Exhibit 10.28
PREFERRED STOCK AND WARRANTS
SUBSCRIPTION AGREEMENT
dated as of
November 17, 1999
among
WRC MEDIA INC.
WEEKLY READER CORPORATION,
JLC LEARNING CORPORATION
and
THE BUYERS NAMED HEREIN
relating to the purchase and sale
of
Preferred Stock
of
WRC Media Inc.,
Warrants
of
Weekly Reader Corporation
and
Warrants
of
JLC Learning Corporation
TABLE OF CONTENTS
---------
PAGE
----
ARTICLE 1
---------
DEFINITIONS
-----------
SECTION 1.01. DEFINITIONS..............................................................2
ARTICLE 2
---------
PURCHASE AND SALE
-----------------
SECTION 2.01. PURCHASE AND SALE........................................................4
SECTION 2.02. CLOSING..................................................................4
ARTICLE 3
---------
REPRESENTATIONS AND WARRANTIES OF WRC
-------------------------------------
SECTION 3.01. CORPORATE EXISTENCE AND POWER............................................5
SECTION 3.02. CORPORATE AUTHORIZATION..................................................5
SECTION 3.03. GOVERNMENTAL AUTHORIZATION...............................................5
SECTION 3.04. NONCONTRAVENTION.........................................................6
SECTION 3.05. CAPITALIZATION AND VOTING RIGHTS OF WRC..................................6
SECTION 3.06. CAPITALIZATION AND VOTING RIGHTS OF WEEKLY READER........................7
SECTION 3.07. CAPITALIZATION AND VOTING RIGHTS OF JLC..................................8
SECTION 3.08. VALID ISSUANCE OF SECURITIES.............................................9
SECTION 3.09. LITIGATION...............................................................9
SECTION 3.10. NEWLY FORMED CORPORATION.................................................9
SECTION 3.11. SHAREHOLDER ARRANGEMENTS.................................................9
ARTICLE 4
---------
REPRESENTATIONS AND WARRANTIES OF BUYERS
----------------------------------------
SECTION 4.01. EXISTENCE AND POWER.....................................................10
SECTION 4.02. AUTHORIZATION...........................................................10
SECTION 4.03. GOVERNMENTAL AUTHORIZATION..............................................10
SECTION 4.04. PURCHASE FOR INVESTMENT.................................................10
SECTION 4.05. PRIVATE PLACEMENT.......................................................11
SECTION 4.06. LITIGATION..............................................................11
SECTION 4.07. BROKERS OR FINDERS' FEES................................................11
ARTICLE 5
---------
CONDITIONS TO CLOSING
---------------------
SECTION 5.01. CONDITIONS TO OBLIGATIONS OF THE DLJ BUYERS, EACH OF THE OTHER
BUYERS AND THE SELLERS........................................................11
SECTION 5.02. CONDITIONS TO OBLIGATION OF THE DLJ BUYERS AND EACH OF THE OTHER
BUYERS........................................................................12
SECTION 5.03. CONDITIONS TO OBLIGATION OF THE SELLERS.................................13
i
ARTICLE 6
---------
SURVIVAL; INDEMNIFICATION
-------------------------
SECTION 6.01. SURVIVAL................................................................14
SECTION 6.02. INDEMNIFICATION.........................................................14
SECTION 6.03. EXCLUSIVITY.............................................................15
ARTICLE 7
---------
TERMINATION
-----------
SECTION 7.01. GROUNDS FOR TERMINATION.................................................15
SECTION 7.02. EFFECT OF TERMINATION...................................................15
ARTICLE 8
---------
MISCELLANEOUS
-------------
SECTION 8.01. NOTICES.................................................................16
SECTION 8.02. CERTAIN WRC COVENANTS...................................................17
SECTION 8.03. AMENDMENTS AND WAIVERS..................................................17
SECTION 8.04. EXPENSES; OTHER PAYMENTS................................................18
SECTION 8.05. SUCCESSORS AND ASSIGNS..................................................18
SECTION 8.06. GOVERNING LAW...........................................................18
SECTION 8.07. JURISDICTION............................................................18
SECTION 8.08. WAIVER OF JURY TRIAL....................................................19
SECTION 8.09. COUNTERPARTS; THIRD PARTY BENEFICIARIES.................................19
SECTION 8.10. ENTIRE AGREEMENT........................................................19
SECTION 8.11. CAPTIONS................................................................19
SECTION 8.12. SEVERABILITY............................................................19
ii
Schedule A Schedule of Investors
Exhibit A Certificate of Incorporation of WRC Media Inc.
Exhibit B Preferred Stock
Exhibit C Form of Weekly Reader Corporation Warrant
Exhibit D Form of JLC Learning Corporation Warrant
Exhibit E Form of Stockholders Agreement
iii
PREFERRED STOCK AND WARRANTS
SUBSCRIPTION AGREEMENT
AGREEMENT dated as of November 17, 1999 among WRC Media Inc., a
Delaware corporation ("WRC"), Weekly Reader Corporation, a Delaware corporation
("WEEKLY READER"), JLC Learning Corporation, a Delaware corporation ("JLC" and,
collectively with WRC and Weekly Reader, the "SELLERS"), and the Persons named
on Schedule A hereto (each a "BUYER" and collectively, the "BUYERS").
W I T N E S S E T H :
WHEREAS, WRC has agreed to acquire (the "PURCHASE") from Primedia Inc., a
Delaware corporation ("PRIMEDIA"), 2,685,670 shares of Common Stock, par value
$.01 per share (the "WR COMMON STOCK"), of Weekly Reader, on the terms and
conditions set forth in the Redemption, Stock Purchase and Recapitalization
Agreement, dated as of August 13, 1999, as amended pursuant to Amendment No. 1
thereto dated as of October 26, 1999 and Amendment No. 2 thereto dated as of
November 10, 1999, between WRC and Primedia (as amended, the "RECAPITALIZATION
AGREEMENT"); WHEREAS, to finance, in part, the payment of the consideration
payable in the Purchase, WRC intends (i) to issue shares of preferred stock, par
value $.01 per share (the "PREFERRED STOCK"), (ii) to cause Weekly Reader to
issue warrants (the "WR WARRANTS") to purchase WR Common Stock and (iii) to
cause JLC to issue warrants (the "JLC WARRANTS" and, together with the WR
Warrants, the "WARRANTS" and, collectively with the Preferred Stock and the WR
Warrants, the "SECURITIES") to purchase common stock, par value $.01 per share
(the "JLC COMMON STOCK"), of JLC.
WHEREAS, the Sellers desire to issue and sell the relevant
Securities to each of the Buyers, and each of the Buyers desires to purchase the
relevant Securities from the applicable Seller, upon the terms and subject to
the conditions hereinafter set forth;
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) The following terms, as used
herein, have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"CLOSING DATE" means the date of the Closing.
"COMMON STOCK SUBSCRIPTION AGREEMENTS" mean (i) the Common
Stock Purchase Agreement dated as of the Closing Date between WRC and SGC
Partners II LLC and (ii) the Subscription Agreement dated as of the Closing Date
between WRC and EAC III LLC.
1
"CREDIT AGREEMENT" means the Credit Agreement dated as of the
Closing Date among WRC, Weekly Reader and JLC as borrowers and those certain
lenders listed on the signature pages thereto, together with all schedules,
exhibits and annexes thereto.
"DEBT SECURITIES PURCHASE AGREEMENT" means the Purchase
Agreement dated as of the Closing Date among WRC, Weekly Reader, JLC, Donald,
Lufkin & Jenrette Securities Corporation and Banc of America Securities LLC,
together with all schedules, exhibits and annexes thereto and all agreements
contemplated to be executed pursuant thereto.
"DLJ BUYERS" means DLJ Merchant Banking Partners II, L.P., DLJ
Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II, Inc., DLJ EAB
Partners, L.P., DLJ First ESC, L.P. and DLJ ESC II, L.P.
"LIEN" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest or encumbrance in respect of
such property or asset.
"1934 ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"1933 ACT" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"OTHER BUYERS" means those Buyers, other than the DLJ Buyers,
listed on the signature pages hereto.
"OTHER STOCKHOLDERS AGREEMENTS" means (i) the Shareholder
Agreement dated as of the Closing Date among Primedia Inc., WRC and Weekly
Reader and the (ii) the Amended and Restated Stockholders Agreement dated as of
the Closing Date among SGC Partners II LLC, EAC III L.L.C. and WRC.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"STOCKHOLDERS AGREEMENT" means the Preferred Stockholders
Agreement dated as of the Closing Date among the Sellers, EAC III L.L.C.,
Ripplewood Partners, L.P., SGC Partners II LLC, DLJ Merchant Banking Partners
II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II,
C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ
Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II,
Inc., DLJ EAB Partners, L.P., DLJ First ESC, L.P., DLJ ESC II, L.P. and each of
the Other Buyers.
"SUBSIDIARY" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are, after
giving effect to the transactions contemplated by the Recapitalization
Agreement, directly or indirectly owned by WRC.
2
"TRANSACTION DOCUMENTS" means this Agreement, the
Recapitalization Agreement, the Credit Agreements, the Debt Securities Purchase
Agreement, the Common Stock Subscription Agreements, the Stockholders Agreement,
the Other Stockholders Agreements and the Warrants.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
TERM SECTION
Certificate of Incorporation 3.05
Closing 2.02
Damages 6.02
JLC Recitals
JLC Common Stock Recitals
JLC Preferred Stock 3.07
JLC Warrants Recitals
Preferred Stock Recitals
Primedia Recitals
Purchase Recitals
Purchase Price 2.01
Recapitalization Agreement Recitals
Securities Recitals
Sellers Recitals
Subsidiary Preferred Shares 3.08
Warrants Recitals
Weekly Reader Recitals
WRC Recitals
WRC Common Stock 3.05
WR Common Stock 3.06(a)
WR Preferred Stock 3.06
WR Warrants Recitals
ARTICLE 2
Purchase and Sale
SECTION 2.01. PURCHASE AND SALE. Upon the terms and subject to
the conditions of this Agreement, the applicable Seller agrees to issue and sell
to each Buyer and each Buyer agrees, severally and not jointly, to purchase from
the applicable Seller the Securities set forth opposite such Buyer's name on
Schedule A hereto at the Closing; PROVIDED that the Securities to be purchased
by the Other Buyers shall, in the event any Other Buyer does not purchase such
Securities, be purchased PRO RATA by the DLJ Buyers. The purchase price for the
Securities (the "PURCHASE PRICE") is the amount in cash
3
specified on Schedule A hereto. The Purchase Price shall be paid as provided in
Section 2.02.
SECTION 2.02. CLOSING. The closing (the "CLOSING") of the
purchase and sale of the Securities hereunder shall take place at the offices of
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York,
concurrently with the execution of this Agreement, or at such other time or
place as Buyers and the Sellers may agree. At the Closing:
(a) Each Buyer shall deliver to WRC, in immediately available
funds, the aggregate Purchase Price set forth opposite such Buyer's name on
Schedule A hereto, by wire transfer (or other means acceptable to WRC) to an
account of WRC with a bank in New York City designated by WRC, by notice to such
Buyer; PROVIDED that, in the event the DLJ Buyers are obligated pursuant to
Section 2.01 to purchase the Securities designated on Schedule A hereto to be
purchased by any Other Buyer, such DLJ Buyers shall deliver to WRC their PRO
RATA portion of the aggregate Purchase Price payable with respect to such
Securities.
(b) Each Seller shall deliver, or cause to be delivered, to
each Buyer certificates, or other appropriate documentation, for the relevant
Securities duly registered in the name of such Buyer and bearing appropriate
legends.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF WRC
WRC represents and warrants to each Buyer as of the date hereof
and as of the Closing Date that:
SECTION 3.01. CORPORATE EXISTENCE AND POWER. Each Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and all
material governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted and as proposed to be
conducted.
SECTION 3.02. CORPORATE AUTHORIZATION. The execution, delivery
and performance by each Seller, as applicable, of each of the relevant
Transaction Documents and the consummation by each Seller, as applicable, of the
transactions contemplated hereby and thereby (including the issuance and sale of
the Securities) are within the corporate powers of such Seller and have been
duly authorized by all necessary corporate action on the part of such Seller.
Each of the Transaction Documents constitutes, or when executed will constitute,
a valid and binding agreement of each Seller, as applicable, enforceable against
such entity in accordance with its respective terms, except (i) as limited by
the applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement or creditors' rights generally or
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
section 3.03. GOVERNMENTAL AUTHORIZATION. The execution,
delivery and performance by each Seller, as applicable, of each of the
Transaction Documents and the
4
consummation of the transactions contemplated hereby and thereby require no
order, license, consent, authorization or approval of, or exemption by, or
action by or in respect of, or notice to, or filing or registration with, any
governmental body, agency or official to be obtained or made by, or with respect
to, the Seller, except as have been obtained or made (or are not required to be
obtained or made until after the Closing) and except for the filing of the
Certificate of Designation by WRC for the Preferred Stock with the office of the
Secretary of State for the State of Delaware.
SECTOPM 3.04. NONCONTRAVENTION. Except as set forth on Schedule
3.04 hereto, the execution, delivery and performance by each Seller, as
applicable, of each of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) violate its
certificate of incorporation or bylaws, (ii) assuming compliance with the
matters referred to in Section 3.03, violate any applicable law, rule,
regulation, judgment, injunction, order or decree, (iii) require any consent or
other action by any Person under, constitute a default under (with due notice or
lapse of time or both), or give rise to any right of termination, cancellation
or acceleration of any right or obligation of such entity or to a loss of any
benefit to which it is entitled under any provision of any agreement or other
instrument binding upon it or any of its assets or properties (except, with
respect to the Transaction Documents other than this Agreement, the Stockholders
Agreement and the Warrants, as would not have a material adverse effect on WRC
and its Subsidiaries taken as a whole) or (iv) result in the creation or
imposition of any material Lien on any of its properties or assets.
SECTION 3.05. CAPITALIZATION AND VOTING RIGHTS OF WRC. The
authorized capital stock of WRC consists of 20,000,000 shares of common stock,
par value $.01 per share (the "WRC COMMON STOCK"), and 20,000,000 shares of
Preferred Stock, and the outstanding capital stock of WRC immediately prior to
the Closing will be 1,434,900 shares of WRC Common Stock and no shares of
Preferred Stock. The rights, privileges, preferences, voting powers,
designations and qualifications, limitations and restrictions of the WRC Common
Stock are set forth in the Amended and Restated Certificate of Incorporation
attached hereto as Exhibit A (the "CERTIFICATE OF INCORPORATION") and the
rights, privileges, preferences, voting powers, designations and qualifications,
limitations and restrictions of the Preferred Stock are set forth in the
Certificate of Designation attached hereto as Exhibit B.
(b) Immediately following the Closing and after giving effect
to the transactions contemplated by the Recapitalization Agreement, the
outstanding capital stock of WRC will be 6,855,853 shares of WRC Common Stock
and 3,000,000 shares of Preferred Stock.
(c) As of the date hereof, EAC III L.L.C. owns 1,034,900
shares of WRC Common Stock representing 67.07% of the outstanding common
stock of WRC and SGC Partners II LLC owns 350,000 shares of WRC representing
22.68% of the outstanding common stock of WRC. Immediately following the
Closing and after giving effect to the transactions contemplated by the
Recapitalization Agreement, (i) EAC III L.L.C. will own 4,848,635 shares of
WRC Common Stock representing 70.7% of the outstanding common stock of WRC,
(ii) SGC Partners II LLC will own 1,694,039 shares of WRC Common Stock
representing 24.7% of the outstanding common stock of WRC, (iii) each
individual listed on Schedule 3.05 (c) hereto will own that number of shares
of WRC Common Stock set forth opposite its name on Schedule 3.05(c) hereto,
representing in the aggregate 107,523 shares of WRC Common Stock and
representing
5
1.6% of the outstanding common stock of WRC and (iv) 205,656 shares of WRC
Common Stock, representing 3.0% of the outstanding common stock of WRC, will be
held by certain entities purchasing such shares in connection with the
transactions contemplated by the Debt Securities Purchase Agreement.
(d) All of the outstanding shares of capital stock of WRC have
been duly authorized and validly issued and are fully paid and non-assessable
and free of any preemptive rights. Except as set forth in this Section 3.05 or
in Schedule 3.05(d) hereto, there are, and immediately after the Closing and
after giving effect to the transactions contemplated by the Recapitalization
Agreement there will be, no outstanding shares of capital stock or voting
securities of WRC, securities of WRC convertible into or exchangeable for shares
of capital stock or voting securities of WRC, options or other rights to acquire
from WRC, or other obligation of WRC to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of WRC or (iv) other than as expressly permitted in the
Transaction Documents or employment plans, obligations of WRC to repurchase or
otherwise acquire or retire any shares of capital stock or any convertible
securities, rights or options of the type described in (i), (ii), or (iii).
SECTION 3.06. CAPITALIZATION AND VOTING RIGHTS OF WEEKLY
READER. After giving effect to the transactions contemplated by the
Recapitalization Agreement, the authorized capital stock of Weekly Reader will
consist of 22,000,000 shares of common stock, of which 20,000,000 shares are
designated "Common Stock", 1,000,000 shares are designated "Class A Non-Voting
Common Stock" and 1,000,000 shares are designated "Class B Non-Voting
(collectively, the "WR COMMON STOCK") and 20,000,000 shares of preferred stock,
par value $.01 per share (the "WR PREFERRED STOCK"), and the outstanding capital
stock of Weekly Reader will be 2,830,000 shares of WR Common Stock and 3,000,000
shares of WR Preferred Stock and there will be outstanding WR Warrants to
purchase 422,874 shares of WR Common Stock. The form of WR Warrant is attached
hereto as Exhibit C.
(b) All of the outstanding shares of capital stock of Weekly
Reader have been duly authorized and validly issued and are fully paid and
non-assessable and free of any preemptive rights. Except as set forth in this
Section 3.06 or in Schedule 3.06(b) hereto and after giving effect to the
transactions contemplated by the Recapitalization Agreement, all of the
outstanding capital stock or other voting securities of Weekly Reader will be
owned by WRC, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities) and there will be no
outstanding shares of capital stock or voting securities of Weekly Reader,
securities of Weekly Reader convertible into or exchangeable for shares of
capital stock or voting securities of Weekly Reader, options or other rights to
acquire from Weekly Reader, or other obligation of Weekly Reader to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of Weekly Reader or other than as
expressly permitted in the Transaction Documents, obligation of Weekly Reader to
repurchase or otherwise acquire or retire any shares of capital stock or any
convertible securities, rights or positions of the type described in (i), (ii),
or (iii).
SECTION 3.07. CAPITALIZATION AND VOTING RIGHTS OF JLC. (a)
After giving effect to the transactions contemplated by the Recapitalization
Agreement, the authorized capital stock of JLC will consist of 20,000 shares of
JLC Common Stock and
6
10,000,000 shares of preferred stock, par value $.01 per share (the "JLC
PREFERRED STOCK"), and the outstanding capital stock of JLC will be 10,000
shares of JLC Common Stock and no shares of JLC Preferred Stock and there will
be outstanding JLC Warrants to purchase 1,495 shares of JLC Common Stock. The
form of JLC Warrant is attached hereto as Exhibit D.
(b) All of the outstanding shares of capital stock of JLC have
been duly authorized and validly issued and are fully paid and non-assessable.
Except as set forth in this Section 3.07 or in Schedule 3.07(b) and after giving
effect to the transactions contemplated by the Recapitalization Agreement, all
of the outstanding capital stock or other voting securities of JLC will be owned
by WRC, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities) and there will be no
outstanding shares of capital stock or voting securities of JLC, securities of
JLC convertible into or exchangeable for shares of capital stock or voting
securities of JLC, options or other rights to acquire from JLC, or other
obligation of JLC to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of JLC
or other than as expressly permitted in the Transaction Documents, obligation of
JLC to repurchase or otherwise acquire or retire any shares of capital stock or
any convertible securities, rights or positions of the type described in (i),
(ii), or (iii).
SECTION 3.08. VALID ISSUANCE OF SECURITIES. The shares of
Preferred Stock which are being issued to the Buyers hereunder have been duly
and validly authorized and, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be fully paid and
non-assessable and free of any preemptive rights. The WR Warrants and the JLC
Warrants, when executed and delivered in accordance with the terms hereof for
the consideration set forth herein, will constitute valid and binding
obligations of Weekly Reader and JLC, respectively, enforceable in accordance
with their terms, except (i) as limited by the applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement or creditor's rights generally or (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies. The issuance of the Warrant Shares has been duly and
validly authorized and, when issued and sold in accordance with the WR Warrants
or the JLC Warrants, as the case may be, the Warrant Shares will be duly and
validly issued, fully paid and non-assessable and free of preemptive rights. The
issuance of the Subsidiary Preferred Shares has been duly and validly authorized
and, when issued and delivered in accordance with the Stockholders Agreement,
the Subsidiary Preferred Shares will be duly and validly issued, fully paid and
non-assessable and free of any preemptive rights.
SECTION 3.09. LITIGATION. There is no action, suit,
investigation or proceeding pending against, or to the knowledge of WRC,
threatened against or affecting any Seller or any of their respective properties
before any court or arbitrator or any governmental body, agency or official
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by any Transaction Document or which could
reasonably be expected to have a material adverse effect on the business,
financial condition, properties or operations of WRC and its Subsidiaries, taken
as a whole.
7
SECTION 3.10. NEWLY FORMED CORPORATION. WRC was incorporated on
May 14, 1999 in the State of Delaware for the purpose of effectuating the
acquisition of JLC and has not conducted any business or entered into any
agreements or commitments, except with respect to the foregoing and except with
respect to the transactions contemplated by the Transaction Documents.
SECTION 3.11. Shareholder Arrangements. Other than the
Stockholders Agreement and the Other Stockholders Agreements, none of WRC,
Weekly Reader or JLC is a party to or bound by any agreement with any of its
stockholders.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYERS
Each Buyer represents and warrants to WRC, severally as to
itself only and not jointly or as to any other Buyer, as of the date hereof and
as of the Closing Date that:
SECTION 4.01. EXISTENCE AND POWER. Such Buyer is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all powers (corporate, partnership or
otherwise) and all material governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted.
SECTION 4.02. AUTHORIZATION. The execution, delivery and
performance by such Buyer of each of this Agreement and, when executed, the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby are or, when executed, will be within the powers (corporate,
partnership or otherwise) of such Buyer and have been or will have been duly
authorized by all necessary action on the part of such Buyer. This Agreement
constitutes, and the Stockholders Agreement when executed will constitute, a
valid and binding agreement of such Buyer, each enforceable in accordance with
their respective terms, except (i) as limited by the applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement or creditors' rights generally or (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
SECTION 4.03. GOVERNMENTAL AUTHORIZATION. The execution,
delivery and performance by such Buyer of this Agreement and the Stockholders
Agreement and the consummation of the transactions contemplated hereby and
thereby require no order, license, consent, authorization or approval of, or
exemption by, or action by or in respect of, or notice to, or filing or
registration with, any governmental body, agency or official to be obtained or
made by, or with respect to, such Buyer.
SECTION 4.04. PURCHASE FOR INVESTMENT. Such Buyer is purchasing
the relevant Securities for investment for its own account and not with a view
to, or for sale in connection with, any distribution thereof.
SECTION 4.05. PRIVATE PLACEMENT. (a) Such Buyer understands
that (i) the offering and sale of the Securities hereby is intended to be exempt
from
8
registration under the 1933 Act and (ii) there is no market or only a limited
market for the relevant Securities, and there can be no assurance that any Buyer
will be able to sell or dispose of the relevant Securities to be purchased by
such Buyer.
(b) Such Buyer's financial situation is such that such Buyer
can afford to bear the economic risk of holding the relevant Securities acquired
hereunder for an indefinite period of time, and such Buyer can afford to suffer
the complete loss of the investment in the relevant Securities.
SECTION 4.06. LITIGATION. There is no action, suit,
investigation or proceeding pending against, or to the knowledge of such Buyer
threatened against or affecting, such Buyer before any court or arbitrator or
any governmental body, agency or official which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by this Agreement or the Stockholders Agreement.
SECTION 4.07. BROKERS OR FINDERS' FEES. There is no investment
banker, broker, finder or other intermediary which has been retained by, will be
retained by or is authorized to act on behalf of such Buyer who might be
entitled to any fee or commission from any Seller or such Buyer upon
consummation of the transactions contemplated by this Agreement.
ARTICLE 5
CONDITIONS TO CLOSING
SECTION 5.01. CONDITIONS TO OBLIGATIONS OF THE DLJ BUYERS, EACH
OF THE OTHER BUYERS AND THE SELLERS. The obligations of the DLJ Buyers, each of
the Other Buyers and the Sellers to consummate the Closing are subject to the
satisfaction of the following conditions:
(a) No provision of any applicable law, rule or regulation and no
judgment, injunction, order or decree by any governmental entity of
competent jurisdiction shall prohibit the consummation of the Closing
or the Purchase.
(b) All material actions by or in respect of, or filings with,
any governmental body, agency, official or authority required to
permit the consummation of the Closing and the Purchase shall have
been taken, made or obtained.
(c) The conditions to the consummation of the Recapitalization
Agreement shall have been satisfied or waived and the Purchase shall
have been consummated as contemplated by the Recapitalization
Agreement, with any waiver of material conditions and any other
material changes having been consented to by DLJ Merchant Banking II,
Inc., on behalf of the Buyers (such consent not to have been
unreasonably withheld).
(d) The conditions to the consummation of the Credit Agreements
shall have been satisfied or waived and the transactions contemplated
therein shall have been consummated as contemplated by the Credit
Agreements, with any waiver of material conditions and any other
material changes having been consented to by
9
DLJ Merchant Banking II, Inc., on behalf of the Buyers (such consent
not to have been unreasonably withheld).
(e) The conditions to the consummation of the Debt Securities
Purchase Agreement shall have been satisfied or waived and the
transactions contemplated therein shall have been consummated as
contemplated by the Debt Securities Purchase Agreement, with any
waiver of material conditions and any other material changes having
been consented to by DLJ Merchant Banking II, Inc., on behalf of the
Buyers (such consent not to have been unreasonably withheld).
(f) The conditions to the consummation of the Common Stock
Subscription Agreements shall have been satisfied or waived and the
transactions contemplated therein shall have been consummated as
contemplated by the Common Stock Subscription Agreements, with any
waiver of material conditions and any other material changes having
been consented to by DLJ Merchant Banking II, Inc., on behalf of the
Buyers (such consent not to have been unreasonably withheld).
(g) The Certificate of Designation for the Preferred Stock shall
have been duly filed at the office of the Secretary of State of the
State of Delaware.
SECTION 5.02. CONDITIONS TO OBLIGATION OF THE DLJ BUYERS AND
EACH OF THE OTHER BUYERS. The obligation of the DLJ Buyers and each of the Other
Buyers to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) (i) Each Seller shall have performed in all material respects
all of its obligations hereunder required to be performed by it on or
prior to the Closing Date and the representations and warranties of
WRC contained in this Agreement and the representations and warranties
of each Seller contained in any certificate or other writing delivered
by such Seller pursuant hereto shall be true in all material respects
when made and at and as of the Closing Date, as if made at and as of
such date (it being understood that where any such representation and
warranty already includes a materiality exception, no further
materiality exception is to be permitted by this Section 5.02(a)(ii)).
(b) Such Buyer shall have received all documents it may
reasonably request relating to the existence of each Seller and the
authority of each Seller, as applicable, to enter into this Agreement,
the Credit Agreements, the Debt Securities Purchase Agreement, the
Common Stock Subscription Agreements, the Warrants, the Stockholders
Agreement and the Other Stockholders Agreements (including without
limitation an opinion of counsel to the Sellers), all in form and
substance reasonably satisfactory to such Buyer.
(c) Each Seller shall have entered into the Stockholders
Agreement in the form attached hereto as Exhibit E.
(d) The Sellers shall have paid in full all costs and expenses,
including any out-of-pocket expenses, of the DLJ Buyers then due and
required to be paid by the Sellers pursuant to Section 8.04(a) hereof.
10
(e) The board of directors of WRC, Weekly Reader and JLC shall
each have appointed one designee of the DLJ Buyers as a director
pursuant to the Stockholders Agreement.
(f) Since December 31, 1998 there shall have been no material
adverse change in the business, financial condition or results of
operation of the Sellers or their respective subsidiaries, taken as a
whole; PROVIDED that the matters set forth in Schedule 3.05 to the
Recapitalization Agreement shall not be deemed to constitute a
material adverse change for purposes of this Agreement.
(g) Any material changes to the Other Stockholders Agreements
shall have been consented to by DLJ Merchant Banking II, Inc., on
behalf of the Buyers (such consent not to have been unreasonably
withheld).
SECTION 5.03. CONDITIONS TO OBLIGATION OF THE SELLERS. The
obligation of the Sellers to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) Each Buyer shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or
prior to the Closing Date and the representations and warranties of
each Buyer contained in this Agreement and in any certificate or other
writing delivered by such Buyer pursuant hereto shall be true in all
material respects when made and at and as of the Closing Date, as if
made at and as of such date (it being understood that where any such
representation and warranty already includes a materiality exception,
no further materiality exception is to be permitted by this Section
5.03(a)(II)).
(b) The Sellers shall have received all documents they may
reasonably request relating to the existence of each Buyer and the
authority of such Buyer to enter into this Agreement and the
Stockholders Agreement, all in form and substance reasonably
satisfactory to the Sellers.
(c) Each Buyer shall have entered into the Stockholders Agreement
in the form attached hereto as Exhibit E.
Notwithstanding anything to the contrary contained herein, in
the event that (i) any of the foregoing conditions shall not have been satisfied
solely as result of a breach of such condition by any Other Buyer and (ii) the
DLJ Buyers shall have elected to purchase the Securities that otherwise would
have been purchased by such Other Buyer, such closing condition shall be deemed
to have been satisfied with respect to such Other Buyer in all respects.
ARTICLE 6
SURVIVAL; INDEMNIFICATION
SECTION 6.01. SURVIVAL. The representations and warranties of
the parties hereto contained in this Agreement or in any certificate delivered
pursuant hereto or in connection herewith shall survive the Closing (for the
purpose of Section 6.02 only.) A breach of any representation or warranty made
in this Agreement shall not affect in any
11
manner whatsoever the relative rights and obligations of the parties to and
under the Stockholders Agreement.
SECTION 6.02. INDEMNIFICATION. WRC hereby indemnifies,
severally and not jointly, each Buyer and its Affiliates, limited partners,
general partners, members, directors, officers and employees against and agrees
to hold each of them harmless from any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) ("DAMAGES") incurred or suffered by any such party arising out of
any misrepresentation or breach of warranty, covenant or agreement made or to be
performed by any Seller pursuant to this Agreement.
(b) Each Buyer hereby indemnifies, severally and not jointly,
each Seller and its Affiliates, limited partners, general partners, members,
directors, officers and employees against and agrees to hold each of them
harmless from any and all Damages incurred or suffered by any such party arising
out of any misrepresentation or breach of warranty, covenant or agreement made
or to be performed by such Buyer pursuant to this Agreement.
SECTION 6.03. EXCLUSIVITY. After the Closing, Section 6.02 will
provide the exclusive remedy for any misrepresentation, breach of warranty,
covenant or other agreement or other claim arising out of this Agreement or the
transactions contemplated hereby.
ARTICLE 7
TERMINATION
SECTION 7.01. GROUNDS FOR TERMINATION. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written agreement of the Sellers and the DLJ
Buyers;
(b) by the Sellers or the DLJ Buyers if the Closing shall not
have been consummated as of the close of business on the date hereof;
or
(c) by the Sellers or any DLJ Buyer if consummation of the
transactions contemplated hereby would violate any non-appealable
final order, decree or judgment of any court or governmental body
having competent jurisdiction.
The party desiring to terminate this Agreement pursuant to Section 7.01(b) or
7.01(c) shall give notice of such termination to the other parties hereto.
SECTION 7.02. EFFECT OF TERMINATION. If this Agreement is
terminated as permitted by Section 7.01, such termination shall be without
liability of any party (or any Affiliate, stockholder, general partner, limited
partner, member, director, officer, employee, agent, consultant or
representative of such party) to the other parties to this Agreement; PROVIDED
that if such termination shall result from the willful (i) failure of any party
to fulfill a condition to the performance of the obligations of another party,
12
(ii) failure to perform a covenant of this Agreement or (iii) breach by any
party hereto of any representation or warranty or agreement contained herein,
such party shall be fully liable for any and all Damages incurred or suffered by
each other party as a result of such failure or breach. The provisions of
Sections 8.04, 8.06, 8.07 and 8.08 shall survive any termination hereof pursuant
to Section 7.01.
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given,
if to any Buyer, to such Buyer at the address specified by such
Buyer on the signature pages of this Agreement or in a notice given by such
Buyer to the Sellers for such purpose, with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
if to any Seller, to:
WRC Media Inc.
c/o Ripplewood Holdings L.L.C.
One Rockefeller Plaza, 32nd Floor
New York, New York 10020
Attention: Timothy C. Collins
Charles L. Laurey
Fax: (212) 218-2719
(212) 581-4110
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Peter S. Wilson
Fax: (212) 765-0978
or to such other address or telecopy number and with such other copies as such
party may hereafter specify for the purpose of notice.
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or
13
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
SECTION 8.02. CERTAIN WRC COVENANTS. WRC will cause Weekly
Reader and JLC to reserve and keep available for issuance (i) upon exercise of
the WR Warrants or the JLC Warrants, as the case may be, the total number of
Warrant Shares (as defined in the applicable Warrant) deliverable upon exercise
of the WR Warrants or the JLC Warrants, as the case may be (including, with
respect to the WRC Warrants, that number of Warrant Shares sufficient to satisfy
the obligation to deliver shares of non-voting WR Common Stock upon an exercise
of the WRC Warrants by the DLJ Buyers and to deliver shares of voting WR Common
Stock upon an exercise of the WRC Warrants by any transferee of any DLJ Buyer
(other than a transferee that is an Affiliate of any DLJ Buyer)), and upon
exercise of the exchange rights set forth in Section 2.10 of the Stockholders
Agreement, the total number of shares of preferred stock of Weekly Reader or
JLC, as the case may be, (collectively, the "SUBSIDIARY PREFERRED SHARES")
deliverable upon exercise of such exchange right.
SECTION 8.03. AMENDMENTS AND WAIVERS. Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 8.04. EXPENSES; OTHER PAYMENTS. (a) All costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense; PROVIDED that the Sellers shall pay up to
$350,000 of all reasonable out-of-pocket costs, expenses and other payments,
including without limitation legal payments and disbursements, incurred or made
by the DLJ Buyers in connection with the transactions contemplated by this
Agreement, whether or not consummated.
(b) The Sellers shall pay to the DLJ Buyers a fee of $2,770,000
no later than two business days following the consummation of the Purchase if
the Purchase is consummated on or prior to October 26, 2000 and the Securities,
at such aggregate price as in each case is set forth opposite the name of each
Buyer on Schedule A hereto, are not sold to the DLJ Buyers, other than by reason
of any breach by the DLJ Buyers of their obligations hereunder.
SECTION 8.0.5 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; PROVIDED that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto.
SECTION 8.06. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the law of the State of New York, without
regard to the conflict of law rules of such state.
14
SECTION 8.07. JURISDICTION. The parties hereto agree that any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby may only be brought in the United States District Court for
the Southern District of New York or any New York State court sitting in New
York City, and each of the parties hereby consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 8.01 shall be deemed
effective service of process on such party.
SECTION 8.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.09. COUNTERPARTS; THIRD PARTY BENEFICIARIES. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other party
hereto. No provision of this Agreement shall confer upon any Person other than
the parties hereto any rights or remedies hereunder.
SECTION 8.10. ENTIRE AGREEMENT. This Agreement along with the
Stockholders Agreement (including the documents, schedules and exhibits referred
to herein and therein) and, the sixth paragraph and Exhibit C to each of those
certain commitment letters dated July 7, 1999, August 2, 1999 and October 26,
1999, respectively, between DLJ Merchant Banking Partners and Ripplewood
Partners, L.P. constitute the entire agreement between the parties with respect
to the subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
SECTION 8.11. CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 8.12. SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforced in
accordance with its terms to the maximum extent permitted by law.
15
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers or
partners as of the day and year first above written.
WRC MEDIA INC.
By: /s/ Charles Lavrey
----------------------------
Name: Charles Lavrey
Title: Secretary
WEEKLY READER CORPORATION
By: /s/ Charles Lavrey
----------------------------
Name: Charles Lavrey
Title: Secretary
JLC LEARNING CORPORATION
By: /s/ Charles Lavrey
----------------------------
Name: Charles Lavrey
Title: Secretary
DLJ MERCHANT BANKING PARTNERS
II, L.P., a Delaware Limited Partnership
By: DL Merchant Banking II, Inc.,
as Managing General Partner
By: /s/ William F. Dawson
----------------------------
Name: William F. Dawson
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
16
DLJ MERCHANT BANKING PARTNERS
II-A, L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as Managing General Partner
By: /s/ William F. Dawson
----------------------------
Name: William F. Dawson
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
DLJ OFFSHORE PARTNERS II, C.V., a
Netherlands Antilles Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as Advisory General Partner
By: /s/ David Burgstahler
----------------------------
Name: David Burgstahler
Title: Attorney-in-fact
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
DLJ DIVERSIFIED PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners, Inc.,
as Managing General Partner
By: /s/ David Burgstahler
----------------------------
Name: David Burgstahler
Title: Attorney-in-fact
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
17
DLJ DIVERSIFIED PARTNERS-A, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners, Inc.,
as Managing General Partner
By: /s/ David Burgstahler
----------------------------
Name: David Burgstahler
Title: Attorney-in-fact
Address:c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
DLJ MILLENNIUM PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as Managing General Partner
By: /s/ William F. Dawson
----------------------------
Name: William F. Dawson
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
DLJ MILLENNIUM PARTNERS-A, L.P.,
a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc., as
Managing General Partner
By: /s/ William F. Dawson
----------------------------
Name: William F. Dawson
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
18
DLJMB FUNDING II, INC.,
a Delaware corporation
By: /s/ David Burgstahler
----------------------------
Name: David Burgstahler
Title: Attorney-in-fact
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
DLJ FIRST ESC L.P.,
a Delaware Limited Partnership
By: DLJ LBO Plans Management Corporation,
as General Partner
By: /s/ David Burgstahler
----------------------------
Name: David Burgstahler
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
DLJ EAB PARTNERS, L.P.,
a Delaware Limited Partnership
By: DLJ LBO Plans Management Corporation,
as General Partner
By: /s/ David Burgstahler
----------------------------
Name: David Burgstahler
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
19
DLJ ESC II L.P., a Delaware Limited
Partnership
By: DLJ LBO Plans Management Corporation, as
General Partner
By: /s/ David Burgstahler
----------------------------
Name: David Burgstahler
Title: Attorney-in-fact
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
ARES LEVERAGED INVESTMENT FUND, L.P., a
Delaware Limited Partnership
By: ARES MANAGEMENT L.P.,
its General Partner
By: /s/ Eric Beckman
----------------------------
Name: Eric Beckman
Title: Vice President
Address: c/o Eric Beckman
Ares Leveraged Investment Fund, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, CA 90067
ARES LEVERAGED INVESTMENT FUND II, L.P.,
a Delaware Limited PartnershipBy: ARES
MANAGEMENT II, L.P., its General Partner
By: /s/ Eric Beckman
----------------------------
Name: Eric Beckman
Title:
Address: c/o Eric Beckman
Ares Leveraged Investment Fund II, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, CA 90067
20
TCW LEVERAGED INCOME TRUST, L.P., a
Delaware Limited Partnership
By: TCW INVESTMENT MANAGEMENT
COMPANY, as Investment Advisor
By:
----------------------------
Name:
Title:
By: TCW ADVISORS (Bermuda), LTD., as
General Partner
By:
----------------------------
Name:
Title:
Address: c/o TCW/Crescent Mezzanine, LLC
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 90025
TCW LEVERAGED INCOME TRUST II, L.P., a
Delaware Limited Partnership
By: TCW (LINCII), L.P., as General Partner
By: TCW ADVISORS (Bermuda), LTD., as
General Partner
By:
----------------------------
Name:
Title:
By: TCW INVESTMENT MANAGEMENT
COMPANY, as Investment Advisor
By:
----------------------------
Name:
Title:
Address: c/o TCW/Crescent Mezzanine, LLC
11100 Santa Monica Boulevard
Suite 2000
21
Los Angeles, CA 90025
TCW SHARED OPPORTUNITY FUND III, L.P., a
Delaware Limited Partnership
By: TCW ASSET MANAGEMENT
COMPANY, as Investment Advisor
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
Address: c/o TCW/Crescent Mezzanine, LLC
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 90025
SHARED OPPORTUNITY FUND IIB, LLC,
a Delaware Limited Liability Company
By: TCW ASSET MANAGEMENT COMPANY,
as Investment Advisor
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
Address: c/o TCW/Crescent Mezzanine, LLC
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 9002
22
TCW/CRESCENT MEZZANINE PARTNERS
II, L.P., a Delaware Limited Partnership
TCW/CRESCENT MEZZANINE TRUST II
By: TCW/CRESCENT MEZZANINE II, L.P,
its General Partner or managing owner
By: TCW/CRESCENT MEZZANINE L.L.C.,
its General Partner
By:
----------------------------
Name:
Title:
Address: c/o TCW/Crescent Mezzanine, LLC
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 90025
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Richard A. Strait
----------------------------
Name: Richard A. Strait
Title:
Address:The Northwestern Mutual Life
Insurance
Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Securities Department
23
SCHEDULE A
PURCHASE PRICE
NO. OF PURCHASE PRICE FOR NO. OF WR FOR WR
INVESTOR PREFERRED SHARES PREFERRED SHARES WARRANTS WARRANTS
DLJ Merchant Banking Partners II, L.P. 1,133,865 $23,903,490.11 159,828 $3,451,917.20
DLJ Merchant Banking Partners II-A, L.P. 45,156 951,151.48 6,365 137,469.36
DLJ Offshore Partners II, C.V. 55,758 1,175,156.58 7,860 169,757.92
DLJ Diversified Partners, L.P. 66,291 1,397,674.25 9,344 201,808.91
DLJ Diversified Partners-A, L.P. 24,618 519,490.76 3,470 74,944.02
DLJMB Funding II, Inc. 631,312 13,310,965.72 88,988 1,921,936.12
DLJ Millennium Partners, L.P. 18,333 386,755.13 2,584 55,808.46
DLJ Millennium Partners-A, L.P. 3,576 75,012.22 504 10,885.24
DLJ EAB Partners, L.P. 5,091 106,514.05 718 15,507.15
DLJ ESC II, L.P. 213,818 4,507,109.64 30,140 650,954.68
DLJ First ESC, L.P. 2,182 46,146.64 308 6,652.09
TCW/Crescent Mezzanine Partners II, L.P. 193,174 4,073,101.30 27,231 588,126.97
TCW/Crescent Mezzanine Trust II 46,826 987,826.02 6,600 142,544.82
TCW Leveraged Income Trust, L.P. 40,000 843,206.81 5,638 121,767.83
TCW Leveraged Income Trust II, L.P. 40,000 843,206.81 5,638 121,767.83
Shared Opportunity Fund IIB, L.L.C. 13,333 280,484.04 1,879 40,582.08
TCW Shared Opportunity Fund III, L.P. 66,667 1,405,929.57 9,397 202,953.59
Ares Leveraged Investment Fund, L.P. 100,000 2,109,768.29 14,095 304,419.58
Ares Leveraged Investment Fund II, L.P. 100,000 2,107,995.42 14,096 304,441.18
PURCHASE
PRICE
NO. OF JLC FOR JLC AGGREGATE
INVESTOR WARRANTS WARRANTS PURCHASE PRICE
DLJ Merchant Banking Partners II, L.P. 566 $991,217.69 $28,346,625.00
DLJ Merchant Banking Partners II-A, L.P. 23 40,279.16 1,128,900.00
DLJ Offshore Partners II, C.V. 28 49,035.50 1,393,950.00
DLJ Diversified Partners, L.P. 33 57,791.84 1,657,275.00
DLJ Diversified Partners-A, L.P. 12 21,015.22 615,450.00
DLJMB Funding II, Inc. 314 549,898.16 15,782,800.00
DLJ Millennium Partners, L.P. 9 15,761.41 458,325.00
DLJ Millennium Partners-A, L.P. 2 3,502.54 89,400.00
DLJ EAB Partners, L.P. 3 5,253.80 127,275.00
DLJ ESC II, L.P. 107 187,385.68 5,345,450.00
DLJ First ESC, L.P. 1 1,751.27 54,550.00
TCW/Crescent Mezzanine Partners II, L.P. 96 168,121.73 4,829,350.00
TCW/Crescent Mezzanine Trust II 23 40,279.16 1,170,650.00
TCW Leveraged Income Trust, L.P. 20 35,025.36 1,000,000.00
TCW Leveraged Income Trust II, L.P. 20 35,025.36 1,000,000.00
Shared Opportunity Fund IIB, L.L.C. 7 12,258.88 333,325.00
TCW Shared Opportunity Fund III, L.P. 33 57,791.84 1,666,675.00
Ares Leveraged Investment Fund, L.P. 49 85,812.13 2,500,000.00
Ares Leveraged Investment Fund II, L.P. 50 87,563.40 2,500,000.00
24
PURCHASE PRICE
NO. OF PURCHASE PRICE FOR NO. OF WR FOR WR
INVESTOR PREFERRED SHARES PREFERRED SHARES WARRANTS WARRANTS
Northwestern Mutual Life Insurance
Company 200,000 4,217,763.71 28,191 608,860.76
Total 3,000,000 63,248,748.55 422,874 9,133,105.79
PURCHASE
PRICE
NO. OF JLC FOR JLC AGGREGATE
INVESTOR WARRANTS WARRANTS PURCHASE PRICE
Northwestern Mutual Life Insurance
Company 99 173,375.53 5,000,000.00
Total 1,495 2,618,145.66 75,000,000.00
25
EXHIBIT B
Preferred Stock
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF 15% SENIOR
PREFERRED STOCK DUE 2011
of
WRC MEDIA INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, the undersigned, [ ], President, and
[ ], Secretary, of WRC Media Inc., a Delaware corporation (hereinafter
called the "CORPORATION"), pursuant to the provisions of Sections 103 and 151 of
the General Corporation Law of the State of Delaware, do hereby make this
Certificate of Designations and do hereby state and certify that pursuant to the
authority expressly vested in the Board of Directors of the Corporation by the
Certificate of Incorporation, the Board of Directors duly adopted the following
resolution:
RESOLVED, that, pursuant to Article IV of the Amended and
Restated Certificate of Incorporation (which authorizes 20,000,000 shares of
preferred stock, par value $0.01 per share ("PREFERRED STOCK"), of which no
shares of Preferred Stock are currently issued and outstanding), the Board of
Directors hereby fixes the powers, designations, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions, of a series of Preferred Stock.
RESOLVED, that each share of such series of Preferred Stock
shall rank equally in all respects and shall be subject to the following
provisions: (1) NUMBER AND DESIGNATION. 6,400,000 shares of the Preferred Stock
of the Corporation shall be designated as 15% Senior Preferred Stock Due 2011
(the "SENIOR PREFERRED STOCK").
(2) RANK. The Senior Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution and winding up, rank
prior to all classes of or series of common stock of the Corporation, including
the Corporation's common stock, par value $.01 per share ("COMMON STOCK"), and
each other class of capital stock of the Corporation, the terms of which do not
expressly provide that such class shall rank senior to, or on a parity with, the
Senior Preferred Stock or the terms of which do not specify any rank relative to
the Senior Preferred Stock. All capital stock of the Corporation to which the
Senior Preferred Stock ranks prior (whether with respect to dividends or upon
liquidation, dissolution, winding up or otherwise), including the Common Stock,
1
are collectively referred to herein as the "JUNIOR SECURITIES." All capital
stock of the Corporation with which the Senior Preferred Stock ranks on a parity
(whether with respect to dividends or upon liquidation, dissolution or winding
up) are collectively referred to herein as the "PARITY SECURITIES." The
respective definitions of Junior Securities and Parity Securities shall also
include any rights or options exercisable for or convertible into any of the
Junior Securities and Parity Securities, as the case may be.
(3) DIVIDENDS. (a) (i) The holders of shares of Senior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of dividends,
dividends (subject to Sections 3(a)(ii) and (iii)) at a rate equal to (the
"DIVIDEND RATE") (1) 15% per annum (computed on the basis of a 360 day year) or
(2), if (A) any Registration Statement is not filed with the Securities and
Exchange Commission (the "COMMISSION") on or prior to the applicable Filing
Deadline, (B) any such Registration Statement has not been declared effective by
the Commission on or prior to the applicable Effectiveness Target Date, (C) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (D) any Registration Statement is declared effective but shall thereafter
cease to be effective or fail to be usable for its intended purpose without
being succeeded within 2 days by a post-effective amendment to such Registration
Statement that cures such failure and that is itself declared effective within 5
days of filing such post-effective amendment to such Registration Statement
(each such event referred to in clauses (A) through (D), (a "REGISTRATION
DEFAULT"), 15.5% per annum (computed on the basis of a 360 day year) for each
week or portion thereof that the Registration Default continues. Notwithstanding
anything to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (A) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (B) above, (3) upon Consummation of the Exchange
Offer, in the case of (C) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (D) above, the Dividend Rate shall return to 15% (before giving
effect to any applicable Default Dividend). In the event the Corporation is
unable or shall fail to discharge its obligation to redeem all outstanding
shares of Senior Preferred Stock pursuant to Section 5(b) or 5(c), the Dividend
Rate as provided above shall increase by .50% per quarter (each, a "DEFAULT
DIVIDEND") for each quarter or portion thereof following the date on which such
redemption was required to be made until cured, PROVIDED that the aggregate
increase shall not exceed 10%. Such dividends shall be payable in the manner set
forth below in Sections 3(a)(ii) and (iii) quarterly on March 31, June 30,
September 30, and December 31 of each year (unless such day is not a business
day, in which event on the next succeeding business day) (each of such dates
being a "DIVIDEND PAYMENT DATE" and each such quarterly period being a "DIVIDEND
PERIOD"). Such dividends shall be cumulative from the date of issue, whether or
not in any Dividend Period or Periods there shall be funds of the Corporation
legally available for the payment of such dividends.
2
"CONSUMMATE" means, with respect to an Exchange Offer, the
occurrence of (a) the filing and effectiveness under the Act of the Exchange
Offer Registration Statement relating to the New Preferred Stock to be issued in
the Exchange Offer, (b) the maintenance of such Exchange Offer Registration
Statement continuously effective and the keeping of the Exchange Offer open for
a period not less than the period required pursuant to Article V of the
Shareholders Agreement and (c) the delivery by the Corporation of New Preferred
Stock with the same liquidation value as the Liquidation Value of the Senior
Preferred Stock tendered by holders thereof pursuant to the Exchange Offer.
"EFFECTIVENESS TARGET DATE" shall have the meaning ascribed
such term in the Shareholders Agreement.
"EXCHANGE OFFER" shall have the meaning ascribed such term in
the Shareholders Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall have the meaning
ascribed such term in the Shareholders Agreement.
"FILING DEADLINE" shall have the meaning ascribed such term in
the Shareholders Agreement.
"NEW PREFERRED STOCK" means the Corporation's new Senior
Preferred Stock Due 2011, of identical type and having identical terms as the
Senior Preferred Stock, to be issued (i) in the Exchange Offer or (ii) as
contemplated by Article V of the Shareholders Agreement.
"REGISTRATION STATEMENT" means any registration statement of
the Corporation relating to (a) an offering of New Preferred Stock pursuant to
an Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant hereto and (ii) including the prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
"SHELF REGISTRATION STATEMENT" shall have the meaning ascribed
such term in the Shareholders Agreement.
"SHAREHOLDERS AGREEMENT" means the Preferred Stockholders
Agreement dated as of November 17, 1999 among the Corporation, Weekly Reader
Corporation, JLC Learning Corporation, EAC III LLC, SGC Partners II LLC, DLJ
Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P.,
DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified
Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A,
L.P., DLJMB Funding II, Inc., DLJ EAB Partners, L.P., DLJ First ESC, L.P., DLJ
ESC II, L.P. and the other parties listed on the signature pages thereto.
"TRANSFER RESTRICTED SECURITIES" means each share of Senior
Preferred Stock, until the earliest to occur of (i) the date on which such
Senior Preferred Stock is exchanged in the Exchange Offer for a share of New
Preferred
3
Stock which is entitled to be resold to the public by the holder thereof without
complying with the prospectus delivery requirements of the Act, (ii) the date on
which such share of Senior Preferred Stock has been disposed of in accordance
with a Shelf Registration Statement (and the purchasers thereof have been issued
New Preferred Stock), or (iii) the date on which such Senior Preferred Stock is
distributed to the public pursuant to Rule 144 under the Securities Act of 1933,
as amended (the "ACT").
(ii) Prior to the first Dividend Payment Date after the fifth
anniversary of the issuance of the Senior Preferred Stock (or such earlier
Dividend Payment Date as the Corporation shall elect) (either such date
being referred to as the "CASH PAY DATE"), dividends shall not be payable
in cash to holders of shares of Senior Preferred Stock but shall, subject
to Section 3(b), accrete to the Liquidation Value in accordance with
Section 4(a).
(iii) Following the Cash Pay Date, each such dividend shall be payable
in cash on the Liquidation Value per share of the Senior Preferred Stock,
in equal quarterly amounts (to which the Default Dividend, if any, shall be
added), to the holders of record of shares of the Senior Preferred Stock,
as they appear on the stock records of the Corporation at the close of
business on such record dates, not more than 60 days or less than 10 days
preceding the payment dates thereof, as shall be fixed by the Board of
Directors. Following the Cash Pay Date, accrued and unpaid dividends for
any past Dividend Periods may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such date,
not more than 45 days preceding the payment date thereof, as may be fixed
by the Board of Directors.
(b) At the written request of the holders of a majority of the
shares of Senior Preferred Stock, the Corporation shall, commencing on the first
Dividend Payment Date after such request and ending on the Cash Pay Date, be
required to pay all dividends on shares of Senior Preferred Stock by the
issuance of additional shares of Senior Preferred Stock ("ADDITIONAL SHARES").
The Additional Shares shall be identical to all other shares of Senior Preferred
Stock, except as set forth in Section 4. For the purposes of determining the
number of Additional Shares to be issued as dividends pursuant to this Section
3(b), such Additional Shares shall be valued at their Applicable Liquidation
Value as provided in Section 4(c).
(c) Holders of shares of Senior Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of the cumulative dividends, as herein provided, on the Senior Preferred Stock.
Except as provided in this Section 3, no interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on the
Senior Preferred Stock that may be in arrears.
(d) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment or other distribution
declared or made upon Parity Securities, nor shall any Parity Securities be
redeemed,
4
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation, directly or indirectly, unless, in each case (to
the extent such dividends on the Senior Preferred Stock are payable in cash),
full cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for such
payment on the Senior Preferred Stock for all Dividend Periods terminating on or
prior to the date of payment of the dividend on, or the acquisition of, as
applicable, such class or series of Parity Securities. When (to the extent such
dividends are payable in cash) dividends on the Senior Preferred Stock are not
paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the Senior Preferred Stock and
all dividends declared upon any other class or series of Parity Securities shall
(in each case, to the extent payable in cash) be declared ratably in proportion
to the respective amounts of dividends accumulated and unpaid on the Senior
Preferred Stock and accumulated and unpaid on such Parity Securities.
(e) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Securities) shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Securities, nor shall any Junior
Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) (all such dividends, distributions, redemptions or purchases being
hereinafter referred to as a "JUNIOR SECURITIES DISTRIBUTION") for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for Junior Securities), unless
in each case (i) the full cumulative dividends on all outstanding shares of the
Senior Preferred Stock and any other Parity Securities shall (to the extent
payable in cash) have been paid or set apart for payment for all past Dividend
Periods with respect to the Senior Preferred Stock and all past dividend periods
with respect to such Parity Securities and (ii) (to the extent payable in cash)
sufficient funds shall have been paid or set apart for the payment of the
dividend for the current Dividend Period with respect to the Senior Preferred
Stock and the current dividend period with respect to such Parity Securities.
(4) LIQUIDATION PREFERENCE. (a) In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
Junior Securities, the holders of the shares of Senior Preferred Stock shall be
entitled to receive an amount equal to the Liquidation Value of such share plus
any accrued and unpaid cash dividends to the date of distribution. "LIQUIDATION
VALUE" on any date means, with respect to (x) any share of Senior Preferred
Stock other than any Additional Shares, the sum of (1) $25.00 per share and (2)
the aggregate of all dividends accreted on such share until the most recent
Dividend Payment Date upon which an accretion to Liquidation Value has
5
occurred (or if such date is a Dividend Payment Date upon which an accretion to
Liquidation Value has occurred, such date), PROVIDED that in the event of an
actual liquidation, dissolution or winding up of the Corporation or the
redemption of any shares of Senior Preferred Stock pursuant to Section 5
hereunder, the amount referred to in (2) shall be calculated by including
dividends accreting to the actual date of such liquidation, dissolution or
winding up or the redemption date, as the case may be, rather than the Dividend
Payment Date referred to above and, PROVIDED FURTHER that in no event will
dividends accrete beyond the earlier of (i) the Cash Pay Date and (ii) the most
recent Dividend Payment Date prior to the Dividend Payment Date on which
dividends on the Senior Preferred Stock are payable in Additional Shares (except
that in the event of an actual liquidation, dissolution or winding up of the
Corporation or the redemption of any shares of Senior Preferred Stock pursuant
to Section 5 hereunder, the amount referred to in (ii) shall be calculated by
including dividends accreting to the actual date of such liquidation,
dissolution or winding up or the redemption date, as the case may be), and (y)
any Additional Share, the Applicable Liquidation Value. All accretions to
Liquidation Value will be calculated using compounding on a quarterly basis.
Except as provided in the preceding sentences, holders of shares of Senior
Preferred Stock shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
shares of Senior Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any Parity Securities,
then such assets, or the proceeds thereof, shall be distributed among the
holders of shares of Senior Preferred Stock and any such other Parity Securities
ratably in accordance with the respective amounts that would be payable on such
shares of Senior Preferred Stock and any such other stock if all amounts payable
thereon were paid in full. For the purposes of this Section (4), (i) a
consolidation or merger of the Corporation with one or more corporations or (ii)
a sale or transfer of all or substantially all of the Corporation's assets,
shall not be deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
(b) Subject to the rights of the holders of any Parity
Securities, after payment shall have been made in full to the holders of the
Senior Preferred Stock, as provided in this Section (4), any other series or
class or classes of Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Senior Preferred
Stock shall not be entitled to share therein.
(c) The Applicable Liquidation Value of any Additional Shares
shall be the Liquidation Value of Senior Preferred Stock outstanding immediately
prior to the first Dividend Payment Date occurring after a request for payment
in Additional Shares has been made in accordance with Section 3(b).
(5) REDEMPTION. (a) REDEMPTION AT THE OPTION OF THE
CORPORATION. On and after November 17, 1999 (but not including from November 17,
2002 to November 17, 2004), to the extent the Corporation shall have funds
legally available for such payment, the Corporation may, at its option, redeem
shares of Senior Preferred Stock, in whole but not in part, at redemption prices
per share in
6
cash set forth in the table below, together with accrued and unpaid cash
dividends thereon to the date fixed for redemption, without interest:
YEAR BEGINNING
NOVEMBER 17 PERCENTAGE OF LIQUIDATION VALUE
1999 115.000%
2000 115.000
2001 115.000
2002 Not applicable
2003 Not applicable
2004 107.500
2005 105.625
2006 103.750
2007 101.875
2008 100.000
(b) REDEMPTION IN THE EVENT OF A CHANGE OF CONTROL. In the
event of a Change of Control, the Corporation shall, to the extent it shall have
funds legally available for such payment and to the extent permitted pursuant to
the Indenture, offer to redeem all of the shares of Senior Preferred Stock then
outstanding, and shall redeem the shares of Senior Preferred Stock of any holder
of such shares that shall consent to such redemption, upon a date no later than
30 days (or, if a later date is required in order to comply with the federal
securities laws, the first date thereafter on which such redemption is permitted
under the federal securities laws) (such date being referred to as the "CHANGE
OF CONTROL REDEMPTION DATE") following the Change in Control, at a redemption
price per share in cash set forth in the table below, together with accrued and
unpaid cash dividends thereon to the date fixed for redemption, without
interest.
YEAR BEGINNING
NOVEMBER 17 PERCENTAGE OF LIQUIDATION VALUE
1999 107.5000%
2000 107.5000
2001 107.5000
2002 100.0000
2003 100.0000
2004 103.7500
2005 102.8125
2006 101.8750
2007 100.9375
2008 100.0000
7
"CHANGE OF CONTROL" means the occurrence of any of the
following (i) the direct or indirect sale, transfer or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or assets of the
Corporation and its Subsidiaries (other than JLC Learning Corporation) taken as
a whole to any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")) other than a Principal or a Related Party; (ii) the adoption of a plan of
liquidation or dissolution of the Corporation or Weekly Reader Corporation;
(iii) the consummation of any transaction (including without limitation any
merger or consolidation) the result of which is that any "person" or "group" (as
defined above), other than a Principal or a Related Party, becomes the
Beneficial Owner, directly or indirectly of more than 50% of the Voting Stock of
either of the Corporation or Weekly Reader Corporation, measured by voting power
rather than number of shares; or (iv) the first day on which a majority of the
members of the board of directors of the Corporation or Weekly Reader are not
Continuing Directors.
"BENEFICIAL OWNER" has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. "CONTINUING DIRECTORS" means, as of the date of any determination,
any member of the board of directors of the relevant company who (i) was a
member of such board of directors on November 17, 1999 or (ii) was nominated for
election or elected to such board of directors with the approval of a majority
of the Continuing Directors who were members of such board at the time of such
nomination or election.
"PRINCIPAL" means Ripplewood Partners, L.P., DLJ Merchant
Banking Partners II, L.P. and any member of management of any of the
Corporation, Weekly Reader Corporation or JLC Learning Corporation as of
November 17, 1999.
"RELATED PARTY" means (i) any controlling stockholder,
Subsidiary, or immediate family member (in the case of an individual) of any
Principal, (ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding a
majority or more controlling interest of which consist of any one or more
Principals and/or such other Persons referred to in the immediately preceding
clause (i) or (iii) any Affiliate (as such term is defined in the Shareholders
Agreement) of DLJ Merchant Banking Partners II, L.P.
"SUBSIDIARY" means, with respect to any specified person, (i)
any corporation, association or other business entity of which more than 50% of
the total voting power of shares of capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such person or one or more of the other Subsidiaries of the
person and (ii) any
8
partnership the sole general partner or the managing general partner of which is
such person or a Subsidiary of such person or the only general partners of which
are such person or one or more Subsidiaries of such person.
"INDENTURE" means that certain Indenture dated November 17,
1999 by and between the Corporation and The Bankers Trust Company with respect
to the Corporation's 12 3/4% Senior Subordinated Notes due 2009.
(c) MANDATORY REDEMPTION. To the extent the Corporation shall
have funds legally available for such payment, on November 17, 2011, if any
shares of the Senior Preferred Stock shall be outstanding, the Corporation shall
redeem all outstanding shares of the Senior Preferred Stock, at a redemption
price equal to the aggregate Liquidation Value, in cash, together with any
accrued and unpaid cash dividends thereon to the date fixed for redemption,
without interest.
(d) REDEMPTION FOR WEEKLY READER CORPORATION PREFERRED STOCK.
The Corporation, at its option but only in connection with or in anticipation of
(and no more than 10 business days prior to) the Reorganization, may redeem all
of the shares of Senior Preferred Stock then outstanding in exchange for an
equivalent number of shares of preferred stock of Weekly Reader Corporation, of
identical type and liquidation preference, having identical terms and conditions
as the Senior Preferred Stock (except that the issuer of such preferred stock
shall be Weekly Reader Corporation) and with equal amounts of accrued and unpaid
cash dividends, if any (the "EXCHANGE PREFERRED STOCK").
"REORGANIZATION" means a reorganization completed in connection
with an initial public offering, pursuant to which the Corporation shall
transfer, or cause to be transferred, all or substantially all of its assets to
Weekly Reader Corporation in exchange for the assumption by Weekly Reader
Corporation of all or substantially all of the liabilities of the Corporation,
the issuance to the Corporation by Weekly Reader Corporation of new common stock
and a number of shares of Exchange Preferred Stock equal to the number of shares
of Senior Preferred Stock then outstanding, and, at the option of the
Corporation, the distribution by the Corporation of an equivalent number of
shares of the Exchange Preferred Stock to the holders of the Senior Preferred
Stock in exchange for the Senior Preferred Stock, PROVIDED that after giving
effect to such reorganization, the overall economic position of a holder of
Exchange Preferred Stock with respect to its investment in Weekly Reader
Corporation (and relative to other creditors, lenders and equity holders of
Weekly Reader Corporation) shall not be worse than, immediately prior to such
reorganization, the overall economic position of a holder of Senior Preferred
Stock with respect to the investment by that holder in the Corporation (and
relative to other creditors, lenders and equity holders of the Corporation).
(e) STATUS OF REDEEMED SHARES. Shares of Senior Preferred Stock
which have been issued and reacquired in any manner, including shares purchased
or redeemed, shall (upon compliance with any applicable provisions of the laws
of the State of Delaware) have the status of authorized and unissued shares of
the class of Preferred Stock undesignated as to series and may be redesignated
and reissued as part of any series of the Preferred Stock, PROVIDED that no such
issued
9
and reacquired shares of Senior Preferred Stock shall be reissued or sold as
Senior Preferred Stock.
(f) FAILURE TO REDEEM. If the Corporation is unable or shall
fail to discharge its obligation to redeem all outstanding shares of Senior
Preferred Stock pursuant to Section (5)(b) or 5(c) (each, a "MANDATORY
REDEMPTION OBLIGATION"), such Mandatory Redemption Obligation shall be
discharged as soon as the Corporation is able to discharge such Mandatory
Redemption Obligation. If and so long as any Mandatory Redemption Obligation
with respect to the Senior Preferred Stock shall not be fully discharged, the
Corporation shall not (i) directly or indirectly, redeem, purchase, or otherwise
acquire any Parity Security or discharge any mandatory or optional redemption,
sinking fund or other similar obligation in respect of any Parity Securities
(except in connection with a redemption, sinking fund or other similar
obligation to be satisfied pro rata with the Senior Preferred Stock) or (ii) in
accordance with Section 3(e), declare or make any Junior Securities
Distribution, or, directly or indirectly, discharge any mandatory or optional
redemption, sinking fund or other similar obligation in respect of the Junior
Securities.
(g) FAILURE TO PAY DIVIDENDS. Notwithstanding the foregoing
provisions of this Section (5), unless full cumulative cash dividends (whether
or not declared) on all outstanding shares of Senior Preferred Stock shall have
been paid or contemporaneously are declared and paid or set apart for payment
for all Dividend Periods terminating on or prior to the applicable redemption
date, none of the shares of Senior Preferred Stock shall be redeemed, and no sum
shall be set aside for such redemption, unless shares of Senior Preferred Stock
are redeemed pro rata.
(6) PROCEDURE FOR REDEMPTION. (a) In the event the Corporation
shall redeem shares of Senior Preferred Stock pursuant to Section 5(a) or (c),
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 days nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed at such holder's address
as the same appears on the stock register of the Corporation, PROVIDED that
neither the failure to give such notice nor any defect therein shall affect the
validity of the giving of notice for the redemption of any share of Senior
Preferred Stock to be redeemed except as to the holder to whom the Corporation
has failed to give said notice or except as to the holder whose notice was
defective. Each such notice shall state: (i) the redemption date; (ii) that all
shares of Senior Preferred Stock are to be redeemed; (iii) the redemption price;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date.
(b) In the case of any redemption pursuant to Sections 5(a) or
(c), notice having been mailed as provided in Section 6(a), from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the redemption price of the shares), dividends on the
shares of Senior Preferred Stock shall cease to accrue, and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the redemption price) shall cease. Upon surrender in
accordance with
10
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price aforesaid.
(c) In the case of a redemption pursuant to Section 5(b),
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not more than 10 days following the occurrence of the Change of Control
and not less than 20 days prior to the Change of Control Redemption Date, to
each holder of record of the shares to be redeemed at such holder's address as
the same appears on the stock register of the Corporation, PROVIDED that neither
the failure to give such notice nor any defect therein shall affect the validity
of the giving of notice for the redemption of any share of Senior Preferred
Stock to be redeemed except as to the holder to whom the Corporation has failed
to give said notice or except as to the holder whose notice was defective. Each
such notice shall state: (i) that a Change of Control has occurred; (ii) the
Change of Control Redemption Date; (iii) the redemption price; (iv) that such
holder may elect to cause the Corporation to redeem all or any of the shares of
Senior Preferred Stock held by such holder; (v) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (vi) that dividends on the shares the holder elects to cause the
Corporation to redeem will cease to accrue on such redemption date.
Upon receipt of such notice, the holder shall, within the time
period specified therein, return such notice to the Corporation indicating the
number of shares of Senior Preferred Stock such holder shall elect to cause the
Corporation to redeem, if any. The failure of any holder to timely return such
notice shall be deemed an election by such holder not to cause the Corporation
to redeem any of such holder's shares of Senior Preferred Stock. (d) In the case
of a redemption pursuant to Section 5(b), notice having been mailed as provided
in Section 6(c), from and after the Change of Control Redemption Date (unless
default shall be made by the Corporation in providing money for the payment of
the redemption price of the shares called for redemption), dividends on such
shares of Senior Preferred Stock as the holder elects to cause the Corporation
to redeem shall cease to accrue, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such share shall be redeemed by the
Corporation at the redemption price aforesaid. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
(e) In the case of a redemption pursuant to Section 5(d),
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 10 days nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed at such holder's address
as the same appears on the stock register of the Corporation, PROVIDED that
neither the failure to give such notice nor any defect therein shall affect the
validity of the giving of
11
notice for the redemption of any share of Senior Preferred Stock to be redeemed
except as to the holder to whom the Corporation has failed to give said notice
or except as to the holder whose notice was defective. Each such notice shall
state: (i) the redemption date; (ii) that all shares of Senior Preferred Stock
are to be redeemed; (iii) the place or places where certificates for such shares
of Senior Preferred Stock are to be surrendered for certificates for shares of
Exchange Preferred Stock; (iv) that dividends on the shares to be redeemed will
cease to accrue on such redemption date and (v) the proposed terms of the
Reorganization. If the Reorganization Transaction shall not be consummated in
the manner disclosed in such notice of redemption, such redemption will be, and
will be deemed to be, rescinded in all respects and the Senior Preferred Stock
shall remain outstanding in accordance with its terms.
(f) In the case of a redemption pursuant to Section 5(d),
notice having been mailed as provided in Section 6(e), from and after the
redemption date (unless default shall be made by the Corporation in distributing
the required shares of Exchange Preferred Stock in exchange for the shares of
Senior Preferred Stock), dividends on the shares of Senior Preferred Stock shall
cease to accrue, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the required
shares of Exchange Preferred Stock) shall cease. Upon surrender in accordance
with said notice of the certificates for any shares of Senior Preferred Stock
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be exchanged by the Corporation for the required shares of Exchange Preferred
Stock.
(7) VOTING RIGHTS. (a) The holders of record of shares of
Senior Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in this Section (7) or as otherwise provided by law. (b) If
and whenever (i) four consecutive or six quarterly cash dividends payable on the
Senior Preferred Stock have not been paid in full, (ii) for any reason
(including the reason that funds are not legally available for a redemption),
the Corporation shall have failed to discharge any Mandatory Redemption
Obligation, (iii) the Corporation shall have failed to provide the notice
required by Section 6(c) within the time period specified in such section or
(iv) the Corporation shall have failed to comply with Sections 3(d), 3(e) or
7(c), (1) the number of directors then constituting the Board of Directors shall
be increased by one and the holders of a majority of the outstanding shares of
Senior Preferred Stock, together with the holders of shares of every other
series of preferred stock upon which like rights have been conferred and are
exercisable (resulting from either the failure to pay dividends or the failure
to redeem) (any such series is referred to as the "PREFERRED SHARES"), voting as
a single class regardless of series, shall be entitled to elect the one
additional director to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special meeting
of the holders of the Senior Preferred Stock and the Preferred Shares called as
hereinafter provided.
