary of State of the
State of Delaware of a Certificate of Designations of the Company in the form
attached hereto as Exhibit A (the "Certificate of Designations"), 20,000 shares
of Preferred Stock shall be designated as authorized Series D Preferred Stock.
(c) Except as set forth in the Company SEC Filings or on
Schedule 2.03 hereof, as of the date hereof, no subscription, warrant, option,
convertible security, stock appreciation or other right (contingent or other)
to purchase or acquire any shares of any class of capital stock of the Company
or any of its subsidiaries is authorized or outstanding and (except as
otherwise expressly contemplated by this Agreement) there is not
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any commitment of the Company or any of its subsidiaries to issue any shares,
warrants, options or other such rights or to distribute to holders of any class
of its capital stock any evidences of indebtedness or assets. Schedule 2.03
sets forth a complete and correct list of the number of warrants or options,
including a listing of the vesting schedules thereof, held by each person with
respect to the outstanding capital stock of the Company.
(d) Except as set forth on Schedule 2.03, neither the Company
nor any of its subsidiaries has any obligation (contingent or other) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof.
SECTION 2.04. Authorization of Agreements, Etc. (a) Each of
(i) the execution and delivery by the Company of this Agreement, (ii) the
performance by the Company of its obligations hereunder, (iii) the issuance,
sale and delivery by the Company of the Series D Preferred Shares, and (iv) the
issuance and delivery of the shares of Common Stock issuable upon the
conversion of the Series D Preferred Shares (collectively, the "Conversion
Shares") have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation or By-laws of the Company, or any
provision of any indenture, agreement or other instrument to which the Company
or any of its properties or assets is bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any Claim in favor of any third person upon any of
the assets of the Company or any of its subsidiaries.
(b) The Series D Preferred Shares have been duly authorized
by the Company and, when sold and paid for in accordance with this Agreement,
will be validly issued, fully paid and nonassessable shares of Series D
Preferred Stock. The Conversion Shares, when issued and delivered upon the
conversion of the Series D Preferred Shares, will be duly authorized, validly
issued, fully paid and nonassessable shares of Common
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Stock. Neither the issuance, sale and delivery of the Series D Preferred
Shares to the Purchasers hereunder, nor the issuance and delivery of the
Conversion Shares, is subject to any preemptive rights of stockholders of the
Company or to any right of first refusal or other similar right in favor of any
person.
SECTION 2.05. Validity. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
SECTION 2.06. Governmental Approvals. Subject to the
accuracy of the representations and warranties of the Purchasers set forth in
Article III hereof, no registration or filing with, or consent or approval of,
or other action by, any Federal, state or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery and
performance of this Agreement, the issuance, sale and delivery of the Series D
Preferred Shares or the issuance and delivery of the Conversion Shares upon the
conversion of the Series D Preferred Shares, other than (i) the filing of the
Certificate of Designations with the Secretary of State of the State of
Delaware in accordance with the Delaware General Corporation Law (the "Delaware
GCL") with respect to the designation of the Series D Preferred Stock, and (ii)
such filings with and approvals of the Securities and Exchange Commission
("SEC") or any state securities commission or similar regulatory body as may be
necessary in connection with the commencement or consummation of the
transactions contemplated herein.
SECTION 2.07. Financial Statements, Etc. (a) The Company
has furnished to the Purchasers: (i) the audited consolidated balance sheet of
the Company and its subsidiaries as of September 30, 1996 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the fiscal year then ended certified by Xxxxxx Xxxxxxxx LLP, the independent
certified public accountants retained by the Company, and (ii) the unaudited
consolidated balance sheet of the Company and its subsidiaries as of June 30,
1997 and the related consolidated statements of operations and cash flows for
the nine months then ended, certified by the principal financial officer of the
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Company. All such financial statements (including any related schedules and/or
notes) have been prepared in accordance with generally accepted accounting
principles in the United States ("GAAP") consistently applied and consistent
with prior periods, (i) except that such interim statements are subject to
year-end and audit adjustments (which consist of normal recurring accruals) and
do not contain certain footnote disclosures, and (ii) except as otherwise
disclosed in such financial statements or in the Company SEC Filings (as
defined below). Such balance sheets fairly present in all material respects
the financial position of the Company and its subsidiaries as of their
respective dates, and such statements of operations, stockholders' equity and
cash flows fairly present in all material respects the results of operations of
the Company and its subsidiaries for the respective periods then ended,
subject, in the case of unaudited financial statements, to normal year-end and
audit adjustments and the absence of certain footnote disclosures.
(b) Except as and to the extent (i) reflected on the
consolidated balance sheet of the Company and its subsidiaries as of September
30, 1996 (the "September 30, 1996 Balance Sheet"), (ii) incurred since
September 30, 1996 in the ordinary course of business consistent with past
practice, or (iii) set forth on Schedule 2.07 hereto, neither the Company nor
any of its subsidiaries has any material liabilities or obligations of any kind
or nature, whether known or unknown, secured or unsecured, absolute, accrued,
contingent or otherwise, and whether due or to become due, that would be
required to be reflected on a balance sheet, or the notes thereto, prepared in
accordance with GAAP. Since September 30, 1996, neither the Company nor any of
its subsidiaries has suffered any Material Adverse Effect.
SECTION 2.08. SEC Filings. The Company has filed all forms,
reports and documents required to be filed with the SEC since September 30,
1992, and the Company has made available to the Purchasers, as filed with the
SEC, complete and accurate copies of (i) the Annual Report of the Company on
Form 10-K for the year ended September 30, 1996, and (ii) all other reports,
statements and registration statements (including Current Reports on Form 8-K)
filed by the Company with the SEC since September 30, 1992, in each case
including all amendments and supplements
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(collectively, the "Company SEC Filings"). The Company SEC Filings (including,
without limitation, any financial statements or schedules included therein) (i)
were prepared in compliance with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, and the rules and
regulations thereunder, as the case may be, and (ii) did not at the time of
filing (or if amended, supplemented or superseded by a filing prior to the date
hereof, on the date of that filing) 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 the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 2.09. Absence of Certain Changes or Events. Except
as set forth on Schedule 2.09 hereto or as otherwise disclosed in the Company
SEC Filings or the financial statements of the Company and its subsidiaries as
of and for the nine months ended June 30, 1997 referred to above, and except as
otherwise expressly contemplated by this Agreement, since September 30, 1996,
neither the Company nor any of its subsidiaries has (i) issued any stock, bonds
or other corporate securities; (ii) borrowed or refinanced any amount or
incurred any material liabilities (absolute or contingent), other than
revolving credit facility borrowings and trade payables incurred in the
ordinary course of business consistent with past practice; (iii) discharged or
satisfied any material Claim or incurred or paid any obligation or liability
(absolute or contingent) other than current liabilities shown on the September
30, 1996 Balance Sheet and current liabilities incurred since the date of such
balance sheet in the ordinary course of business consistent with past practice;
(iv) declared or made any payment or distribution to stockholders, or purchased
or redeemed any shares of its capital stock or other securities; (v) mortgaged,
pledged or subjected to lien any of its assets, tangible or intangible, other
than liens for current real property taxes not yet due and payable; (vi) sold,
assigned or transferred any of its tangible assets, or cancelled any debts or
Claims, except in the ordinary course of business consistent with past
practice; (vii) sold, assigned or transferred any patents, trademarks and trade
names, trademark and trade name registrations, servicemark, brandmark and brand
name registrations and copyrights, the applications therefor and
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the licenses with respect thereto or other intangible assets; (viii) waived any
rights of substantial value, whether or not in the ordinary course of business;
(ix) made any material increase in the compensation (including, without
limitation, the rate of commissions) payable to, or any payment of a material
cash bonus to any director, officer, employee of, or consultant or agent to,
the Company or any of its subsidiaries or any other material change in the
terms or conditions of any employment relationship; (x) announced any plan or
legally binding commitment to create any employee benefit plan, program or
arrangement or to amend or modify in any material respect any existing employee
benefit plan, program or arrangement; (xi) eliminated the vesting conditions or
otherwise accelerated the payment of any compensation, including any stock
options; or (xii) except in connection with this Agreement and the transactions
contemplated hereby, entered into any agreement, letter of intent or similar
undertaking to take any of the actions listed in clauses (i) through (xi)
above.
SECTION 2.10. Actions Pending. Except (i) for any actions,
suits, investigations or proceedings which individually do not involve claims
against the Company or any of its subsidiaries for more than $25,000, (ii) as
set forth on Schedule 2.10 hereto, or (iii) as set forth in the Company SEC
Filings, there is no action, suit, investigation or proceeding pending or, to
the best knowledge of the Company, threatened against or affecting the Company,
or any of its properties or rights, before any court or by or before any
governmental body or arbitration board or tribunal. Except as set forth on
Schedule 2.10 hereto, there is no judgment, decree, injunction or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company.
SECTION 2.11. Compliance with Law. Neither the Company nor
any of its subsidiaries is in default in any respect under any order or decree
of any court, governmental authority, arbitrator or arbitration board or
tribunal or under any laws, ordinances, governmental rules or regulations to
which the Company or any of such subsidiaries or any of their respective
properties or assets is subject, except where such default would not have a
Material Adverse Effect.
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SECTION 2.12. Offering of the Securities. Neither the
Company nor any person authorized or employed by the Company as agent, broker,
dealer or otherwise in connection with the offering or sale of the Series D
Preferred Shares or any similar securities of the Company has offered any such
securities for sale to, or solicited any offers to buy any such securities
from, or otherwise approached or negotiated with respect thereto with, any
person or persons, under circumstances that involved the use of any form of
general advertising or solicitation as such terms are defined in Regulation D
of the Securities Act; and, assuming the accuracy of the representations and
warranties of the Pur- chasers set forth in Article III hereof, neither the
Company nor any person acting on the Company's behalf has taken or will take
any action (including, without limitation, any offer, issuance or sale of any
securities of the Company under circumstances which might require the
integration of such transactions with the sale of the Series D Preferred Shares
under the Securities Act or the rules and regulations of the SEC thereunder)
which would subject the offering, issuance or sale of the Series D Preferred
Shares to the Purchasers to the registration provisions of the Securities Act.
SECTION 2.13. Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by the
Company directly with the Purchasers, without the intervention of any other
person on behalf of the Company in such manner as to give rise to any valid
claim by any other person against the Purchasers for a finder's fee, brokerage
commission or similar payment.
III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and
warrants to the Company as follows:
SECTION 3.01. Authorization. The execution, delivery and
performance by such Purchaser of this Agreement and the purchase and receipt by
such Purchaser of the Series D Preferred
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Shares being acquired by it hereunder, have been duly authorized by all
requisite action on the part of such Purchaser, and will not violate any
provision of law, any order of any court or other agency of government, the
charter or other governing documents of such Purchaser, or any provision of any
indenture, agreement or other instrument by which such Purchaser or any of such
Purchaser's properties or assets are bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in any Claim
upon any of the properties or assets of such Purchaser.
SECTION 3.02. Validity. This Agreement has been duly
executed and delivered by such Purchaser and constitutes the legal, valid and
binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms.
SECTION 3.03. Investment Representations.
(a) Such Purchaser is acquiring the Series D Preferred Shares
being purchased by such Purchaser hereunder for such Purchaser's own account,
for investment, and not with a view toward the resale or distribution thereof.
(b) Such Purchaser understands that he, she or it, as the
case may be, must bear the economic risk of such Purchaser's investment for an
indefinite period of time because the Series D Preferred Shares are not
registered under the Securities Act or any applicable state securities laws,
and may not be resold unless subsequently registered under the Securities Act
and such other laws or unless an exemption from such registration is available.
Such Purchaser also understands that, except as provided in the Registration
Rights Agreement (as defined below), as amended herein, it is not contemplated
that any registration will be made under the Securities Act or that the Company
will take steps which will make the provisions of Rule 144 under the Securities
Act available to permit resale of the Series D Preferred Shares.
