SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT, dated as of February 22, 1999 (this
"Agreement") between ▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation (the
"Company"), and THE NEW YORK TIMES COMPANY, a New York corporation (the
"Buyer").
1. Sale of Securities and Terms of Payment. In consideration of the
foregoing, the parties hereto agree that, subject to the conditions contained
herein, on February 26, 1999 or such later date as the Company and the Buyer
shall agree (the "Closing Date"), the Buyer will purchase from the Company and
the Company will sell to the Buyer 37,728 shares (the "Preferred Shares") of the
Company's Series B 9 1/2% Cumulative Preferred Stock, par value $.01 per share
and 3,962,703 shares (the "Common Shares" and, together with the Preferred
Shares, the "Shares") of the Company's Common Stock, par value $.01 per share
(the "Common Stock").
(a) Upon the terms and subject to the conditions contained in
this Agreement, and in consideration of the aforesaid issuance, sale and
delivery of the Shares, on the Closing Date, the Buyer will pay or cause to be
paid to the Company $15,000,000, of which $3,000,000 shall be in cash and
$12,000,000 shall be an irrevocable advertising credit (the "Advertising
Credit"), provided to the Company pursuant to the Advertising Credit Agreement,
dated the Closing Date, between the Company and the Buyer (the "Advertising
Credit Agreement"), for purchasing its advertisements on all the Buyer's
traditional (i.e., print, radio and television) and online publications and
properties (collectively, the "Media"), at the best available advertising
contract rates then being charged by the Buyer to advertisers spending
comparable amounts on advertising on the Media during the four year period
beginning from the Closing Date and ending on February 22, 2003 (such period
being hereinafter referred to as the "Advertising Period").
(b) Upon the terms and subject to the conditions of this
Agreement, on the Closing Date the Company will issue, sell and deliver to the
Buyer, and the Buyer will accept and purchase from the Company the Shares.
(c) The Company and the Buyer agree that the number of Shares
issuable under this Agreement has not been adjusted for the three to one reverse
stock split approved by the Company's Board of Directors on February 16, 1999,
but which has not as of the date hereof been approved by the Company's
stockholders. Any Shares issued by the Company
or sold by the Buyer pursuant to clause (b) above shall be adjusted for any
stock splits or stock dividends or combination of shares or recapitalizations,
mergers, consolidation or other reorganization or otherwise.
(d) Each of the Shares issued pursuant to this Agreement shall
bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATES, AND THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND LAWS, IF
APPLICABLE."
2. Representations of the Company. The Company represents and
warrants to the Buyer that as of the Closing Date:
(a) 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, except as may be
limited by bankruptcy, insolvency, fraudulent transfer or other similar laws
affecting creditors generally and subject to general principles of equity
regardless of whether enforceability is considered in a proceeding in equity or
at law.
(b) The Shares have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable.
(c) Except for 250,000 shares of the Common Stock sold by the
Company to a third party, the Company had (i) 41,291,515 issued and outstanding
shares of the Common Stock and 7,581,818 shares of the Common Stock reserved for
issuance pursuant to the Company's 1998 Stock Incentive Plan; (ii) 118,441
issued and outstanding shares of its Series A 9 1/2% Cumulative Preferred Stock;
(iii) 345,366 issued and outstanding shares of its Series B 9 1/2% Cumulative
Preferred Stock and (iv) 1,500 issued and outstanding shares of its Series C
Preferred Stock.
3. Representations of the Buyer. The Buyer represents and warrants
to the Company that:
(a) This Agreement has been duly executed and delivered by the
Buyer and constitutes the legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms, except as may be
limited by bankruptcy, insolvency, fraudulent transfer or other similar laws
affecting creditors generally and subject to general principles of equity
regardless of whether enforceability is considered in a proceeding in equity or
at law.
(b) The Buyer has purchased the Shares for investment purposes
without a view to resell the Shares.
4. Agreement of the Company to Provide Financial Information. The
Company covenants and agrees with the Buyer that until the earlier of (i)
consummation of an underwritten public offering of the Common Stock conducted by
a nationally recognized reputable underwriter with gross proceeds of at least
$20,000,000 (a "Qualified Public Offering"), and (ii) the first date on which
the Buyer no longer holds Common Shares representing 5% of the outstanding
Common Stock (clause (i) and (ii) are collectively referred to herein as the
"Termination Date") the Company shall furnish to the Buyer:
(a) within ninety (90) days after the end of each fiscal year
of the Company, an audited consolidated balance sheet of the Company and its
subsidiaries, if any, as of the end of such fiscal year and the related audited
consolidated statements of income, stockholders' equity and cash flows for the
fiscal year then ended, prepared in accordance with generally accepted
accounting principles and certified by a firm of independent public accountants
of recognized national standing selected by the Board of Directors of the
Company; and
(b) within forty (45) days after the end of each fiscal
quarter (other than the last fiscal quarter of each fiscal year) of the Company
a consolidated balance sheet of the Company and its subsidiaries, if any, and
the related consolidated statements of income, stockholders' equity and cash
flows, unaudited but prepared in accordance with generally accepted accounting
principles and certified by the Chief Financial Officer of the Company as fairly
presenting, in all material respects, the financial position of the Company and
its subsidiaries and results of operating and cash flow on a consolidated basis,
in each case in accordance with generally accepted accounting principles, such
consolidated balance sheet to be as of the end of such fiscal quarter and such
consolidated statements of income, stockholders' equity and cash flows to be for
such fiscal quarter and for the period from the beginning of the fiscal year to
the end of such quarter, in each case with comparative statements for the prior
fiscal year.
5. Agreement by the Company to Amend the Stockholders' Agreement to
Appoint an Additional Director to Board of Directors. The Company agrees to
amend the certain Amended and Restated Stockholders' Agreement, dated December
21, 1998, between the Company and the Stockholders named therein to provide
that:
(a) Until the Termination Date, at each annual meeting of the
stockholders of the Company, and at each special meeting of the stockholders of
the Company called for the purpose of electing directors of the Company, and at
any time at which stockholders of the Company shall have the right to, or shall,
vote for directors of the Company, then, and in each event, the Buyer shall have
the right to designate one person to the Board of Directors of the Company. The
Buyer hereby initially designates ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice Chairman and Senior Vice
President of the Buyer as a member of the Company's Board of Directors.
(b) Any vacancy on the Board of Directors created by the
resignation, removal, incapacity or death of any person designated under this
Section 5 shall be filled by another person designated by the Buyer.
6. Agreement to Negotiate Joint Venture Agreement. The parties
hereto agree that, as soon as practicable after the Closing Date, they will
enter into good faith negotiations to enter into a joint venture agreement and
any necessary additional agreements to, among other things, establish a joint
business and financial news site.
7. Lockup Agreement. The Buyer hereby agrees that in the event of a
Qualified Public Offering, it will execute a standard form of underwriter's
lock-up agreement under which it will agree not to transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for shares of Common Stock, for a period of
180 days after the date of the commencement of the public offering.
IN WITNESS WHEREOF, each of the Company and the Buyer has caused
this Agreement to be signed by its duly authorized officers as of the date first
above written.
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. English
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Name: ▇▇▇▇▇ ▇. English
Title: Chairman and CEO
THE NEW YORK TIMES COMPANY
By: /s/ ▇▇▇▇ ▇. ▇'▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer