CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated
as of January 13, 1999, among TRO Learning, Inc., a Delaware corporation (the
"COMPANY"), KA Investments LDC ("KA"), Xxxx X. Xxxxxx ("XXXXXX"), First Trust
National Association TTEE FBO Xxxx Xxxxxx XXX ("XXXXXX XXX"), Industricorp &
Co., Inc. FBO Twin City Carpenters Pension Plan and ("TWIN CITY"), Xxxxx
International ("XXXXX", and together with KA, Kohler, Xxxxxx XXX and Twin
City, the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers and the Purchasers
desire to purchase from the Company, shares of the Company's Series C
Convertible Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"),
which are convertible into shares of the Company's common stock, par value
$.01 per share (the "COMMON STOCK").
IN CONSIDERATION of the mutual covenants contained in this Agreement, and
for other good and valuable consideration the receipt and adequacy are hereby
acknowledged, the Company and the Purchasers agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 THE CLOSING.
(a) THE CLOSING. (i) Subject to the terms and conditions set forth
in this Agreement, the Company shall issue and sell to the Purchasers and the
Purchasers shall purchase 540 shares of Preferred Stock (the "SHARES") for an
aggregate purchase price of $5,000,000. The closing of the purchase and sale of
the Shares (the "CLOSING") shall take place at the offices of Xxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxx & Xxxxxx LLP ("XXXXXXXX XXXXXXXXX"), 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, immediately following the execution hereof
or such later date as the parties shall agree. The date of the Closing is
hereinafter referred to as the "CLOSING DATE."
(ii) Prior to the Closing Date, the parties shall deliver or
shall cause to be delivered the following: (A) the Company shall deliver (1) to
KA (a) stock certificates representing 399.6 Shares, registered in the name of
KA, (b) a Common Stock purchase warrant, in the form of EXHIBIT D, registered in
the name of KA, pursuant to which KA shall have the right at any time and from
time to time thereafter through the fifth anniversary of the Closing Date to
acquire 92,500 shares of Common Stock at an exercise price per share (subject to
adjustment as provided therein) of $9.51 (the "KA WARRANT"), (c) the legal
opinion of Winston & Xxxxxx, outside counsel to the Company, substantially in
the form of EXHIBIT C, and (d) all other documents, instruments and writings
required to have been delivered at or prior to the Closing Date by the Company
pursuant to this Agreement, including an executed Registration Rights Agreement,
dated the date hereof, between the Company and the Purchasers, in the form of
EXHIBIT B (the "REGISTRATION RIGHTS AGREEMENT"), and the Irrevocable Transfer
Agent Instructions, in the form of EXHIBIT E, delivered to and acknowledged by
the Company's transfer agent (the "TRANSFER AGENT INSTRUCTIONS"), (2) to
Kohler (a) stock certificates representing 8.1 Shares, registered in the name
of Kohler, (b) a Common Stock purchase warrant, in the form of EXHIBIT D,
registered in the name of Kohler, pursuant to which Kohler shall have the
right at any time and from time to time thereafter through the fifth
anniversary of the Closing Date to acquire 1,875 shares of Common Stock at an
exercise price per share (subject to adjustment as provided therein) of $9.51
(the "KOHLER WARRANT"), (c) the legal opinion of Winston & Xxxxxx, outside
counsel to the Company, substantially in the form of EXHIBIT C, and (d) all
other documents, instruments and writings required to have been delivered at
or prior to the Closing Date by the Company pursuant to this Agreement,
including an executed Registration Rights Agreement, and the Transfer Agent
Instructions, (3) to Xxxxxx XXX (a) stock certificates representing 8.1
Shares, registered in the name of Xxxxxx XXX, (b) a Common Stock purchase
warrant, in the form of EXHIBIT D, registered in the name of Xxxxxx XXX,
pursuant to which Xxxxxx XXX shall have the right at any time and from time
to time thereafter through the fifth anniversary of the Closing Date to
acquire 1,875 shares of Common Stock at an exercise price per share (subject
to adjustment as provided therein) of $9.51 (the "XXXXXX XXX WARRANT"), (c)
the legal opinion of Winston & Xxxxxx, outside counsel to the Company,
substantially in the form of EXHIBIT C, and (d) all other documents,
instruments and writings required to have been delivered at or prior to the
Closing Date by the Company pursuant to this Agreement, including an executed
Registration Rights Agreement, and the Transfer Agent Instructions, (4) to
Twin City (a) stock certificates representing 16.2 Shares, registered in the
name of Twin City, (b) a Common Stock purchase warrant, in the form of
EXHIBIT D, registered in the name of Twin City, pursuant to which Twin City
shall have the right at any time and from time to time thereafter through the
fifth anniversary of the Closing Date to acquire 3,750 shares of Common Stock
at an exercise price per share (subject to adjustment as provided therein) of
$9.51 (the "TWIN CITY WARRANT"), and (5) to Xxxxx (a) stock certificates
representing 108 Shares, registered in the name of Xxxxx, (b) a Common Stock
purchase warrant, in the form of EXHIBIT D, registered in the name of Xxxxx,
pursuant to which Xxxxx shall have the right at any time and from time to
time thereafter through the fifth anniversary of the Closing Date to acquire
25,000 shares of Common Stock at an exercise price per share (subject to
adjustment as provided therein) of $9.51 (the "XXXXX WARRANT" and
collectively with the KA Warrant, the Kohler Warrant, the Xxxxxx XXX Warrant,
and the Twin City Warrant, the "WARRANTS"), (c) the legal opinion of Winston
& Xxxxxx, outside counsel to the Company, substantially in the form of
EXHIBIT C, and (d) all other documents, instruments and writings required to
have been delivered at or prior to the Closing Date by the Company pursuant
to this Agreement, including an executed Registration Rights Agreement, and
the Transfer Agent Instructions; and (B) the Purchasers shall deliver (1)
$5,000,000 in United States dollars in immediately available funds by wire
transfer to an account designated in writing by the Company for such purpose,
and (2) all documents, instruments and writings required to have been
delivered at or prior to the Closing Date by the Purchasers pursuant to this
Agreement, including, without limitation, an executed Registration Rights
Agreement.
1.2 FORM OF PREFERRED STOCK. The Preferred Stock shall have the
rights preferences and privileges set forth in EXHIBIT A, and shall be
incorporated into a Certificate of Designation (the "CERTIFICATE OF
DESIGNATION"), which shall be filed on or prior to the Closing Date by the
Company with the Secretary of State of the State of Delaware, in form and
substance mutually agreed to by the parties.
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For purposes of this Agreement, "CONVERSION PRICE," "ORIGINAL ISSUE
DATE" and "TRADING DAY" shall have the meanings set forth in EXHIBIT A;
"BUSINESS DAY" shall mean any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
States of New York, Illinois or Minnesota are authorized or required by law or
other governmental action to close.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchasers:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in SCHEDULE
2.1(a) (collectively the "SUBSIDIARIES"). Each of the Subsidiaries is an
entity, duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the full power and authority to own and use its properties
and assets and to carry on its business as currently conducted. Each of the
Company and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of the Securities (as defined
below) or any of this Agreement, the Certificate of Designation, the
Registration Rights Agreement and the Warrants (collectively, the "TRANSACTION
DOCUMENTS"), (y) have or result in a material adverse effect on the results of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Documents (any of (x), (y) or (z), a "MATERIAL ADVERSE
EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each of
the Transaction Documents has been duly executed by the Company and, when
delivered (or filed, as the case may be) in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, by-laws or other charter documents.
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(c) CAPITALIZATION. The number of authorized, issued and outstanding
capital stock of the Company is set forth in SCHEDULE 2.1(c). No shares of
Common Stock are entitled to preemptive or similar rights, nor is any holder of
the Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company by virtue of any of the Transaction
Documents. Except as a result of the purchase and sale of the Shares and the
Warrants and except as disclosed in SCHEDULE 2.1(c), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. To the knowledge of
the Company, except as specifically disclosed in the SEC Documents (as defined
below) or SCHEDULE 2.1(c), no Person or group of related Persons beneficially
owns (as determined pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")), or has the right to
acquire by agreement with or by obligation binding upon the Company, in excess
of 5% of the Common Stock. A "PERSON" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
(d) ISSUANCE OF THE SHARES AND THE WARRANTS. The Shares and the
Warrants are duly authorized and, when issued and paid for in accordance with
the terms hereof, shall have been duly and validly issued, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights of first
refusal of any kind (collectively, "LIENS"). The Company has on the date hereof
and will, at all times while the Shares and the Warrants are outstanding,
maintain an adequate reserve of duly authorized shares of Common Stock, reserved
for issuance to the holders of the Shares and the Warrants, to enable it to
perform its conversion, exercise and other obligations under this Agreement, the
Certificate of Designation and the Warrants. Such number of reserved and
available shares of Common Stock is not less than the sum of (i) 1,703,470
shares of Common Stock which would be issuable upon conversion in full of the
Shares, and (ii) the number of shares of Common Stock issuable upon exercise of
the Warrants (such number of shares of Common Stock, the "INITIAL MINIMUM").