(c) Whenever (i) all arrears in cash dividends on the Senior
Preferred Stock and the Preferred Shares then outstanding shall have been paid
and cash dividends thereon for the current quarterly dividend period shall have
been paid or declared and set apart for payment, (ii) the Corporation shall have
12
fulfilled its Mandatory Redemption Obligation, (iii) the Corporation shall have
fulfilled its obligation to provide notice as specified in subsection (b)(iii),
or (iv) the Corporation shall have complied with Sections 3(d), 3(e) and 7(c),
as the case may be, then the right of the holders of the Senior Preferred Stock
to elect such additional director shall cease (but subject always to the same
provisions for the vesting of such voting rights in the case of any similar
future (i) arrearage in four consecutive or six quarterly cash dividends, (ii)
failure to fulfill any Mandatory Redemption Obligation, (iii) failure to fulfill
the obligation to provide the notice required by Section 6(c) within the time
period specified in such section or (iv) failure to comply with Sections 3(d),
3(e) or 7(c)), the terms of office of the person elected as director by the
holders of the Senior Preferred Stock shall forthwith terminate and the number
of the Board of Directors shall be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of shares of Senior
Preferred Stock and the Preferred Shares, the secretary of the Corporation may,
and upon the written request of any holder of Senior Preferred Stock (addressed
to the secretary at the principal office of the Corporation) shall, call a
special meeting of the holders of the Senior Preferred Stock and of the
Preferred Shares for the election of the director to be elected by them as
herein provided, such call to be made by notice similar to that provided in the
Bylaws of the Corporation for a special meeting of the stockholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the secretary within 20 days after receipt of
any such request, then any holder of shares of Senior Preferred Stock may call
such meeting, upon the notice above provided, and for that purpose shall have
access to the stock books of the Corporation. The director elected at any such
special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur with
respect to the director elected by the holders of the Senior Preferred Stock and
the Preferred Shares, a successor shall be elected in accordance with the
procedures of Section 7(b) to serve until the next annual meeting of the
stockholders or special meeting held in place thereof, if such office shall not
have previously terminated as provided above.
(d) Without the written consent of a majority of the
outstanding shares of Senior Preferred Stock or the vote of holders of a
majority of the outstanding shares of Senior Preferred Stock at a meeting of the
holders of Senior Preferred Stock called for such purpose, the Corporation will
not (i) amend, alter or repeal any provision of the Certificate of Incorporation
(by merger or otherwise) so as to adversely affect the preferences, rights or
powers of the Senior Preferred Stock, PROVIDED that any such amendment that
decreases the dividend payable on or the Liquidation Value of the Senior
Preferred Stock shall require the affirmative vote of holders of each share of
Senior Preferred Stock at a meeting of holders of Senior Preferred Stock called
for such purpose or written consent of the holder of each share of Senior
Preferred Stock; (ii) create, authorize or issue any class of stock ranking
prior to, or on a parity with, the Senior Preferred Stock with respect to
dividends or upon liquidation, dissolution, winding up or otherwise, or increase
the authorized number of shares of any such class or series, or reclassify any
authorized stock of the Corporation into any such prior or parity shares or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such prior or parity
13
shares, except that the Corporation may, without such approval, create,
authorize and issue Parity Securities for the purpose of utilizing the proceeds
from the issuance of such Parity Securities for the redemption of all
outstanding shares of Senior Preferred Stock in accordance with the terms hereof
or (iii) merge or consolidate, or sell, exchange or convey all or substantially
all of the assets, property or business of the Corporation unless, in the case
of a merger or consolidation, (A) if the Corporation is not the surviving
corporation, the seniority, rights, powers and preferences of the Senior
Preferred Stock continue unimpaired and on identical terms after such
transaction or (B) the surviving corporation has a Consolidated Net Worth
(immediately following any such transaction) at least equal to that of the
Corporation immediately prior to such transaction. The previous sentence shall
not be construed to prohibit any Reorganization consummated in compliance with
the terms of this Senior Preferred Stock.
"CONSOLIDATED NET WORTH" means at any date and with respect to
any Person, the consolidated stockholders' equity of such Person and its
consolidated subsidiaries less their consolidated Intangible Assets, all
determined as of such date. For purposes of this definition, "Intangible Assets"
means the amount (to the extent reflected in determining such consolidated
stockholders' equity) of (i) all write-ups (other than write-ups of assets of a
going concern business made within twelve months after the acquisition of such
business) subsequent to November 17, 1999 in the book value of any asset owned
by such Person or a consolidated subsidiary, (ii) all investments in
unconsolidated subsidiaries and all equity investments in Persons which are not
subsidiaries and (iii) all unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards, copyrights, organization
or developmental expenses and other intangible assets.
(e) In exercising the voting rights set forth in this Section
(7), each share of Senior Preferred Stock shall have one vote per share, except
that when any other series of Preferred Stock shall have the right to vote with
the Senior Preferred Stock as a single class on any matter, then the Senior
Preferred Stock and such other series shall have with respect to such matters
one vote per $25.00 of Liquidation Value or other liquidation preference. Except
as otherwise required by applicable law or as set forth herein, the shares of
Senior Preferred Stock shall not have any relative, participating, optional or
other special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.
(8) REPORTS. So long as any of the Senior Preferred Stock is
outstanding, the Corporation will furnish the holders thereof with the quarterly
and annual financial reports that the Corporation is required to file with the
Securities and Exchange Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 or, in the event the Corporation is not
required to file such reports, reports containing the same information as would
be required in such reports.
14
(9) GENERAL PROVISIONS. (a) The term "PERSON" as used herein
means any corporation, limited liability company, partnership, trust,
organization, association, other entity or individual.
(b) The term "OUTSTANDING", when used with reference to shares
of stock, shall mean issued shares, excluding shares held by the Corporation or
a subsidiary.
(c) The headings of the sections, subsections, paragraphs,
subparagraphs, clauses and subclauses used herein are for convenience of
reference only and shall not define, limit or affect any of the provisions
hereof.
(d) Each holder of Senior Preferred Stock, by acceptance
thereof, acknowledges and agrees that payments of dividends, interest, premium
and principal on, and exchange, redemption and repurchase of, such securities by
the Corporation are subject to restrictions on the Corporation contained in
certain credit and financing agreements, including the Indenture.
IN WITNESS WHEREOF, WRC Media Inc. has caused this Certificate
of Designations to be signed and attested by the undersigned this ____ day of
November, 1999.
WRC MEDIA INC.
By:
------------------------
Name:
Title:
ATTEST:
- ------------------------
Name:
Title:
15
EXHIBIT C
Form of Warrant
WEEKLY READER CORPORATION
WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK OF WEEKLY READER CORPORATION
NO. ____ WARRANT TO PURCHASE
____ SHARES
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH
IN THE STOCKHOLDERS AGREEMENT (AS HEREIN DEFINED), COPIES OF WHICH MAY BE
OBTAINED UPON REQUEST FROM THE COMPANY OR ANY SUCCESSOR THERETO.
FOR VALUE RECEIVED, WEEKLY READER CORPORATION, a Delaware corporation
(the "COMPANY"), hereby certifies that [HOLDER], its successor or permitted
assigns (the "HOLDER"), is entitled, subject to the provisions of this Warrant,
to purchase from the Company, at the times specified herein, _____ fully paid
and non-assessable shares of voting common stock of the Company, par value $0.01
per share (the "WARRANT SHARES"), at a purchase price per share equal to the
Exercise Price (as hereinafter defined). The number of Warrant Shares to be
received upon the exercise of this Warrant and the price to be paid for a
Warrant Share are subject to adjustment from time to time as hereinafter set
forth. Notwithstanding the foregoing, the term "Warrant Shares," in the case of
any exercise of this Warrant by any DLJ Holder (as hereinafter defined) and any
transferee of any DLJ Holder that is also an Affiliate (as hereinafter defined)
of any DLJ Holder, but only in such case, shall be deemed to refer to fully-paid
and non-assessable shares of non-voting common stock of the Company, par value
$0.01 per share.
1
(a) DEFINITIONS.
(1) The following terms, as used herein, have the following
meanings:
"AFFILIATE" shall have the meaning given to such term in Rule
12b-2 promulgated under the Securities and Exchange Act of 1934, as amended.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized by law to close.
"COMMON STOCK" means the Common Stock, par value $0.01 per
share, of the Company or other capital stock of the Company that is not
preferred as to liquidation or dividends.
"DLJ HOLDERS" means DLJ Merchant Banking Partners II, L.P.,
DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II, Inc., DLJ EAB
Partners, L.P., DLJ ESC II, L.P. and DLJ First ESC, L.P.
"DULY ENDORSED" means duly endorsed in blank by the Person or
Persons in whose name a stock certificate is registered or accompanied by a duly
executed stock assignment separate from the certificate with the signature(s)
thereon guaranteed by a commercial bank or trust company or a member of a
national securities exchange or of the National Association of Securities
Dealers, Inc.
"EXERCISE PRICE" means $0.01 per Warrant Share, such Exercise
Price to be adjusted from time to time as provided herein.
"EXPIRATION DATE" means November 17, 2011 at 5:00 p.m. New
York City time.
"FAIR MARKET VALUE" means, with respect to one share of Common
Stock on any date, the Current Market Price Per Common Share determined pursuant
to paragraph (h)(6) hereof.
"PERSON" means an individual, partnership, corporation,
limited liability company, trust, joint stock company, association, joint
venture, or any other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"PRINCIPAL HOLDERS" means, on any date, the Holders of at
least 662/3% of the Warrants.
"STOCKHOLDERS AGREEMENT" means the Preferred Stockholders
Agreement dated as of the date hereof among WRC Media Inc., the Company, JLC
Learning Corporation, Ripplewood Partners, L.P., The Northwestern Mutual Life
Insurance Company, SGC Partners II LLC, DLJ Merchant Banking Partners II, L.P.,
DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ
2
Millennium Partners-A, L.P., DLJMB Funding II, Inc., DLJ EAB
Partners, L.P., DLJ ESC II, L.P., DLJ First ESC, L.P., EAC III LLC and the other
Buyers listed on the signature pages thereto.
"TRANSFER" means to directly or indirectly sell transfer,
assign or otherwise dispose of.
"WARRANTS" means the Warrants issued to the subscribers under
the Preferred Stock and Warrants Subscription Agreement dated as of the date
hereof among the Company and the subscribers listed on the signature pages
thereof.
(2) Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Stockholders Agreement.
(b) EXERCISE OF WARRANT.
(1) The Holder is entitled to exercise this Warrant in whole
or in part at any time, or from time to time, until the Expiration Date
or, if such day is not a Business Day, then on the next succeeding day
that shall be a Business Day. To exercise this Warrant, the Holder
shall execute and deliver to the Company a Warrant Exercise Notice
substantially in the form annexed hereto. No earlier than ten days
after delivery of the Warrant Exercise Notice, the Holder shall deliver
to the Company this Warrant Certificate, including the Warrant Exercise
Subscription Form forming a part hereof duly executed by the Holder,
together with payment of the applicable Exercise Price, PROVIDED
HOWEVER, that in connection with a public offering of the Common Stock,
a Holder may deliver the Warrant Exercise Notice, the Warrant Exercise
Subscription Form and this Warrant Certificate, together with payment
of the applicable Exercise Price, to the Company simultaneously. Upon
such delivery and payment, the Holder shall be deemed to be the holder
of record of the Warrant Shares subject to such exercise,
notwithstanding that the stock transfer books of the Company shall then
be closed or that certificates representing such Warrant Shares shall
not then be actually delivered to the Holder. Notwithstanding anything
herein to the contrary, in lieu of payment in cash of the applicable
Exercise Price, the Holder may elect (i) to receive upon exercise of
this Warrant, the number of Warrant Shares reduced by a number of
shares of Common Stock having the aggregate Fair Market Value equal to
the aggregate Exercise Price for the Warrant Shares, (ii) to deliver as
payment, in whole or in part of the aggregate Exercise Price, shares of
Common Stock having the aggregate Fair Market Value equal to or in
excess of the applicable portion of the aggregate Exercise Price for
the Warrant Shares or (iii) to deliver as payment, in whole or in part
of the aggregate Exercise Price, such number of Warrants which, if
exercised, would result in a number of shares of Common Stock having an
aggregate Fair Market Value equal to or in excess of the applicable
portion of the aggregate Exercise Price for the Warrant Shares.
Notwithstanding anything to the contrary in this paragraph (b)(1), if
the aggregate Fair Market Value of the Common Stock applied or
delivered pursuant to (i),
3
(ii) or (iii) above exceeds the aggregate Exercise Price, in no event
shall the Holder be entitled to receive any amounts from the Company.
(2) The Exercise Price may be paid in cash or by certified or
official bank check or bank cashier's check payable to the order of the
Company or by any combination of such cash or check. The Company shall
pay any and all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of the Warrant Shares;
PROVIDED HOWEVER, that the Company shall not be required to pay any
such documentary, stamp, issue or transfer taxes payable in respect
of the issue or delivery of the Warrant Shares or any Warrant
Certificate in a name other than that of the Holder.
(3) If the Holder exercises this Warrant in part, this Warrant
Certificate shall be surrendered by the Holder to the Company and a new
Warrant Certificate of the same tenor and for the unexercised number of
Warrant Shares shall be executed by the Company. The Company shall
register the new Warrant Certificate in the name of the Holder or in
such name or names of its transferee pursuant to paragraph (f) hereof
as may be directed in writing by the Holder and deliver the new Warrant
Certificate to the Person or Persons entitled to receive the same;
PROVIDED HOWEVER, that the Company shall not be required to deliver any
such new Warrant Certificate until any taxes referred to in the proviso
to the foregoing clause (2) shall have been paid.
(4) Upon surrender of this Warrant Certificate in conformity
with the foregoing provisions, the Company shall transfer to the Holder
of this Warrant Certificate appropriate evidence of ownership of the
shares of Common Stock or other securities or property (including any
money) to which the Holder is entitled, registered or payable to the
order of, the name or names of the Holder or such transferee as may be
directed in writing by the Holder, and shall deliver such evidence of
ownership and any other securities or property (including any money) to
the Person or Persons entitled to receive the same, together with an
amount in cash in lieu of any fraction of a share as provided in
paragraph (e) below; PROVIDED HOWEVER, that the Company shall not be
required to deliver any such evidence of ownership until any taxes
referred to in the proviso to the foregoing clause (2) shall have been
paid.
(c) RESTRICTIVE LEGEND. Certificates representing shares of
Common Stock issued pursuant to this Warrant shall bear a legend substantially
in the form of the legend set forth on the first page of this Warrant
Certificate to the extent that and for so long as such legend is required
pursuant to the Stockholders Agreement.
(d) RESERVATION OF SHARES. The Company hereby agrees that at
all times there shall be reserved for issuance and delivery upon exercise of
this Warrant such number of its authorized but unissued shares of Common Stock
or other securities of the Company from time to time issuable upon exercise of
this Warrant as will be sufficient to permit the exercise in full of this
Warrant. All such shares shall be duly authorized and, when issued upon such
exercise, shall be
4
validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and
free and clear of all preemptive rights, except to the extent set forth in the
Stockholders Agreement.
(e) FRACTIONAL SHARES. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this Warrant
and in lieu of delivery of any such fractional share upon any exercise hereof,
the Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the Current Market Price Per Common Share (as defined in paragraph
(h)(6)) at the date of such exercise.
The Company further agrees that it will not change the par
value of the Common Stock from par value $0.01 per share to any higher par value
which exceeds the Exercise Price then in effect, and will reduce the par value
of the Common Stock upon any event described in paragraph (h) that (i) provides
for an increase in the number of shares of Common Stock subject to purchase upon
exercise of this Warrant, in inverse proportion to and effective at the same
time as such number of shares is increased, but only to the extent that such
increase in the number of shares, together with all other such increases after
the date hereof, causes the aggregate Exercise Price of all Warrants (without
giving effect to any exercise thereof) to be greater than $4,228.74 or (ii)
would, but for this provision, reduce the Exercise Price below the par value of
the Common Stock.
(f) EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.
(1) This Warrant and the Warrant Shares are subject to the
provisions of the Stockholders Agreement, including the restrictions on
transfer. Each taker and holder of this Warrant Certificate, by taking
or holding the same, consents and agrees that the registered holder
hereof may be treated by the Company and all other persons dealing with
this Warrant Certificate as the absolute owner hereof for any purpose
and as the person entitled to exercise the rights represented hereby.
The Holder, by its acceptance of this Warrant, will be subject to the
provisions of, and will have the benefits of, the Stockholders
Agreement to the extent set forth therein, including the transfer
restrictions and the registration rights included therein.
(2) Subject to compliance with the transfer restrictions set
forth in the Stockholders Agreement, upon surrender of this Warrant to
the Company, together with the attached Warrant Assignment Form duly
executed, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee or assignees named in such
instrument of assignment and, if the Holder's entire interest is not
being assigned, in the name of the Holder and this Warrant shall
promptly be canceled. The Company may require payment of a sum
sufficient to pay all documentary, stamp or similar issue or transfer
taxes payable in respect of any transfer, exchange or assignment
pursuant to this paragraph (f).
5
(g) LOSS OR DESTRUCTION OF WARRANT. Upon receipt by the
Company of evidence satisfactory to it (in the exercise of its reasonable
discretion) of the loss, theft, destruction or mutilation of this Warrant
Certificate, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant Certificate, if mutilated, the Company shall execute and deliver a new
Warrant Certificate of like tenor and date.
(h) ANTI-DILUTION PROVISIONS. The Exercise Price of this
Warrant and the number of shares of Common Stock for which this Warrant may be
exercised shall be subject to adjustment from time to time upon the occurrence
of certain events as provided in this paragraph (h); PROVIDED that,
notwithstanding anything to the contrary contained herein, the Exercise Price
shall not be less than the par value of the Common Stock, as such par value may
be reduced from time to time in accordance with paragraph (e).
(1) In case the Company shall at any time after the date
hereof (i) declare a dividend or make a distribution on Common Stock
payable in Common Stock, (ii) subdivide or split the outstanding Common
Stock, (iii) combine or reclassify the outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares of its capital stock
in a reclassification of Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), the Exercise Price in
effect at the time of the record date for such dividend or distribution
or of the effective date of such subdivision, split, combination or
reclassification shall be proportionately adjusted so that, giving
effect to paragraph (h)(9), the exercise of this Warrant after such
time shall entitle the holder to receive the aggregate number of shares
of Common Stock or other securities of the Company (or shares of any
security into which such shares of Common Stock have been reclassified
pursuant to clause (iii) or (iv) above) which, if this Warrant had been
exercised immediately prior to such time, such holder would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, distribution, subdivision, split, combination or
reclassification. Such adjustment shall be made successively whenever
any event listed above shall occur.