(c) Such Purchaser is able to fend for itself in the
transactions contemplated by this Agreement and such Purchaser has the ability
to bear the economic risks of the investment in
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the Series D Preferred Shares being purchased hereunder for an indefinite
period of time. Such Purchaser further acknowledges that he, she or it, as the
case may be, has received copies of the Company SEC Filings and has had the
opportunity to ask questions of, and receive answers from, officers of the
Company with respect to the business and financial condition of the Company and
the terms and conditions of the offering of the Series D Preferred Shares and
to obtain additional information necessary to verify such information or can
acquire it without unreasonable effort or expense.
(d) Such Purchaser has such knowledge and experience in
financial and business matters that such Purchaser is capable of evaluating the
merits and risks of its investment in the Series D Preferred Shares. Such
Purchaser further represents that he, she or it, as the case may be, is an
"accredited investor" as such term is defined in Rule 501 of Regulation D of
the SEC under the Securities Act with respect to its purchase of the Series D
Preferred Shares, and that any such Purchaser that is a limited partnership has
not been formed solely for the purpose of purchasing the Series D Preferred
Shares.
(e) If such Purchaser is a limited partnership, such
Purchaser represents that it has been organized and is existing as a limited
partnership under the laws of the State of Delaware.
SECTION 3.04. Governmental Approvals. No registration or
filing with, or consent or approval of, or other action by, any Federal, state
or other governmental agency or instrumentality is or will be necessary by such
Purchaser for the valid execution, delivery and performance of this Agreement.
IV.
CONDITIONS PRECEDENT
SECTION 4.01. Conditions Precedent to the Obligations of the
Purchasers. The obligations of the Purchasers hereunder are, at their option,
subject to the satisfaction, on or before the Closing Date, of the following
conditions:
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(a) Certificate of Designations. The Certificate of
Designations shall have been duly filed with the Secretary of State of the
State of Delaware and shall have become legally effective.
(b) Opinion of Counsel. The Purchasers shall have
received from Xxxxxx & Xxxx L.L.P., counsel for the Company, an opinion dated
the Closing Date, satisfactory in form and substance to the Purchasers and
their counsel.
(c) All Proceedings to Be Satisfactory. All corporate and
other proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
shall have been taken or obtained by the Company and all documents incident
thereto shall be satisfactory in form and substance to the Purchasers and their
counsel.
(d) Supporting Documents. On or prior to the Closing
Date the Purchasers and their counsel shall have received copies of the
following supporting documents:
(i) copies of (1) the Certificate of Incorporation of the
Company and the charter documents of each of its subsidiaries,
including all amendments thereto, certified as of a recent date by the
Secretary of State or the appropriate official of the relevant state
of incorporation, (2) certificates of said Secretary or official,
dated as of a recent date, as to the due incorporation and good
standing of the Company and each such subsidiary, and listing all
documents on file with said official, and (3) a telegram or facsimile
from said Secretary or official as of the close of business on the
next business day preceding the Closing Date as to the continued due
incorporation and good standing of the Company and each such
subsidiary and to the effect that no amendment to the respective
charter documents of such corporations has been filed since the date
of the certificate referred to in clause (2) above; and
(ii) a certificate of the Secretary or an Assistant Secretary
of the Company, dated the Closing Date and
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certifying (1) that attached thereto is a true and complete copy of
the By-laws of the Company as in effect on the date of such
certification and at all times since May 20, 1993; (2) that attached
thereto is a true and complete copy of resolutions adopted by the
Board of Directors of the Company authorizing the execution, delivery
and performance of this Agreement, the designation, issuance, sale and
delivery of the Series D Preferred Shares, the reservation, issuance
and delivery of the Conversion Shares and that all such resolutions
are still in full force and effect and are all the resolutions adopted
in connection with the transactions contemplated by this Agreement;
(3) that the Certificate of Incorporation of the Company has not been
amended since the date of the last amendment referred to in the
certificate delivered pursuant to clause (i)(2) above; and (4) as to
the incumbency and specimen signature of each officer of the Company
executing this Agreement, the stock certificates representing the
Series D Preferred Shares and any certificate or instrument furnished
pursuant hereto, and a certification by another officer of said
corporation as to the incumbency and signature of the officer signing
the certificate referred to in this paragraph (ii).