All such authorized shares of Common Stock shall be duly reserved for issuance
to the holders of the Shares and the Warrants. The shares of Common Stock
issuable upon conversion of the Shares, and upon exercise of the Warrants are
collectively referred to herein as the "UNDERLYING SHARES." The Shares, the
Warrants and the Underlying Shares are collectively referred to herein as, the
"SECURITIES." When issued in accordance with this Agreement, the Certificate of
Designation and the Warrants, the Underlying Shares shall have been duly
authorized, validly issued, fully paid and nonassessable, free and clear of all
Liens.
(e) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate of incorporation, bylaws or other
charter documents (each as amended through the date hereof), or
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(ii) subject to obtaining the Required Approvals (as defined below), conflict
with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, indenture or
instrument (evidencing a Company debt or otherwise) to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company is
subject (including Federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected, except in
the case of each of clauses (ii) and (iii), as could not, individually or in
the aggregate, have or result in a Material Adverse Effect. The business of
the Company is not being conducted in violation of any law, ordinance or
regulation of any governmental authority, except for violations which,
individually or in the aggregate, could not have or result in a Material
Adverse Effect.
(f) FILINGS, CONSENTS AND APPROVALS. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
Federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing of the Certificate of
Designation with the Secretary of State of Delaware, (ii) the filings required
pursuant to Section 3.11, (iii) the filing of the Underlying Securities
Registration Statement with the Securities and Exchange Commission (the
"COMMISSION") meeting the requirements set forth in the Registration Rights
Agreement and covering the resale of the Underlying Shares by the Purchasers,
(iv) the application(s) to the Nasdaq National Market ("NASDAQ") for the listing
of the Underlying Shares for trading on the NASDAQ (and with any other national
securities exchange or market on which the Common Stock is then listed for
trading), (v) applicable Blue Sky filings, (vi) the consent of Sanwa Bank Credit
Corporation and (vii) in all other cases where the failure to obtain such
consent, waiver, authorization or order, or to give such notice or make such
filing or registration could not have or result in, individually or in the
aggregate, a Material Adverse Effect (collectively, the "REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed in the
SEC Documents, there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (Federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, individually or in
the aggregate, have or result in a Material Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Except as described on Schedule 2.1(h)
hereto, neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred which has not been waived which, with
notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received
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notice of a claim that it is in default under or that it is in violation of,
any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound, (ii)
is in violation of any order of any court, arbitrator or governmental body,
or (iii) is in violation of any statute, rule or regulation of any
governmental authority, except as could not individually or in the aggregate,
have or result in a Material Adverse Effect.
(i) PRIVATE OFFERING. Assuming the accuracy of the representations
and warranties of the Purchasers set forth in Sections 2.2(b)-(g), the offer,
issuance and sale of the Securities to the Purchasers as contemplated hereby are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"). Neither the Company nor any Person acting on
its behalf has taken any action could subject the offering, issuance or sale of
the Securities to the registration requirements of the Securities Act.
(j) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed all
reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the three years preceding the date hereof
(or such shorter period as the Company was required by law to file such
material) (the foregoing materials being collectively referred to herein as the
"SEC DOCUMENTS" and, together with the Schedules to this Agreement the
"DISCLOSURE MATERIALS") on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Documents prior to the expiration
of any such extension. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted 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. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject have been filed as exhibits to the SEC Documents as
required. The financial statements of the Company included in the SEC Documents
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP")
during the periods involved, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. Since Ocotber 30, 1997, except as
specifically disclosed in the SEC Documents, (a) there has been no event,
occurrence or development that has had or that could have or result in a
Material Adverse Effect, (b) the Company has not incurred any liabilities
(contingent or otherwise) other than (x) liabilities incurred in the ordinary
course of business consistent with past practice and (y) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (c) the Company
has not altered its method of accounting or the identity of its auditors and (d)
the Company has not declared or made any payment or distribution of cash or
other property to its stockholders or officers or directors (other than in
compliance with existing Company stock option plans) with respect to its capital
stock, or purchased, redeemed (or made any agreements to purchase or redeem) any
shares of its
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capital stock. The Company last filed audited financial statements with the
Commission on January 15, 1998, and has not received any comments from the
Commission in respect thereof.
(k) INVESTMENT COMPANY. The Company is not, and is not an Affiliate
(as defined in Rule 405 under the Securities Act) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(l) CERTAIN FEES. Except for certain fees payable to Xxxxxx, Xxxxxxx
& Xxxxx and Xxxxx Xxxxxx, no fees or commissions will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, or bank with respect to the transactions contemplated by this
Agreement. The Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall indemnify and
hold harmless each of the Purchasers, their employees, officers, directors,
agents, and partners, and their respective Affiliates, from and against all
claims, losses, damages, costs (including the costs of preparation and
attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as such fees and expenses are incurred.
(m) SOLICITATION MATERIALS. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
(n) FORM S-3 ELIGIBILITY. The Company is eligible to register
securities for resale in transactions involving secondary offerings with the
Commission under Form S-3 promulgated under the Securities Act.
(o) EXCLUSIVITY. As long as the Preferred Stock is outstanding, the
Company shall not issue and sell shares of Preferred Stock to any Person other
than the Purchasers other than with the specific prior written consent of KA.
(p) SENIORITY. Except for the Series 1997 Subordinated Convertible
Debentures (the "1997 DEBENTURES"), no class of equity securities of the Company
is senior to the Shares in right of payment, whether upon liquidation,
dissolution, or otherwise.
(q) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. Except as
described on Schedule 2.1(q) hereto, the Company has not, in the two years
preceding the date hereof, received notice (written or oral) from the NASDAQ or
any other stock exchange, market or trading facility on which the Common Stock
is or has been listed (or on which it has been quoted) to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such exchange or market. The Company is, and has no reason to believe that it
will not in the foreseeable future continue to be, in compliance with all such
maintenance requirements.
(r) PATENTS AND TRADEMARKS. The Company has, or has rights to use,
all patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights,
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licenses and rights (collectively, the "INTELLECTUAL PROPERTY RIGHTS") which
are necessary or material for use in connection with its business, and which
the failure to so have would have a Material Adverse Effect. To the best
knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights.
(s) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as set
forth on SCHEDULE 6(b) to the Registration Rights Agreement, the Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been satisfied. No
Person, has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.
(t) REGULATORY PERMITS. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate Federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Documents, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect ("MATERIAL PERMITS"), and neither the Company nor
any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(u) TITLE. Except for Liens existing on the Closing Date, the
Company and the Subsidiaries have good and marketable title in fee simple to all
real property and personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and its Subsidiaries. Any real property and facilities held
under lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
(v) DISCLOSURE. The Company confirms that it has not provided the
Purchasers or their agents or counsel with any information that constitutes or
might constitute material non-public information. The Company understands and
confirms that the Purchasers shall be relying on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided
to each of the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company are true and correct and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers, severally and not jointly, hereby represent and warrant to the
Company as follows:
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(a) ORGANIZATION; AUTHORITY. Such Purchaser, as applicable, is an
entity duly formed, validly existing and in good standing under the laws of the
jurisdiction of its formation with the requisite power and authority, to enter
into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations thereunder. The purchase
by such Purchaser of the Securities hereunder has been duly authorized by all
necessary action on the part of such Purchaser. Each of this Agreement and the
Registration Rights Agreement has been duly executed and delivered by such
Purchaser and constitutes the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms.
(b) INVESTMENT INTENT. Such Purchaser is acquiring the Securities
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof or interest
therein, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement and the Registration Rights Agreement, at all times
to sell or otherwise dispose of all or any part of such Securities pursuant to
an effective registration statement under the Securities Act and in compliance
with applicable state securities laws or under an exemption from such
registration.
(c) PURCHASER STATUS. At the time such Purchaser was offered the
Shares and the Warrants, it was, and at the date hereof it is, and at each
exercise date under the Warrants, it will be, an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(d) EXPERIENCE OF THE PURCHASER. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) ABILITY OF THE PURCHASER TO BEAR RISK OF INVESTMENT. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) ACCESS TO INFORMATION. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
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(g) GENERAL SOLICITATION. Such Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
(h) RELIANCE. Such Purchaser understands and acknowledges that (i)
the Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that such Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) Securities may only be disposed of pursuant
to an effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from or in a transaction not subject to
the registration requirements of the Securities Act. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred securities under the
Securities Act. Notwithstanding the foregoing, the Company hereby consents to
and agrees to register on the books of the Company and with any transfer agent
for the securities of the Company any transfer of Securities by any Purchaser to
an Affiliate of such Purchaser or to one or more funds under common management
with such Purchaser, and any transfer among any such Affiliates or one or more
funds, provided that the transferee certifies to the Company that it is an
"accredited investor" as defined in Rule 501(a) under the Securities Act and
that it is acquiring the Securities solely for investment purposes. Any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights and obligations of a Purchaser under this Agreement and
the Registration Rights Agreement.
(b) Each Purchaser agrees to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM
-10-
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
Underlying Shares shall not contain the legend set forth above nor any
other legend if the conversion of Shares and exercise of the Warrants or other
issuances of Underlying Shares as contemplated hereby, by the Certificate of
Designation or the Warrants occurs at any time while an Underlying Securities
Registration Statement is effective under the Securities Act or, in the event
there is not an effective Underlying Securities Registration Statement, at such
time, if in the opinion of counsel to the Company, such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The
Company shall issue the Transfer Agent Instructions to the Company's transfer
agent on the day that the Underlying Securities Registration Statement is
declared effective by the Commission. The Company agrees that, in the event any
Underlying Shares are issued with a legend in accordance with this Section
3.1(b), it will, within three (3) Trading Days after request therefor by any
such Purchaser, provide such Purchaser with a certificate or certificates
representing such Underlying Shares, free from such legend at such time as such
legend would not have been required under this Section 3.1(b) had such issuance
occurred on the date of such request. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company which
enlarge the restrictions of transfer set forth in this Section.
3.2 ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the
issuance of the Underlying Shares upon (i) conversion of the Shares in
accordance with the terms of the Certificate of Designation, and (ii) exercise
of the Warrants in accordance with its terms, will result in dilution of the
outstanding shares of Common Stock. The Company further acknowledges that its
obligation to issue Underlying Shares upon (x) conversion of the Shares in
accordance with the terms of the Certificate of Designation, and (y) exercise of
the Warrants in accordance with its terms, is unconditional and absolute,
subject to the limitations set forth herein in the Certificate of Designation or
pursuant to the Warrants, regardless of the effect of any such dilution.
3.3 FURNISHING OF INFORMATION. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to such sections, it will prepare and furnish
to each Purchaser and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act such information as is required for such
Purchaser to sell the Securities under Rule 144 promulgated under the Securities
Act. The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell Underlying Shares without
registration under the Securities Act within the limitation
-11-
of the exemptions provided by Rule 144 promulgated under the Securities Act.
Upon the request of any such Person, the Company shall deliver to such Person
a written certification of a duly authorized officer as to whether it has
complied with such requirements.
3.4 INTEGRATION. The Company shall not, and shall use its best efforts to
ensure that, no Affiliate shall, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers.
3.5 INCREASE IN AUTHORIZED SHARES. If on any date the Company would be,
if a notice of conversion or exercise (as the case may be) were to be delivered
on such date, precluded from (a) issuing the number of Underlying Shares as
would then be issuable upon a conversion in full of the Shares then outstanding,
or (b) issuing the number of Underlying Shares upon exercise in full of the
Warrants (the "CURRENT REQUIRED MINIMUM"), in either case, due to the
unavailability of a sufficient number of authorized but unissued or reserved
shares of Common Stock, then the Board of Directors of the Company shall
promptly (and in any case, within 30 Business Days from such date) prepare and
mail to the stockholders of the Company proxy materials requesting authorization
to amend the Company's Certificate of Incorporation to increase the number of
shares of Common Stock which the Company is authorized to issue to at least such
number of shares as reasonably requested by the Purchasers in order to provide
for such number of authorized and unissued shares of Common Stock to enable the
Company to comply with its issuance, conversion exercise and reservation of
shares obligations as set forth in this Agreement, the Certificate of
Designation and the Warrants (the sum of (x) the number of shares of Common
Stock then authorized, (y) the number of shares of Common Stock then outstanding
plus all shares of Common Stock issuable upon exercise of all outstanding
options, warrants and convertible instruments, and (z) the Current Required
Minimum, shall be a reasonable number). In connection therewith, the Board of
Directors shall (a) adopt proper resolutions authorizing such increase, (b)
recommend to and otherwise use its best efforts to promptly and duly obtain
stockholder approval to carry out such resolutions (and hold a special meeting
of the stockholders no later than the 60th day after delivery of the proxy
materials relating to such meeting) and (c) within five (5) Business Days of
obtaining such stockholder authorization, file an appropriate amendment to the
Company's Certificate of Incorporation to evidence such increase.
3.6 RESERVATION AND LISTING OF UNDERLYING SHARES. (a) The Company shall
(i) not later than the tenth (10th) Business Day following the Closing Date
prepare and file with the NASDAQ (and such other national securities exchange or
market or trading or quotation facility on which the Common Stock is then
listed) an additional shares listing application covering a number of shares of
Common Stock which is not less than the Initial Minimum, (ii) take all steps
necessary to cause such shares of Common Stock to be approved for listing in
the NASDAQ (as well as on any such other national securities exchange or market
or trading or quotation facility on which the Common Stock is then listed) as
soon as possible thereafter, and (iii) provide to the Purchasers evidence of
such listing, and the Company shall maintain the listing of its Common Stock
thereon. If the number of Underlying Shares issuable upon conversion in full of
the then outstanding Shares and upon exercise of the then unexercised portion of
the Warrants exceeds 85% of the number of Underlying
-12-
Shares previously listed on account thereof with the NASDAQ (as well as on
any such other national securities exchange or market or trading or quotation
facility on which the Common Stock is then listed), then the Company shall
take the necessary actions to immediately list a number of Underlying Shares
as equals no less than the then Current Required Minimum.
(b) The Company shall maintain a reserve of shares of Common Stock
for issuance upon conversion of the Shares and upon exercise in full of the
Warrants in accordance with this Agreement, the Certificate of Designation and
the Warrants, respectively, in such amount as may be required to fulfill its
obligations in full under the Transaction Documents, which reserve shall equal
no less than the then Current Required Minimum.
3.7 CONVERSION AND EXERCISE PROCEDURES. The Transfer Agent Instructions,
Conversion Notice (as defined in EXHIBIT A) and Notice of Exercise under the
Warrants set forth the totality of the procedures with respect to the conversion
of the Shares and exercise of the Warrants, including the form of legal opinion,
if necessary, that shall be rendered to the Company's transfer agent and such
other information and instructions as may be reasonably necessary to enable the
Purchasers to convert their Shares and exercise the Warrants as contemplated in
the Certificate of Designation and the Warrants (as applicable).
3.8 NOTICE OF BREACHES. Each of the Company and the Purchasers shall give
prompt written notice to the other of any breach by it of any representation,
warranty or other agreement contained in any Transaction Document, as well as
any events or occurrences arising after the date hereof which would reasonably
be likely to cause any representation or warranty or other agreement of such
party, as the case may be, contained therein to be incorrect or breached as of
the Closing Date. However, no disclosure by either party pursuant to this
Section shall be deemed to cure any breach of any representation, warranty or
other agreement contained in any Transaction Document.
3.9 CONVERSION AND EXERCISE OBLIGATIONS OF THE COMPANY. The Company shall
honor conversions of the Shares and exercises of the Warrants and shall deliver
Underlying Shares in accordance with the respective terms, conditions and time
periods set forth in the Certificate of Designation and the Warrants.
3.10 RIGHT OF FIRST REFUSAL; SUBSEQUENT REGISTRATIONS. (a) The Company
shall not, directly or indirectly, without the prior written consent of KA,
offer, sell, grant any option to purchase, or otherwise dispose of (or announce
any offer, sale, grant or any option to purchase or other disposition) any of
its or its Affiliates' equity or equity-equivalent securities or a transaction
intended to be exempt or not subject to registration under the Securities Act (a
"SUBSEQUENT PLACEMENT") for a period of 180 days after the Closing Date, except
(i) the granting of options or warrants to employees, officers and directors,
and the issuance of shares upon exercise of options granted, under any stock
option plan heretofore or hereinafter duly adopted by the Company, (ii) shares
of Common Stock issuable upon exercise of any currently outstanding warrants and
upon conversion of any currently outstanding convertible securities of the
Company, in each case disclosed in Schedule 2.1(c), and (iii) shares of Common
Stock issuable upon conversion of the Shares and upon exercise of the Warrants
in accordance with the Certificate of Designation or the Warrants, respectively,
unless (A) the Company delivers to KA a written notice (the "SUBSEQUENT
-13-
PLACEMENT NOTICE") of its intention effect such Subsequent Placement, which
Subsequent Placement Notice shall describe in reasonable detail the proposed
terms of such Subsequent Placement, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Placement shall be effected,
and attached to which shall be a term sheet or similar document relating thereto
and (B) KA shall not have notified the Company by 5:00 p.m. (Minnetonka,
Minnesota time) on the tenth (10th) Trading Day after its receipt of the
Subsequent Placement Notice of its willingness to cause KA to provide (or to
cause its sole designee to provide), subject to completion of mutually
acceptable documentation, financing to the Company on substantially the terms
set forth in the Subsequent Placement Notice. If KA shall fail to notify the
Company of its intention to enter into such negotiations within such time
period, the Company may effect the Subsequent Placement substantially upon the
terms and to the Persons (or Affiliates of such Persons) set forth in the
Subsequent Placement Notice; PROVIDED, that the Company shall provide KA with a
second Subsequent Placement Notice, and KA shall again have the right of first
refusal set forth above in this paragraph (a), if the Subsequent Placement
subject to the initial Subsequent Placement Notice shall not have been
consummated for any reason on the terms set forth in such Subsequent Placement
Notice within forty (40) Trading Days after the date of the initial Subsequent
Placement Notice with the Person (or an Affiliate of such Person) identified in
the Subsequent Placement Notice.