(2) In case the Company shall issue or sell any Common Stock
(other than Common Stock issued (I) upon exercise of the Warrants, (II)
pursuant to any Common Stock related employee compensation plan of the
Company approved by the Company's Board of Directors; PROVIDED that no
more than 283,000 shares of Common Stock may be issued pursuant to the
exception set forth in this clause (II) of paragraph (h)(2), (III) upon
exercise or conversion of any security the issuance of which caused an
adjustment under paragraphs (h)(3) or (h)(4) or (iv) to the public in a
bona fide public offering registered under the Securities Act of 1933,
as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder), the Exercise Price to be
in effect after such issuance or sale shall be determined by
multiplying the Exercise Price in effect immediately prior to such
issuance or sale by a fraction, the numerator of which shall be the sum
of (x) the number of shares of
6
Common Stock outstanding immediately prior to the time of such issuance
or sale multiplied by the Current Market Price Per Common Share
immediately prior to such issuance or sale and (y) the aggregate
consideration, if any, to be received by the Company upon such issuance
or sale, and the denominator of which shall be the product of the
aggregate number of shares of Common Stock outstanding immediately
after such issuance or sale and the Current Market Price Per Common
Share immediately prior to such issuance or sale but in no event will
such fraction exceed 1. In case any portion of the consideration to be
received by the Company shall be in a form other than cash, the fair
market value of such noncash consideration shall be utilized in the
foregoing computation. Such fair market value shall be determined by
the Board of Directors of the Company; PROVIDED that if the Principal
Holders shall object to any such determination, the Board of Directors
shall retain an independent appraiser reasonably satisfactory to the
Principal Holders to determine such fair market value, the fees and
expenses of such independent appraiser to be paid (i) by the Company if
the fair market value as determined by such appraiser is less than the
fair market value as determined by the Board of Directors of the
Company and (ii) by the Holders otherwise. The Holder shall be notified
promptly of any consideration other than cash to be received by the
Company and furnished with a description of the consideration and the
fair market value thereof, as determined by the Board of Directors.
(3) In case the Company shall fix a record date for the
issuance of rights, options or warrants to the holders of its Common
Stock or other securities entitling such holders to subscribe for or
purchase for a period expiring within 60 days of such record date
shares of Common Stock (or securities convertible into shares of Common
Stock) at a price per share of Common Stock (or having a conversion
price per share of Common Stock, if a security convertible into shares
of Common Stock) less than the Current Market Price Per Common Share on
such record date, the maximum number of shares of Common Stock issuable
upon exercise of such rights, options or warrants (or conversion of
such convertible securities) shall be deemed to have been issued and
outstanding as of such record date and the Exercise Price shall be
adjusted pursuant to paragraph (h)(2), as though such maximum number of
shares of Common Stock had been so issued for an aggregate
consideration payable by the holders of such rights, options, warrants
or convertible securities prior to their receipt of such shares of
Common Stock. In case any portion of such consideration shall be in a
form other than cash, the fair market value of such noncash
consideration shall be determined as set forth in paragraph (h)(2).
Such adjustment shall be made successively whenever such record date is
fixed; and in the event that such rights, options or warrants are not
so issued or expire unexercised, or in the event of a change in the
number of shares of Common Stock to which the holders of such rights,
options, warrants or convertible securities are entitled (other than
pursuant to adjustment provisions therein which are no more favorable
in their entirety than those contained in this paragraph (h)), the
Exercise Price shall again be adjusted to be the Exercise Price
7
which would then be in effect if such record date had not been fixed,
in the former event, or the Exercise Price which would then be in
effect if such holder had initially been entitled to such changed
number of shares of Common Stock, in the latter event.
(4) In case the Company shall sell or issue rights, options
(other than options issued pursuant to a plan described in clause (II)
of paragraph (h)(2)) or warrants or other securities entitling the
holders thereof to subscribe for or purchase Common Stock (or
securities convertible into shares of Common Stock) and the price per
share of Common Stock (or the conversion price per share of Common
Stock, if the security is convertible into shares of Common Stock) with
respect to such right, option or warrant is less than the Current
Market Price Per Common Share, the maximum number of shares of Common
Stock issuable upon exercise of such rights, options or warrants (or
upon conversion of such convertible securities) shall be deemed to have
been issued and outstanding as of the date of such sale or issuance,
and the Exercise Price shall be adjusted pursuant to paragraph (h)(2),
as though such maximum number of shares of Common Stock had been so
issued for an aggregate consideration equal to the aggregate
consideration paid for such rights, options, warrants or convertible
securities and the aggregate consideration payable by the holders of
such rights, options, warrants or convertible securities prior to their
receipt of such shares of Common Stock. In case any portion of such
consideration shall be in a form other than cash, the fair market value
of such noncash consideration shall be determined as set forth in
paragraph (h)(2). Such adjustment shall be made successively whenever
such rights, options, warrants or convertible securities are issued;
and in the event that such rights, options or warrants expire
unexercised, or in the event of a change in the number of shares of
Common Stock to which the holders of such rights, options, warrants or
convertible securities are entitled (other than pursuant to adjustment
provisions therein which are no more favorable in their entirety than
those contained in this paragraph (h)), the Exercise Price shall again
be adjusted to be the Exercise Price which would then be in effect if
such rights, options, warrants or convertible securities had not been
issued, in the former event, or the Exercise Price which would then be
in effect if such holders had initially been entitled to such changed
number of shares of Common Stock, in the latter event. No adjustment of
the Exercise Price shall be made pursuant to this paragraph (h)(4) to
the extent that the Exercise Price shall have been adjusted pursuant to
paragraph (h)(3) upon the setting of any record date relating to such
rights, options, warrants or convertible securities and such adjustment
fully reflects the number of shares of Common Stock to which the
holders of such rights, options, warrants or convertible securities are
entitled and the price payable therefor.
(5) In case the Company shall fix a record date for the making
of a distribution to holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of
indebtedness, cash, assets or other property (other than dividends
payable in Common Stock or rights, options or warrants referred to in,
and for which an adjustment is made pursuant to, paragraph (h)(3)), the
Exercise Price to be in effect after such
8
record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price Per Common Share
on such record date, less the fair market value (determined as set
forth in paragraph (h)(2)) of the portion of the assets, cash, other
property or evidence of indebtedness so to be distributed which is
applicable to one share of Common Stock, and the denominator of which
shall be such Current Market Price Per Common Share. Such adjustments
shall be made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the Exercise Price
shall again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
(6) For the purpose of any computation under paragraph (e) or
paragraph (h)(2), (3), (4) or (5), on any determination date, the
Current Market Price Per Common Share shall be deemed to be the average
(weighted by daily trading volume) of the Daily Prices (as defined
below) per share of the Common Stock for the 20 consecutive trading
days ending three days prior to such date. "DAILY PRICE" means (1) if
the shares of Common Stock then are listed and traded on the New York
Stock Exchange, Inc. ("NYSE"), the closing price on such day as
reported on the NYSE Composite Transactions Tape; (2) if the shares of
Common Stock then are not listed and traded on the NYSE, the closing
price on such day as reported by the principal national securities
exchange on which the shares are listed and traded; (3) if the shares
of Common Stock then are not listed and traded on any such securities
exchange, the last reported sale price on such day on the National
Market of the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ"); (4) if the shares of Common
Stock then are not listed and traded on any such securities exchange
and not traded on the NASDAQ National Market, the average of the
highest reported bid and lowest reported asked price on such day as
reported by NASDAQ; or (5) if such shares are not listed and traded on
any such securities exchange, not traded on the NASDAQ National Market
and bid and asked prices are not reported by NASDAQ, then the average
of the closing bid and asked prices, as reported by The Wall Street
Journal for the over-the-counter market. If on any determination date
the shares of Common Stock are not quoted by any such organization, the
Current Market Price Per Common Share shall be the fair market value of
such shares on such determination date as determined by the Board of
Directors, without regard to considerations of the lack of liquidity,
applicable regulatory restrictions or any of the transfer restrictions
or other obligations imposed on such shares set forth in the
Stockholders Agreement. If the Principal Holders shall object to any
determination by the Board of Directors of the Current Market Price Per
Common Share, the Current Market Price Per Common Share shall be the
fair market value per share of the applicable class of Common Stock as
determined by an independent appraiser retained by the Company and
reasonably acceptable to the Principal Holders, the fees and expenses
of such independent appraiser to be paid (i) by the Company if the
Current Market Price Per Common Share as determined by such appraiser
is less than the Current Market Price Per Common Share as determined by
the
9
Board of Directors of the Company and (ii) by the Holders otherwise.
For purposes of any computation under this paragraph (h), the number of
shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company.
(7) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at
least one percent in such price; PROVIDED that any adjustments which by
reason of this paragraph (h)(7) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this paragraph (h) shall be made to the nearest
one tenth of a cent or to the nearest hundredth of a share, as the case
may be.
(8) In the event that, at any time as a result of the
provisions of this paragraph (h), the holder of this Warrant upon
subsequent exercise shall become entitled to receive any shares of
capital stock or other securities of the Company other than Common
Stock, the number of such other shares so receivable upon exercise of
this Warrant shall thereafter be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to
the provisions contained herein.
(9) Upon each adjustment of the Exercise Price as a result of
the calculations made in paragraph (h)(1), (2), (3), (4) or (5), the
number of shares for which this Warrant is exercisable immediately
prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of
shares of Common Stock obtained by (i) multiplying the number of shares
covered by this Warrant immediately prior to this adjustment of the
number of shares by the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price and (ii) dividing the product so
obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
(10) The Company shall notify all Holders of the fixing of a
record date for the purpose of payment of a cash dividend to holders of
Common Stock as soon as reasonably practicable, but in no event less
than 20 days prior to any such record date.
(11) Not less than 10 nor more than 30 days prior to the
record date or effective date, as the case may be, of any action which
requires or might require an adjustment or readjustment pursuant to
this paragraph (h), the Company shall forthwith file in the custody of
the secretary or any assistant secretary of the Company at its
principal executive office and with its stock transfer agent or its
warrant agent, if any, an officers' certificate showing the adjusted
Exercise Price determined as herein provided, setting forth in
reasonable detail the facts requiring such adjustment and the manner of
computing such adjustment. Each such officers' certificate shall be
signed by the chairman, president or chief financial officer of the
Company and by the secretary or any assistant secretary of the Company.
Each such officers' certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a
Warrant executed and delivered pursuant to paragraph (f) and the
10
Company shall, forthwith after each such adjustment, mail a copy, by
first-class mail, of such certificate to the Holder.
(12) The Holder shall, at its option, be entitled to receive,
in lieu of the adjustment pursuant to paragraph (h)(5) otherwise
required, on the date of exercise of the Warrants, the evidences of
indebtedness, other securities, cash, property or other assets which
such Holder would have been entitled to receive if it had exercised its
Warrants for shares of Common Stock immediately prior to the record
date with respect to such distribution. The Holder may exercise its
option under this paragraph (h)(12) by delivering to the Company a
written notice of such exercise within seven days of its receipt of the
certificate of adjustment required pursuant to paragraph (h)(11) to be
delivered by the Company in connection with such distribution.
(i) CONSOLIDATION, MERGER, OR SALE OF ASSETS. In case of any
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or any sale or Transfer of all or
substantially all of the assets of the Company or of the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, the Holder shall have the right thereafter to exercise this
Warrant for the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or Transfer by a holder of the
number of shares of Common Stock for which this Warrant may have been exercised
immediately prior to such consolidation, merger, sale or Transfer, assuming (i)
such holder of Common Stock is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company or to which
such sale or Transfer was made, as the case may be ("CONSTITUENT PERSON"), or an
Affiliate of a constituent Person and (ii) in the case of a consolidation,
merger, sale or Transfer which includes an election as to the consideration to
be received by the holders, such holder of Common Stock failed to exercise its
rights of election, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or Transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or Transfer is not the same for each share
of Common Stock held immediately prior to such consolidation, merger, sale or
Transfer by other than a constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("NON-ELECTING SHARE"), then for the purpose of this paragraph (i) the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or Transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). Adjustments for events subsequent to the effective date of
such a consolidation, merger and sale of assets shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Warrant.
In any such event, effective provisions shall be made in the
certificate or articles of incorporation of the resulting or surviving
corporation, in any contract of sale, conveyance, lease or Transfer, or
otherwise so that the
11
provisions set forth herein for the protection of the rights of the Holder shall
thereafter continue to be applicable; and any such resulting or surviving
corporation shall expressly assume the obligation to deliver, upon exercise,
such shares of stock, other securities, cash and property. The provisions of
this paragraph (i) shall similarly apply to successive consolidations, mergers,
sales, leases or Transfers.
(j) NOTICES. Any notice, demand or delivery authorized by this
Warrant Certificate shall be in writing and shall be given to the Holder or the
Company, as the case may be, at its address (or telecopier number) set forth
below, or such other address (or telecopier number) as shall have been furnished
to the party giving or making such notice, demand or delivery:
If to the Company: Weekly Reader Corporation
c/o Ripplewood Holdings L.L.C.
32nd Floor
One Rockefeller Plaza
New York, NY 10020
Attention: Mr. Timothy C. Collins
Mr. Charles L. Laurey
Telephone: (212) 218-2719
Facsimile: (212) 582-4110
With a copy to: Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
Telephone: (212) 474-1767
Facsimile: (212) 765-0978
If to the Holder: [Holder]
[Address]
[Address]
Attention:
Telephone:
Facsimile:
Each such notice, demand or delivery shall be effective (i) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified herein and the intended recipient confirms the receipt of such
telecopy or (ii) if given by any other means, when received at the address
specified herein.
(k) RIGHTS OF THE HOLDER. Prior to the exercise of any
Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder of the Company, including, without limitation, the right to vote, to
receive dividends or other distributions or to receive any notice of meetings of
shareholders or any notice of any proceedings of the Company except as may be
specifically provided for herein.
12
(l) GOVERNING LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS
ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, AND THE PERFORMANCE THEREOF SHALL BE
GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.
(m) AMENDMENTS; WAIVERS. Any provision of this Warrant
Certificate may be amended or waived if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by the Holder and the
Company, or in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
IN WITNESS WHEREOF, the Company has duly caused this Warrant
Certificate to be signed by its duly authorized officer and to be dated as of
November 17, 1999.
WEEKLY READER CORPORATION
By __________________________
Name:
Title:
Acknowledged and Agreed:
[HOLDER]
By ---------------------
Title:
13
WARRANT EXERCISE NOTICE
(To be delivered prior to exercise of the Warrant by execution of
the Warrant Exercise Subscription Form)
To: Weekly Reader Corporation
The undersigned hereby notifies you of its intention to exercise the
Warrant to purchase shares of Common Stock, par value $0.01 per share, of Weekly
Reader Corporation.
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at $____ per Share (the Exercise Price
currently in effect pursuant to the Warrant). The undersigned intends to pay the
aggregate Exercise Price for the Shares in cash, certified or official bank or
bank cashier's check (or a combination of cash and check) as indicated below.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") and wishes, in lieu of paying the Exercise
Price of $____ per share currently in effect pursuant to the Warrant, to receive
that number of shares reduced by a number of shares of Common Stock having an
aggregate Fair Market Value (as defined in the Warrant) equal to the aggregate
Exercise Price for the Shares.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at the Exercise Price of $____ per share
currently in effect pursuant to the Warrant, and intends to deliver as payment
that number of shares of Common Stock having an aggregate Fair Market Value (as
defined in the Warrant) equal to or in excess of the aggregate Exercise Price
for the Shares.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at the Exercise Price of $____ per share
currently in effect pursuant to the Warrant, and intends to deliver as payment
that number of Warrants which, if exercised, would result in a number of shares
of Common Stock having an aggregate Fair Market Value (as defined in the
Warrant) equal to or in excess of the aggregate Exercise Price for the Shares.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at the Exercise Price of $____ per share
currently in effect pursuant to the Warrant, and intends to pay $_____ of the
aggregate Exercise Price for the Shares in cash, certified or official bank or
bank cashier's check (or a combination of cash and check) as indicated below,
and to
deliver as payment of $____ of the aggregate Exercise Price that number of
shares of Common Stock having an aggregate Fair Market Value (as defined in the
Warrant) equal to or in excess of such portion of the aggregate Exercise Price
for the Shares.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at the Exercise Price of $____ per share
currently in effect pursuant to the Warrant, and intends to pay $_____ of the
aggregate Exercise Price for the Shares in cash, certified or official bank or
bank cashier's check (or a combination of cash and check) as indicated below,
and to deliver as payment of $____ of the aggregate Exercise Price that number
of Warrants which, if exercised, would result in a number of shares of Common
Stock having an aggregate Fair Market Value (as defined in the Warrant) equal to
or in excess of such portion of the aggregate Exercise Price for the Shares.
Date: __________ __, ____.
--------------------------------
(Signature of Holder)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
Payment: $___________ cash
$___________ check
____________ shares of Common Stock having a Fair Market
Value of $___________
_____________ Warrants exercisable for shares of Common Stock
having a Fair Market Value of $__________
2
WARRANT SUBSCRIPTION FORM
To: Weekly Reader Corporation
The undersigned irrevocably exercises the Warrant for the purchase of
___________ shares of Common Stock (the "SHARES"), par value $0.01 per share, of
Weekly Reader Corporation (the "COMPANY") at $_____ per Share (the Exercise
Price currently in effect pursuant to the Warrant) and herewith makes payment of
$___________ (such payment being made in cash or by certified or official bank
or bank cashier's check payable to the order of the Company or by any permitted
combination of such cash or check), all on the terms and conditions specified in
the Warrant Certificate, surrenders this Warrant Certificate and all right,
title and interest therein to the Company and directs that the Shares
deliverable upon the exercise of this Warrant be registered or placed in the
name and at the address specified below and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
___________ shares of Common Stock (the "SHARES"), par value $0.01 per share, of
Weekly Reader Corporation (the "COMPANY") at $_____ per Share (the Exercise
Price currently in effect pursuant to the Warrant) (provided that in lieu of
payment of $_________, the undersigned will receive a number of Shares reduced
by a number of shares of Common Stock having an aggregate Fair Market Value (as
defined in the Warrant) equal to the aggregate Exercise Price for the Shares),
all on the terms and conditions specified in the Warrant Certificate, surrenders
this Warrant Certificate and all right, title and interest therein to the
Company and directs that the Shares deliverable upon the exercise of this
Warrant be registered or placed in the name and at the address specified below
and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
_______ shares of Common Stock (the "SHARES"), par value $0.01 per share, of
Weekly Reader Corporation (the "COMPANY") at $____ per share (the Exercise Price
currently in effect pursuant to the Warrant) (such payment being made by
delivering that number of shares of Common Stock having an aggregate Fair Market
Value (as defined in the Warrant) equal to or in excess of the aggregate
Exercise Price for the Shares), all on the terms and conditions specified in the
Warrant Certificate, surrenders this Warrant Certificate and all right, title
and interest therein to the Company and directs that the Shares deliverable upon
the exercise of this Warrant be registered or placed in the name and at the
address specified below and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
_______ shares of Common Stock (the "SHARES"), par value $0.01 per share, of
Weekly Reader Corporation (the "COMPANY") at $____ per share (the Exercise Price
currently in effect pursuant to the Warrant) (such payment being made by
delivering that number of Warrants which, if exercised, would result in a number
of shares of Common Stock having an aggregate Fair Market Value (as defined in
the Warrant) equal to or in excess of the aggregate Exercise Price for the
Shares), all on the terms and conditions specified in the Warrant Certificate,
surrenders this Warrant Certificate and all right, title and interest therein to
the Company and directs that the Shares deliverable upon the exercise of this
Warrant be registered or placed in the name and at the address specified below
and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase
__________ shares of Common Stock (the "SHARES"), par value $0.01 per share, of
Weekly Reader Corporation (the "COMPANY") at $_______ per Share (the Exercise
Price currently in effect pursuant to the Warrant), and herewith makes payment
of $_____ of the aggregate Exercise Price for the Shares in cash, certified or
official bank or bank cashier's check (or a combination of cash and check), and
herewith delivers as payment of $____ of the aggregate Exercise Price that
number of shares of Common Stock having an aggregate Fair Market Value (as
defined in the Warrant) equal to or in excess of such portion of the aggregate
Exercise Price for the Shares, all on the terms and conditions specified in the
Warrant Certificate, surrenders this Warrant Certificate and all right, title
and interest therein to the Company and directs that the Shares deliverable upon
the exercise of this Warrant be registered or placed in the name and at the
address specified below and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
__________ shares of Common Stock, par value $0.01 per share, of Weekly Reader
Corporation (the "COMPANY") at $____ per share (the Exercise Price currently in
effect pursuant to the Warrant), and herewith makes payment of $_____ of the
aggregate Exercise Price for the Shares in cash, certified or official bank or
bank cashier's check (or a combination of cash and check), and herewith delivers
as payment of $____ of the aggregate Exercise Price that number of Warrants
which, if exercised, would result in a number of shares of Common Stock having
an aggregate Fair Market Value (as defined in the Warrant) equal to or in excess
of such portion of the aggregate Exercise Price for the Shares, all on the terms
and conditions specified in the Warrant Certificate, surrenders this Warrant
Certificate and all right, title and interest therein to the Company and directs
that the Shares deliverable upon the exercise of this Warrant be registered or
placed in the name and at the address specified below and delivered thereto.