All such documents shall be satisfactory in form and substance to the
Purchasers and their counsel.
SECTION 4.02. Condition Precedent to the Obligations of the
Company. The obligations of the Company hereunder are subject to the due
filing with the Secretary of State of the State of Delaware and the legal
effectiveness of the Certificate of Designations on or prior to the Closing
Date.
V.
SURVIVAL OF REPRESENTATIONS; INDEMNITY
SECTION 5.01. Survival of Representations. Subject as set
forth below, all representations and warranties made by any party hereto in
this Agreement or pursuant hereto shall survive for a period of one year after
the Closing Date.
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SECTION 5.02. General Indemnity.
(a) Subject to the terms and conditions of this Article V,
the Company hereby agrees to indemnify, defend and hold the Purchasers harmless
from and against all demands, claims, actions or causes of action, assessments,
losses (including diminution in value of the Series D Preferred Shares),
damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and expenses (collectively,
"Damages"), asserted against, resulting to, imposed upon or incurred by the
Purchasers by reason of or resulting from a breach of any representation,
warranty or covenant of the Company contained in or made pursuant to this
Agreement.
(b) Subject to the terms and conditions of this Article V,
the Purchasers hereby agree to indemnify, defend and hold the Company harmless
from and against all Damages asserted against, resulting to, imposed upon or
incurred by the Company by reason of or resulting from a breach of any
representation, warranty or covenant of the Purchasers contained in or made
pursuant to this Agreement.
SECTION 5.03. Conditions of Indemnification. The respective
obligations and liabilities of the Purchasers, on the one hand, and the
Company, on the other hand (the "indemnifying party"), to the other (the "party
to be indemnified") under Section 5.02 hereof with respect to claims resulting
from the assertion of liability by third parties shall be subject to the
following terms and conditions:
(a) within 20 days after receipt of notice of
commencement of any action or the assertion in writing of any claim by a third
party, the party to be indemnified shall give the indemnifying party written
notice thereof together with a copy of such claim, process or other legal
pleading, and the indemnifying party shall have the right to undertake the
defense thereof by representatives of its own choosing;
(b) in the event that the indemnifying party, by the 30th
day after receipt of notice of any such claim (or, if earli-
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er, by the tenth day preceding the day on which an answer or other pleading
must be served in order to prevent judgment by default in favor of the person
asserting such claim), does not elect to defend against such claim, the party
to be indemnified will (upon further notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such claim on
behalf of and for the account and risk of the indemnifying party, subject to
the right of the indemnifying party to assume the defense of such claim at any
time prior to settlement, compromise or final determination thereof, provided
that the indemnifying party shall be given at least 15 days prior written
notice of the effectiveness of any such proposed settlement or compromise;
(c) anything in this Section 5.03 to the contrary
notwithstanding (i) if there is a reasonable probability that a claim may
materially and adversely affect the indemnifying party other than as a result
of money damages or other money payments, the indemnifying party shall have the
right, at its own cost and expense, to compromise or settle such claim, but
(ii) the indemnifying party shall not, without the prior written consent of the
party to be indemnified, settle or compromise any claim or consent to the entry
of any judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the party to be indemnified a
release from all liability in respect of such claim; and
(d) in connection with any such indemnification, the
indemnified party will cooperate in all reasonable requests of the indemnifying
party.
VI.
CERTAIN REGISTRATION RIGHTS
The Company hereby affirms and agrees that the registration
rights granted to the Purchasers and certain other stockholders of the Company
as set forth in the Registration Rights Agreement, dated as of March 29, 1996
(said agreement, as previously amended, the "Registration Rights Agreement"),
among
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the Company, the Purchasers and the other parties named therein, shall continue
in full force and effect, provided, however, that the Company and the
Purchasers acknowledge and agree that the Registration Rights Agreement is
hereby amended such that (i) the term "Convertible Preferred Stock" shall
hereinafter refer to and include the Series D Preferred Stock and (ii) the term
"Preferred Shares" shall hereinafter refer to and include the Series D
Preferred Shares.