(b) Except for (w) shares issued or registered in connection with the
1997 Debentures and the warrants issued in connection therewith, (x) Underlying
Shares, (y) other "Registrable Securities" (as such term is defined in the
Registration Rights Agreement) to be registered, and securities of the Company
permitted pursuant to Schedule 6(b) of the Registration's Rights Agreement to be
registered, in the Underlying Securities Registration Statement in accordance
with the Registration Rights Agreement, and (z) Common Stock to be registered
for resale in connection with financings permitted pursuant to paragraph
(a)(i) - (iii) of Section 3.10(a), the Company shall not, without the prior
written consent of KA (i) issue or sell any of its or any of its Affiliates'
equity or equity-equivalent securities pursuant to Regulation S promulgated
under the Securities Act, or (ii) register for resale any securities of the
Company for a period of not less than 90 Trading Days after the date that
the Underlying Securities Registration Statement is declared effective by the
Commission. Any days that a Purchaser is unable to sell Underlying Shares
under the Underlying Securities Registration Statement shall be added to
such 90 Trading Day period for the purposes of (i) and (ii) above.
3.11 CERTAIN SECURITIES LAWS DISCLOSURES; PUBLICITY. The Company shall:
(i) issue a press release reasonably acceptable to KA disclosing the
transactions contemplated hereby on the Closing Date, (ii) file with the
Commission a Report on Form 8-K disclosing the transactions contemplated hereby
within ten (10) Business Days after the Closing Date, and (iii) timely file with
the Commission a Form D promulgated under the Securities Act as required under
Regulation D promulgated under the Securities Act and provide a copy thereof to
the Purchasers promptly after the filing thereof. The Company shall, no less
than two (2) Business Days prior to the filing of any disclosure required by
clauses (ii) and (iii) above, provide a copy thereof to such Purchaser. No
such filing or disclosure may be made that mentions any Purchaser by name
without the prior consent of such Purchaser.
-14-
3.12 TRANSFER OF INTELLECTUAL PROPERTY RIGHTS. Except in connection with
the sale of all or substantially all of the assets of the Company, the Company
shall not transfer, sell or otherwise dispose of any Intellectual Property
Rights, or allow any of the Intellectual Property Rights to become subject to
any Liens, or fail to renew such Intellectual Property Rights (if renewable and
it would otherwise lapse if not renewed), without the prior written consent of
KA.
3.13 USE OF PROCEEDS. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not to redeem any
Company equity or equity-equivalent securities. Pending application of the
proceeds of this placement in the manner permitted hereby, the Company will
invest such proceeds in interest bearing accounts and/or short-term, investment
grade interest bearing securities.
3.14 REIMBURSEMENT. If any Purchaser, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse such Purchaser for its reasonable legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith, as such expenses are incurred. In addition, other than
with respect to any matter in which such Purchaser is a named party, the Company
will pay such Purchaser the charges, as reasonably determined by such Purchaser,
for the time of any officers or employees of such Purchaser devoted to appearing
and preparing to appear as witnesses, assisting in preparation for hearings,
trials or pretrial matters, or otherwise with respect to inquiries, hearings,
trials, and other proceedings relating to the subject matter of this Agreement.
The reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of such Purchaser who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchaser and any such Affiliate, and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Purchasers and any such Affiliate and any such Person. The
Company also agrees that neither the Purchasers nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any
liability to the Company or any Person asserting claims on behalf of or in right
of the Company in connection with or as a result of the consummation of the
Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of the Purchasers or entity in connection with the
transactions contemplated by this Agreement.
-15-
ARTICLE IV
MISCELLANEOUS
4.1 FEES AND EXPENSES. At the Closing the Company shall pay $20,000
to Xxxxxxxx Xxxxxxxxx in connection with the preparation and negotiation of the
Transaction Documents. Other than the amounts contemplated in the immediately
preceding sentence, and except as otherwise set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Securities.
4.2 ENTIRE AGREEMENT; AMENDMENTS. The Transaction Documents,
together with the Exhibits and Schedules thereto, and the Transfer Agent
Instructions contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.
4.3 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 8:00 p.m.
(Minnetonka, Minnesota time) on a Business Day, (ii) the Business Day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this Agreement later than 8:00
p.m. (Minnetonka, Minnesota time) on any date and earlier than 11:59 p.m.
(Minnetonka, Minnesota time) on such date, (iii) the Business Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as follows:
If to the Company: TRO Learning, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxxx
If to KA: KA Investments LDC
c/o Deephaven Capital Management LLC
-16-
0000 Xxxxxxx Xxxxxxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
If to Kohler or Xxxxxx XXX: Xxxx X. Xxxxxx
c/x Xxxxxx, Xxxxxxx & Xxxxx
0000 Xxxxxxx Xxxx., 0xx Xxxxx
Xxxxxxxxxxx, XX 00000
If to Twin City: Twin City Carpenters Pension Plan
c/o Perkins Capital Management, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
If to Xxxxx: Xxxxx International
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and Purchasers holding in the aggregate at least
66 2/3% of the then outstanding Shares or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
4.5 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each of the
Purchasers. Except as set forth in Section 3.1(a), no Purchaser may assign
this Agreement or any
-17-
of the rights or obligations hereunder (other than to an Affiliate of such
Purchaser) without the consent of the Company. This provision shall not
limit any Purchaser's right to transfer securities or transfer or assign
rights hereunder or under the Registration Rights Agreement, provided that
the Company shall receive notice of any such transfer.
4.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
4.9 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and
conversion or exercise (as the case may be) of the Shares and the Warrants.
4.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 PUBLICITY. The Company and the Purchasers shall consult with
each other in issuing any press releases or otherwise making public statements
or filings and other communications with the Commission or any regulatory
agency or stock market or trading facility with respect to the transactions
contemplated hereby and neither party shall issue any such press release or
otherwise make any such public statement, filings or other communications
without the prior written consent of the other, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required
if such disclosure is required by law, in which such
-18-
case the disclosing party shall provide the other party with prior notice of
such public statement, filing or other communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser
or include the name of any Purchaser in any filing with the Commission, or
any regulatory agency, trading facility or stock market without the prior
written consent of such Purchaser, except to the extent such disclosure (but
not any disclosure as to the controlling Persons thereof) is required by law,
in which case the Company shall provide such Purchaser with prior notice of
such disclosure.
4.12 SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchasers
will be entitled to specific performance of the obligations of the Company under
the Transaction Documents. Each of the Company and the Purchasers (severally
and not jointly) agree that monetary damages may not be adequate compensation
for any loss incurred by reason of any breach of its obligations described in
the foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Preferred Stock Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
Company:
. TRO LEARNING, INC.
By:
--------------------------------------------
Name:
Title:
Purchasers:
KA INVESTMENTS LDC
By:
--------------------------------------------
Name:
Title:
--------------------------------------------
XXXX X. XXXXXX
FIRST TRUST NATIONAL ASSOCIATION TTEE
FBO XXXX XXXXXX XXX
By:
--------------------------------------------
Name:
Title:
INDUSTRICORP & CO., INC.
FBO TWIN CITY CARPENTERS PENSION PLAN
By:
--------------------------------------------
Name:
Title:
XXXXX INTERNATIONAL
By:
--------------------------------------------
Name:
Title:
-------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Among
TRO LEARNING, INC.,
KA INVESTMENTS LDC,
XXXX X. XXXXXX,
FIRST TRUST NATIONAL ASSOCIATION TTEE
FBO XXXX XXXXXX XXX,
INDUSTRICORP & CO., INC.
FBO TWIN CITY CARPENTERS PENSION PLAN,
and
XXXXX INTERNATIONAL
January 13, 1999
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