2
Date:
---------- --, ----.
--------------------------------
(Signature of Owner)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
The signature to the foregoing Warrant Subscription Form must
correspond to the name as written upon the face of the accompanying Warrant or
any prior assignment thereof in every particular without alteration or
enlargement or any change whatsoever.
3
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised portion of the Warrant evidenced by the within Warrant
Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
WARRANT ASSIGNMENT FORM
Dated_______
FOR VALUE RECEIVED,
---------------------------------------------
hereby sells, assigns and transfers unto,
- ------------------------------------------------(the "ASSIGNEE"),
(please type or print in block letters)
- -----------------------------------------------------------------
(insert address)
its right to purchase shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
_______________________ Attorney, to transfer the same on the books of
the Company, with full power of substitution in the premises.
Signature
----------------------------
NOTICE:
The signature to the foregoing Warrant Assignment Form must correspond
to the name as written upon the face of the accompanying Warrant or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
EXHIBIT D
Form of Warrant
JLC LEARNING CORPORATION
WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK OF JLC LEARNING CORPORATION
NO. ____ WARRANT TO PURCHASE
____ SHARES
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT
IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH IN THE
STOCKHOLDERS AGREEMENT (AS HEREIN DEFINED), COPIES OF WHICH MAY BE OBTAINED
UPON REQUEST FROM THE COMPANY OR ANY SUCCESSOR THERETO.
FOR VALUE RECEIVED, JLC LEARNING CORPORATION, a Delaware corporation
(the "COMPANY"), hereby certifies that [HOLDER], its successor or permitted
assigns (the "HOLDER"), is entitled, subject to the provisions of this Warrant,
to purchase from the Company, at the times specified herein, _____ fully paid
and non-assessable shares of voting common stock of the Company, par value $0.01
per share (the "WARRANT SHARES"), at a purchase price per share equal to the
Exercise Price (as hereinafter defined). The number of Warrant Shares to be
received upon the exercise of this Warrant and the price to be paid for a
Warrant Share are subject to adjustment from time to time as hereinafter set
forth. Notwithstanding the foregoing, the term "Warrant Shares," in the case of
any exercise of this Warrant by any DLJ Holder (as hereinafter defined) and any
transferee of any DLJ Holder that is also an Affiliate (as hereinafter defined)
of any DLJ Holder, but only in such case, shall be deemed to refer to fully paid
and non-assessable shares of non-voting common stock of the Company, par value
$0.01 per share.
(a) DEFINITIONS.
(1) The following terms, as used herein, have the following meanings:
"AFFILIATE" shall have the meaning given to such term in Rule 12b-2 promulgated
under the Securities and Exchange Act of 1934, as amended.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.
"COMMON STOCK" means the Common Stock, par value $0.01 per share, of
the Company or other capital stock of the Company that is not preferred as to
liquidation or dividends.
"DLJ HOLDERS" means DLJ Merchant Banking Partners II, L.P., DLJ
Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLj Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II, Inc., DLJ EAB
Partners, L.P., DLJ ESC II, L.P. and DLJ First ESC, L.P.
"DULY ENDORSED" means duly endorsed in blank by the Person or Persons
in whose name a stock certificate is registered or accompanied by a duly
executed stock assignment separate from the certificate with the signature(s)
thereon guaranteed by a commercial bank or trust company or a member of a
national securities exchange or of the National Association of Securities
Dealers, Inc.
"EXERCISE PRICE" means $0.01 per Warrant Share, such Exercise Price to
be adjusted from time to time as provided herein.
"EXPIRATION DATE" means November 17, 2011 at 5:00 p.m. New York City
time.
"FAIR MARKET VALUE" means, with respect to one share of Common Stock on
any date, the Current Market Price Per Common Share determined pursuant to
paragraph (h)(6) hereof.
"PERSON" means an individual, partnership, corporation, limited
liability company, trust, joint stock company, association, joint venture, or
any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PRINCIPAL HOLDERS" means, on any date, the Holders of at least 662/3%
of the Warrants.
"STOCKHOLDERS AGREEMENT" means the Amended and Restated Stockholders
Agreement dated as of the date hereof among WRC Media Inc., Weekly Reader
Corporation, the Company, Ripplewood Partners, L.P., the Northwestern Mutual
Life Insurance Company, SGC Partners II LLC, DLJ Merchant Banking Partners II,
L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V.,
DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II, Inc., DLJ EAB
Partners, L.P., DLJ ESC II, L.P., DLJ First ESC, L.P., EAC III LLC and the other
Buyers listed on the signature pages thereto.
"TRANSFER" means to directly or indirectly sell, transfer, assign or
otherwise dispose of.
"WARRANTS" means the Warrants issued to the subscribers under the
Preferred Stock and Warrants Subscription Agreement dated as of the date hereof
among the Company and the subscribers listed on the signature pages thereof.
2
(2) Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Stockholders Agreement.
(b) EXERCISE OF WARRANT.
(1) The Holder is entitled to exercise this Warrant in whole or in part
at any time, or from time to time, until the Expiration Date or, if such day is
not a Business Day, then on the next succeeding day that shall be a Business
Day. To exercise this Warrant, the Holder shall execute and deliver to the
Company a Warrant Exercise Notice substantially in the form annexed hereto. No
earlier than ten days after delivery of the Warrant Exercise Notice, the Holder
shall deliver to the Company this Warrant Certificate, including the Warrant
Exercise Subscription Form forming a part hereof duly executed by the Holder,
together with payment of the applicable Exercise Price, PROVIDED HOWEVER, that
in connection with a public offering of the Common Stock, a Holder may deliver
the Warrant Exercise Notice, the Warrant Exercise Subscription Form and this
Warrant Certificate, together with payment of the applicable Exercise Price, to
the Company simultaneously. Upon such delivery and payment, the Holder shall be
deemed to be the holder of record of the Warrant Shares subject to such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such Warrant Shares shall not
then be actually delivered to the Holder. Notwithstanding anything herein to the
contrary, in lieu of payment in cash of the applicable Exercise Price, the
Holder may elect (i) to receive upon exercise of this Warrant, the number of
Warrant Shares reduced by a number of shares of Common Stock having the
aggregate Fair Market Value equal to the aggregate Exercise Price for the
Warrant Shares, (ii) to deliver as payment, in whole or in part of the aggregate
Exercise Price, shares of Common Stock having the aggregate Fair Market Value
equal to or in excess of the applicable portion of the aggregate Exercise Price
for the Warrant Shares or (iii) to deliver as payment, in whole or in part of
the aggregate Exercise Price, such number of Warrants which, if exercised, would
result in a number of shares of Common Stock having an aggregate Fair Market
Value equal to or in excess of the applicable portion of the aggregate Exercise
Price for the Warrant Shares. Notwithstanding anything to the contrary in this
paragraph (b)(1), if the aggregate Fair Market Value of the Common Stock applied
or delivered pursuant to (i), (ii) or (iii) above exceeds the aggregate Exercise
Price, in no event shall the Holder be entitled to receive any amounts from the
Company.
(2) The Exercise Price may be paid in cash or by certified or official
bank check or bank cashier's check payable to the order of the Company or
by any combination of such cash or check. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of
the issue or delivery of the Warrant Shares; PROVIDED HOWEVER, that the
Company shall not be required to pay any such documentary, stamp, issue or
transfer taxes payable in respect of the issue or delivery of the Warrant
Shares or any Warrant Certificate in a name other than that of the Holder.
(3) If the Holder exercises this Warrant in part, this Warrant
Certificate shall be surrendered by the Holder to the Company and a new
Warrant Certificate of the same tenor and for the unexercised number of
Warrant Shares shall be executed by the Company. The Company shall register
the
3
new Warrant Certificate in the name of the Holder or in such name or names
of its transferee pursuant to paragraph (f) hereof as may be directed in
writing by the Holder and deliver the new Warrant Certificate to the Person
or Persons entitled to receive the same; PROVIDED HOWEVER, that the Company
shall not be required to deliver any such new Warrant Certificate until any
taxes referred to in the proviso to the foregoing clause (2) shall have
been paid.
(4) Upon surrender of this Warrant Certificate in conformity with the
foregoing provisions, the Company shall transfer to the Holder of this
Warrant Certificate appropriate evidence of ownership of the shares of
Common Stock or other securities or property (including any money) to which
the Holder is entitled, registered or payable to the order of, the name or
names of the Holder or such transferee as may be directed in writing by the
Holder, and shall deliver such evidence of ownership and any other
securities or property (including any money) to the Person or Persons
entitled to receive the same, together with an amount in cash in lieu of
any fraction of a share as provided in paragraph (e) below; PROVIDED
HOWEVER, that the Company shall not be required to deliver any such
evidence of ownership until any taxes referred to in the proviso to the
foregoing clause (2) shall have been paid.
(c) RESTRICTIVE LEGEND. Certificates representing shares of Common
Stock issued pursuant to this Warrant shall bear a legend substantially in the
form of the legend set forth on the first page of this Warrant Certificate to
the extent that and for so long as such legend is required pursuant to the
Stockholders Agreement.
(d) RESERVATION OF SHARES. The Company hereby agrees that at all times
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of its authorized but unissued shares of Common Stock or other
securities of the Company from time to time issuable upon exercise of this
Warrant as will be sufficient to permit the exercise in full of this Warrant.
All such shares shall be duly authorized and, when issued upon such exercise,
shall be validly issued, fully paid and non-assessable, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale and free and clear of all preemptive rights, except to the extent set forth
in the Stockholders Agreement.
(e) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant and in lieu
of delivery of any such fractional share upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the Current Market Price Per Common Share (as defined in paragraph (h)(6)) at
the date of such exercise.
The Company further agrees that it will not change the par value of the
Common Stock from par value $0.01 per share to any higher par value which
exceeds the Exercise Price then in effect, and will reduce the par value of the
Common Stock upon any event described in paragraph (h) that (i) provides for an
increase in the number of shares of Common Stock subject to purchase upon
exercise of this Warrant, in inverse proportion to and effective at the same
time as such number of shares is increased, but only to the extent that such
increase in the
4
number of shares, together with all other such increases after the date hereof,
causes the aggregate Exercise Price of all Warrants (without giving effect to
any exercise thereof) to be greater than $14.95 or (ii) would, but for this
provision, reduce the Exercise Price below the par value of the Common Stock.
(f) EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.
(1) This Warrant and the Warrant Shares are subject to the
provisions of the Stockholders Agreement, including the restrictions on
transfer. Each taker and holder of this Warrant Certificate, by taking
or holding the same, consents and agrees that the registered holder
hereof may be treated by the Company and all other persons dealing with
this Warrant Certificate as the absolute owner hereof for any purpose
and as the person entitled to exercise the rights represented hereby.
The Holder, by its acceptance of this Warrant, will be subject to the
provisions of, and will have the benefits of, the Stockholders Agreement
to the extent set forth therein, including the transfer restrictions and
the registration rights included therein.
(2) Subject to compliance with the transfer restrictions set forth in
the Stockholders Agreement, upon surrender of this Warrant to the Company,
together with the attached Warrant Assignment Form duly executed, the
Company shall, without charge, execute and deliver a new Warrant in the
name of the assignee or assignees named in such instrument of assignment
and, if the Holder's entire interest is not being assigned, in the name of
the Holder and this Warrant shall promptly be canceled. The Company may
require payment of a sum sufficient to pay all documentary, stamp or
similar issue or transfer taxes payable 0in respect of any transfer,
exchange or assignment pursuant to this paragraph (f).
(g) LOSS OR DESTRUCTION OF WARRANT. Upon receipt by the
Company of evidence satisfactory to it (in the exercise of its reasonable
discretion) of the loss, theft, destruction or mutilation of this Warrant
Certificate, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant Certificate, if mutilated, the Company shall execute and deliver a new
Warrant Certificate of like tenor and date.
(h) ANTI-DILUTION PROVISIONS. The Exercise Price of this Warrant and
the number of shares of Common Stock for which this Warrant may be exercised
shall be subject to adjustment from time to time upon the occurrence of certain
events as provided in this paragraph (h); PROVIDED that, notwithstanding
anything to the contrary contained herein, the Exercise Price shall not be less
than the par value of the Common Stock, as such par value may be reduced from
time to time in accordance with paragraph (e).
(1) In case the Company shall at any time after the date hereof (i)
declare a dividend or make a distribution on Common Stock payable in Common
Stock, (ii) subdivide or split the outstanding Common Stock, (iii) combine
or reclassify the outstanding Common Stock into a smaller number of shares,
or (iv) issue any shares of its capital stock in a reclassification of
Common Stock (including any such reclassification in connection with a
consolidation or
5
merger in which the Company is the continuing corporation), the Exercise
Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, split,
combination or reclassification shall be proportionately adjusted so that,
giving effect to paragraph (h)(9), the exercise of this Warrant after such
time shall entitle the holder to receive the aggregate number of shares of
Common Stock or other securities of the Company (or shares of any security
into which such shares of Common Stock have been reclassified pursuant to
clause (iii) or (iv) above) which, if this Warrant had been exercised
immediately prior to such time, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, split, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(2) In case the Company shall issue or sell any Common Stock (other
than Common Stock issued (I) upon exercise of the Warrants, (II) pursuant
to any Common Stock related employee compensation plan of the Company
approved by the Company's Board of Directors; PROVIDED that no more than
1,000 shares of Common Stock may be issued pursuant to the exception set
forth in this clause (II) of paragraph (h)(2), (III) upon exercise or
conversion of any security the issuance of which caused an adjustment under
paragraphs (h)(3) or (h)(4) or (iv) to the public in a bona fide public
offering registered under the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder), the Exercise Price to be in effect after such issuance or sale
shall be determined by multiplying the Exercise Price in effect immediately
prior to such issuance or sale by a fraction, the numerator of which shall
be the sum of (x) the number of shares of Common Stock outstanding
immediately prior to the time of such issuance or sale multiplied by the
Current Market Price Per Common Share immediately prior to such issuance or
sale and (y) the aggregate consideration, if any, to be received by the
Company upon such issuance or sale, and the denominator of which shall be
the product of the aggregate number of shares of Common Stock outstanding
immediately after such issuance or sale and the Current Market Price Per
Common Share immediately prior to such issuance or sale but in no event
will such fraction exceed 1. In case any portion of the consideration to be
received by the Company shall be in a form other than cash, the fair market
value of such noncash consideration shall be utilized in the foregoing
computation. Such fair market value shall be determined by the Board of
Directors of the Company; PROVIDED that if the Principal Holders shall
object to any such determination, the Board of Directors shall retain an
independent appraiser reasonably satisfactory to the Principal Holders to
determine such fair market value, the fees and expenses of such independent
appraiser to be paid (i) by the Company if the fair market value as
determined by such appraiser is less than the fair market value as
determined by the Board of Directors of the Company and (ii) by the Holders
otherwise. The Holder shall be notified promptly of any consideration other
than cash to be received by the Company and furnished with a description of
the consideration and the fair market value thereof, as determined by the
Board of Directors.
(3) In case the Company shall fix a record date for the issuance of
rights, options or warrants to the holders of its Common Stock or other
securities
6
entitling such holders to subscribe for or purchase for a period expiring
within 60 days of such record date shares of Common Stock (or securities
convertible into shares of Common Stock) at a price per share of Common
Stock (or having a conversion price per share of Common Stock, if a
security convertible into shares of Common Stock) less than the Current
Market Price Per Common Share on such record date, the maximum number of
shares of Common Stock issuable upon exercise of such rights, options or
warrants (or conversion of such convertible securities) shall be deemed to
have been issued and outstanding as of such record date and the Exercise
Price shall be adjusted pursuant to paragraph (h)(2), as though such
maximum number of shares of Common Stock had been so issued for an
aggregate consideration payable by the holders of such rights, options,
warrants or convertible securities prior to their receipt of such shares of
Common Stock. In case any portion of such consideration shall be in a form
other than cash, the fair market value of such noncash consideration shall
be determined as set forth in paragraph (h)(2). Such adjustment shall be
made successively whenever such record date is fixed; and in the event that
such rights, options or warrants are not so issued or expire unexercised,
or in the event of a change in the number of shares of Common Stock to
which the holders of such rights, options, warrants or convertible
securities are entitled (other than pursuant to adjustment provisions
therein which are no more favorable in their entirety than those contained
in this paragraph (h)), the Exercise Price shall again be adjusted to be
the Exercise Price which would then be in effect if such record date had
not been fixed, in the former event, or the Exercise Price which would then
be in effect if such holder had initially been entitled to such changed
number of shares of Common Stock, in the latter event.