VII.
MISCELLANEOUS
SECTION 7.01. Expenses, Etc. The Company shall reimburse
WCAS VII or pay on its behalf any reasonable fees and expenses incurred by WCAS
VII in connection with the negotiation and preparation of this Agreement and
the related documents contemplated hereby. For purposes hereof, the "fees and
expenses incurred by WCAS VII" shall include, without limitation, the fees,
disbursements and expenses of counsel, accountants, financial advisors and
other experts retained by WCAS VII in connection with this Agreement and the
transactions contemplated hereby.
SECTION 7.02. Survival of Agreements. All covenants,
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the issuance, sale and delivery of
the Series D Preferred Shares pursuant hereto, notwithstanding any
investigation made at any time by or on behalf of any party hereto. All
statements contained in any certificate or other instrument delivered by the
Company hereunder shall be deemed to constitute representations and warranties
made by the Company.
SECTION 7.03. Parties in Interest. All covenants and
agreements contained in this Agreement by or on behalf of any party hereto
shall bind and inure to the benefit of the respective successors and assigns of
such party hereto whether so expressed or not.
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SECTION 7.04. Notices. Any notice or other communications
required or permitted hereunder shall be deemed to be sufficient if contained
in a written instrument delivered in person or duly sent by first class
certified mail, postage prepaid, by nationally recognized overnight courier, or
by telecopy addressed to such party at the address or telecopy number set forth
below or such other address or telecopy number as may hereafter be designated
in writing by the addressee to the addressor listing all parties:
if to the Company, to:
Aurora Electronics, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: President
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with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
if to any Purchaser, to:
Welsh, Carson, Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
Xxxxxx X. XxXxxxxxx
with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
or, in any case, at such other address or addresses as shall have been
furnished in writing by such party to the other parties hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of mailing, on the fifth business day following the
date of such mailing, (c) in the case of delivery by overnight courier, on the
business day following the date of delivery to such courier, and (d) in the
case of telecopy, when received.
SECTION 7.05. Entire Agreement; Assignment. This Agreement
(including the Schedules and Exhibits hereto) and the Registration Rights
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and may not
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be amended or modified nor any provisions waived except in a writing signed by
the Company and the Purchasers. This Agreement shall not be assigned by
operation of law of otherwise without the consent of the other parties hereto.
SECTION 7.06. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
SECTION 7.07. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the Company and the Purchasers have
executed this Agreement as of the day and year first above written.
AURORA ELECTRONICS, INC.
By_____________________________________
Xxx X. Xxxxxx
Chairman and
Chief Executive Officer
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.
By WCAS VII Partners, L.P.,
General Partner
By_____________________________________
General Partner
WCAS INFORMATION PARTNERS, L.P.
By WCAS Info Partners,
General Partner
By_____________________________________
General Partner
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. xx Xxxxxx
Xxxxxx X. XxXxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxx
Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxx X. XxxXxxxx
Xxxxxxx X. Xxxxx
By_____________________________________
Xxxxx X. XxxXxxxx
Individually and
as Attorney-in-Fact
25
Schedule I
Name of Purchaser Series D Preferred Shares
----------------- -------------------------
Welsh, Carson, Xxxxxxxx &
Xxxxx VII, L.P. 19,005
WCAS Information Partners, L.P. 259
Xxxxxxx X. Xxxxx 104
Xxxxxxx X. Xxxxxx 155
Xxxxx X. Xxxxxxxx 155
Xxxxxxx X. Xxxxx 78
Xxxxxx X. Xxxx 52
Xxxxxx X. XxXxxxxxx 91
Xxxxx XxxXxxxx 5
Xxxxx X. Xxxxxx 26
Xxxxxx X. Xxxxxxxxx 41
Xxxxxxx X. xx Xxxxxx 21
Xxxx X. Xxxxxxx 8
------
Total 20,000
======
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