(4) In case the Company shall sell or issue rights, options (other than
options issued pursuant to a plan described in clause (II) of paragraph
(h)(2)) warrants or other securities entitling the holders thereof to
subscribe for or purchase Common Stock (or securities convertible into
shares of Common Stock), and the price per share of Common Stock (or the
conversion price per share of Common Stock, if the security is convertible
into shares of Common Stock) with respect to such right, option or warrant
is less than the Current Market Price Per Common Share, the maximum number
of shares of Common Stock issuable upon exercise of such rights, options or
warrants (or upon conversion of such convertible securities) shall be
deemed to have been issued and outstanding as of the date of such sale or
issuance, and the Exercise Price shall be adjusted pursuant to paragraph
(h)(2), as though such maximum number of shares of Common Stock had been so
issued for an aggregate consideration equal to the aggregate consideration
paid for such rights, options, warrants or convertible securities and the
aggregate consideration payable by the holders of such rights, options,
warrants or convertible securities prior to their receipt of such shares of
Common Stock. In case any portion of such consideration shall be in a form
other than cash, the fair market value of such noncash consideration shall
be determined as set forth in paragraph (h)(2) hereof. Such adjustment
shall be made successively whenever such rights, options, warrants or
convertible securities are issued; and in the event that such rights,
options or warrants expire unexercised, or in the event of a change in the
number of shares of Common Stock to which the holders of such rights,
options, warrants or convertible securities are entitled
7
(other than pursuant to adjustment provisions therein which are no more
favorable in their entirety than those contained in this paragraph (h)),
the Exercise Price shall again be adjusted to be the Exercise Price which
would then be in effect if such rights, options, warrants or convertible
securities had not been issued, in the former event, or the Exercise Price
which would then be in effect if such holders had initially been entitled
to such changed number of shares of Common Stock, in the latter event. No
adjustment of the Exercise Price shall be made pursuant to this paragraph
(h)(4) to the extent that the Exercise Price shall have been adjusted
pursuant to paragraph (h)(3) upon the setting of any record date relating
to such rights, options, warrants or convertible securities and such
adjustment fully reflects the number of shares of Common Stock to which the
holders of such rights, options, warrants or convertible securities are
entitled and the price payable therefor.
(5) In case the Company shall fix a record date for the making of a
distribution to holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is
the continuing corporation) of evidences of indebtedness, cash, assets or
other property (other than dividends payable in Common Stock or rights,
options or warrants referred to in, and for which an adjustment is made
pursuant to, paragraph (h)(3)), the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator
of which shall be the Current Market Price Per Common Share on such record
date, less the fair market value (determined as set forth in paragraph
(h)(2)) of the portion of the assets, cash, other property or evidence of
indebtedness so to be distributed which is applicable to one share of
Common Stock, and the denominator of which shall be such Current Market
Price Per Common Share. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Exercise Price shall again be adjusted to
be the Exercise Price which would then be in effect if such record date had
not been fixed.
(6) For the purpose of any computation under paragraph (e) or paragraph
(h)(2), (3), (4) or (5), on any determination date, the Current Market
Price Per Common Share shall be deemed to be the average (weighted by daily
trading volume) of the Daily Prices (as defined below) per share of the
Common Stock for the 20 consecutive trading days ending three days prior to
such date.
"DAILY PRICE" means (1) if the shares of Common Stock then are listed
and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing price on
such day as reported on the NYSE Composite Transactions Tape; (2) if the shares
of Common Stock then are not listed and traded on the NYSE, the closing price on
such day as reported by the principal national securities exchange on which the
shares are listed and traded; (3) if the shares of Common Stock then are not
listed and traded on any such securities exchange, the last reported sale price
on such day on the National Market of the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"); (4) if the shares of Common
Stock then are not listed and traded on any such securities exchange and not
traded on the NASDAQ National Market, the average of the highest reported bid
and lowest reported asked price on such day as reported by NASDAQ; or (5) if
such shares
8
are not listed and traded on any such securities exchange, not traded on the
NASDAQ National Market and bid and asked prices are not reported by NASDAQ, then
the average of the closing bid and asked prices, as reported by The Wall Street
Journal for the over-the-counter market. If on any determination date the shares
of Common Stock are not quoted by any such organization, the Current Market
Price Per Common Share shall be the fair market value of such shares on such
determination date as determined by the Board of Directors, without regard to
considerations of the lack of liquidity, applicable regulatory restrictions or
any of the transfer restrictions or other obligations imposed on such shares set
forth in the Stockholders Agreement. If the Principal Holders shall object to
any determination by the Board of Directors of the Current Market Price Per
Common Share, the Current Market Price Per Common Share shall be the fair market
value per share of the applicable class of Common Stock as determined by an
independent appraiser retained by the Company and reasonably acceptable to the
Principal Holders, the fees and expenses of such independent appraiser to be
paid (i) by the Company if the Current Market Price Per Common Share as
determined by such appraiser less than the Current Market Price Per Common Share
as determined by the Board of Directors of the Company and (ii) by the Holders
otherwise. For purposes of any computation under this paragraph (h), the number
of shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company.
(7) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one percent in
such price; PROVIDED that any adjustments which by reason of this paragraph
(h)(7) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this paragraph
(h) shall be made to the nearest one tenth of a cent or to the nearest
hundredth of a share, as the case may be.
(8) In the event that, at any time as a result of the provisions of
this paragraph (h), the holder of this Warrant upon subsequent exercise
shall become entitled to receive any shares of capital stock or other
securities of the Company other than Common Stock, the number of such other
shares so receivable upon exercise of this Warrant shall thereafter be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained herein.
(9) Upon each adjustment of the Exercise Price as a result of the
calculations made in paragraph (h)(1), (2), (3), (4) or (5), the number of
shares for which this Warrant is exercisable immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Exercise Price, that number of shares of Common Stock
obtained by (i) multiplying the number of shares covered by this Warrant
immediately prior to this adjustment of the number of shares by the
Exercise Price in effect immediately prior to such adjustment of the
Exercise Price and (ii) dividing the product so obtained by the Exercise
Price in effect immediately after such adjustment of the Exercise Price.
(10) The Company shall notify all Holders of the fixing of a record
date for the purpose of payment of a cash dividend to holders of Common
Stock as
9
soon as reasonably practicable, but in no event less than 20 days prior to
any such record date.
(11) Not less than 10 nor more than 30 days prior to the record date or
effective date, as the case may be, of any action which requires or might
require an adjustment or readjustment pursuant to this paragraph (h), the
Company shall forthwith file in the custody of the secretary or an
assistant secretary of the Company at its principal executive office and
with its stock transfer agent or its warrant agent, if any, an officers'
certificate showing the adjusted Exercise Price determined as herein
provided, setting forth in reasonable detail the facts requiring such
adjustment and the manner of computing such adjustment. Each such officers'
certificate shall be signed by the chairman, president or chief financial
officer of the Company and by the secretary or any assistant secretary of
the Company. Each such officers' certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a Warrant
executed and delivered pursuant to paragraph (f) and the Company shall,
forthwith after each such adjustment, mail a copy, by first-class mail, of
such certificate to the Holder.
(12) The Holder shall, at its option, be entitled to receive, in lieu
of the adjustment pursuant to paragraph (h)(5) otherwise required thereof,
on the date of exercise of the Warrants, the evidences of indebtedness,
other securities, cash, property or other assets which such Holder would
have been entitled to receive if it had exercised its Warrants for shares
of Common Stock immediately prior to the record date with respect to such
distribution. The Holder may exercise its option under this paragraph
(h)(12) by delivering to the Company a written notice of such exercise
within seven days of its receipt of the certificate of adjustment required
pursuant to paragraph (h)(11) to be delivered by the Company in connection
with such distribution.
(i) CONSOLIDATION, MERGER, OR SALE OF ASSETS. In case of any consolidation of
the Company with, or merger of the Company into, any other Person, any merger of
another Person into the Company (other than a merger which does not result in
any reclassification, conversion, exchange or cancellation of outstanding shares
of Common Stock) or any sale or Transfer of all or substantially all of the
assets of the Company or of the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be, the Holder
shall have the right thereafter to exercise this Warrant for the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or Transfer by a holder of the number of shares of Common Stock for
which this Warrant may have been exercised immediately prior to such
consolidation, merger, sale or Transfer, assuming (i) such holder of Common
Stock is not a Person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which such sale or
Transfer was made, as the case may be ("CONSTITUENT PERSON"), or an Affiliate of
a constituent Person and (ii) in the case of a consolidation, merger, sale or
Transfer which includes an election as to the consideration to be received by
the holders, such holder of Common Stock failed to exercise its rights of
election, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or Transfer (provided that if
the kind or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or Transfer is not the same for each share of Common
Stock held immediately prior to such consolidation, merger, sale or Transfer by
other than a constituent Person or an Affiliate thereof and in respect of which
such rights of
10
election shall not have been exercised ("NON-ELECTING SHARE"), then for the
purpose of this paragraph (i) the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or Transfer by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Adjustments for events
subsequent to the effective date of such a consolidation, merger and sale of
assets shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant.
In any such event, effective provisions shall be made in the certificate or
articles of incorporation of the resulting or surviving corporation, in any
contract of sale, conveyance, lease or Transfer, or otherwise so that the
provisions set forth herein for the protection of the rights of the Holder shall
thereafter continue to be applicable; and any such resulting or surviving
corporation shall expressly assume the obligation to deliver, upon exercise,
such shares of stock, other securities, cash and property. The provisions of
this paragraph (i) shall similarly apply to successive consolidations, mergers,
sales, leases or Transfers.
(j) NOTICES. Any notice, demand or delivery authorized by this Warrant
Certificate shall be in writing and shall be given to the Holder or the Company,
as the case may be, at its address (or telecopier number) set forth below, or
such other address (or telecopier number) as shall have been furnished to the
party giving or making such notice, demand or delivery:
If to the Company: JLC Learning Corporation
c/o Ripplewood Holdings L.L.C.
32nd Floor
One Rockefeller Plaza
New York, NY 10020
Attention: Mr. Timothy C. Collins
Mr. Charles L. Laurey
Telephone: (212) 218-2719
Facsimile: (212) 582-4110
With a copy to: Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
Telephone: (212) 474-1767
Facsimile: (212) 765-0978
If to the Holder: [Holder]
[Address]
[Address]
Attention:
Telephone:
Facsimile:
Each such notice, demand or delivery shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the intended recipient confirms the receipt of such telecopy or (ii)
if given by any other means, when received at the address specified herein.
11
(k) RIGHTS OF THE HOLDER. Prior to the exercise of any Warrant, the Holder shall
not, by virtue hereof, be entitled to any rights of a shareholder of the
Company, including, without limitation, the right to vote, to receive dividends
or other distributions or to receive any notice of meetings of shareholders or
any notice of any proceedings of the Company except as may be specifically
provided for herein.
(l) GOVERNING LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING HEREUNDER
SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN
ACCORDANCE WITH SUCH LAWS.
(m) AMENDMENTS; WAIVERS. Any provision of this Warrant Certificate may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Holder and the Company, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
IN WITNESS WHEREOF, the Company has duly caused this Warrant
Certificate to be signed by its duly authorized officer and to be dated as of
November 17, 1999.
JLC LEARNING CORPORATION
By __________________________
Name:
Title:
Acknowledged and Agreed:
[HOLDER]
By ___________________________
Title:
12
WARRANT EXERCISE NOTICE
(To be delivered prior to exercise of the Warrant by execution of
the Warrant Exercise Subscription Form)
To: JLC Learning Corporation
The undersigned hereby notifies you of its intention to exercise the
Warrant to purchase shares of Common Stock, par value $0.01 per share, of [JLC
Learning Corporation].
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at $____ per Share (the Exercise Price
currently in effect pursuant to the Warrant). The undersigned intends to pay the
aggregate Exercise Price for the Shares in cash, certified or official bank or
bank cashier's check (or a combination of cash and check) as indicated below.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") and wishes, in lieu of paying the Exercise
Price of $____ per share currently in effect pursuant to the Warrant, to receive
that number of shares reduced by a number of shares of Common Stock having an
aggregate Fair Market Value (as defined in the Warrant) equal to the aggregate
Exercise Price for the Shares.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at the Exercise Price of $____ per share
currently in effect pursuant to the Warrant, and intends to deliver as payment
that number of shares of Common Stock having an aggregate Fair Market Value (as
defined in the Warrant) equal to or in excess of the aggregate Exercise Price
for the Shares.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at the Exercise Price of $____ per share
currently in effect pursuant to the Warrant, and intends to deliver as payment
that number of Warrants which, if exercised, would result in a number of shares
of Common Stock having an aggregate Fair Market Value (as defined in the
Warrant) equal to or in excess of the aggregate Exercise Price for the Shares.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at the Exercise Price of $____ per share
currently in effect pursuant to the Warrant, and intends to pay $_____ of the
aggregate Exercise Price for the Shares in cash, certified or official bank or
bank cashier's check (or a combination of cash and check) as indicated below,
and to
deliver as payment of $____ of the aggregate Exercise Price that number of
shares of Common Stock having an aggregate Fair Market Value (as defined in the
Warrant) equal to or in excess of such portion of the aggregate Exercise Price
for the Shares.
-OR-
The undersigned intends to exercise the Warrant to purchase __________
shares of Common Stock (the "SHARES") at the Exercise Price of $____ per share
currently in effect pursuant to the Warrant, and intends to pay $_____ of the
aggregate Exercise Price for the Shares in cash, certified or official bank or
bank cashier's check (or a combination of cash and check) as indicated below,
and to deliver as payment of $____ of the aggregate Exercise Price that number
of Warrants which, if exercised, would result in a number of shares of Common
Stock having an aggregate Fair Market Value (as defined in the Warrant) equal to
or in excess of such portion of the aggregate Exercise Price for the Shares.
Date: __________ __, ____.
--------------------------------
(Signature of Holder)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
Payment: $___________ cash
$___________ check
____________ shares of Common Stock having a Fair Market
Value of $___________
_____________ Warrants exercisable for shares of Common Stock
having a Fair Market Value of $__________
2
WARRANT SUBSCRIPTION FORM
To: JLC Learning Corporation
The undersigned irrevocably exercises the Warrant for the purchase of
___________ shares of Common Stock (the "SHARES"), par value $0.01 per share, of
JLC Learning Corporation (the "COMPANY") at $_____ per Share (the Exercise Price
currently in effect pursuant to the Warrant) and herewith makes payment of
$___________ (such payment being made in cash or by certified or official bank
or bank cashier's check payable to the order of the Company or by any permitted
combination of such cash or check), all on the terms and conditions specified in
the Warrant Certificate, surrenders this Warrant Certificate and all right,
title and interest therein to the Company and directs that the Shares
deliverable upon the exercise of this Warrant be registered or placed in the
name and at the address specified below and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
___________ shares of Common Stock (the "SHARES"), par value $0.01 per share, of
JLC Learning Corporation (the "COMPANY") at $_____ per Share (the Exercise Price
currently in effect pursuant to the Warrant) (provided that in lieu of payment
of $_________, the undersigned will receive a number of Shares reduced by a
number of shares of Common Stock having an aggregate Fair Market Value (as
defined in the Warrant) equal to the aggregate Exercise Price for the Shares),
all on the terms and conditions specified in the Warrant Certificate, surrenders
this Warrant Certificate and all right, title and interest therein to the
Company and directs that the Shares deliverable upon the exercise of this
Warrant be registered or placed in the name and at the address specified below
and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
_______ shares of Common Stock (the "SHARES"), par value $0.01 per share, of JLC
Learning Corporation (the "COMPANY") at $____ per share (the Exercise Price
currently in effect pursuant to the Warrant) (such payment being made by
delivering that number of shares of Common Stock having an aggregate Fair Market
Value (as defined in the Warrant) equal to or in excess of the aggregate
Exercise Price for the Shares), all on the terms and conditions specified in the
Warrant Certificate, surrenders this Warrant Certificate and all right, title
and interest therein to the Company and directs that the Shares deliverable upon
the exercise of this Warrant be registered or placed in the name and at the
address specified below and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
_______ shares of Common Stock (the "SHARES"), par value $0.01 per share, of JLC
Learning Corporation (the "COMPANY") at $____ per share (the Exercise
Price currently in effect pursuant to the Warrant) (such payment being made by
delivering that number of Warrants which, if exercised, would result in a number
of shares of Common Stock having an aggregate Fair Market Value (as defined in
the Warrant) equal to or in excess of the aggregate Exercise Price for the
Shares), all on the terms and conditions specified in the Warrant Certificate,
surrenders this Warrant Certificate and all right, title and interest therein to
the Company and directs that the Shares deliverable upon the exercise of this
Warrant be registered or placed in the name and at the address specified below
and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase
__________ shares of Common Stock (the "SHARES"); par value $0.01 per share, of
JLC Learning Corporation (the "COMPANY") at $_______ per Share (the Exercise
Price currently in effect pursuant to the Warrant), and herewith makes payment
of $_____ of the aggregate Exercise Price for the Shares in cash, certified or
official bank or bank cashier's check (or a combination of cash and check), and
herewith delivers as payment of $____ of the aggregate Exercise Price that
number of shares of Common Stock having an aggregate Fair Market Value (as
defined in the Warrant) equal to or in excess of such portion of the aggregate
Exercise Price for the Shares, all on the terms and conditions specified in the
Warrant Certificate, surrenders this Warrant Certificate and all right, title
and interest therein to the Company and directs that the Shares deliverable upon
the exercise of this Warrant be registered or placed in the name and at the
address specified below and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
__________ shares of Common Stock, par value $0.01 per share, of JLC Learning
Corporation (the "COMPANY") at $____ per share (the Exercise Price currently in
effect pursuant to the Warrant), and herewith makes payment of $_____ of the
aggregate Exercise Price for the Shares in cash, certified or official bank or
bank cashier's check (or a combination of cash and check), and herewith delivers
as payment of $____ of the aggregate Exercise Price that number of Warrants
which, if exercised, would result in a number of shares of Common Stock having
an aggregate Fair Market Value (as defined in the Warrant) equal to or in excess
of such portion of the aggregate Exercise Price for the Shares, all on the terms
and conditions specified in the Warrant Certificate, surrenders this Warrant
Certificate and all right, title and interest therein to the Company and directs
that the Shares deliverable upon the exercise of this Warrant be registered or
placed in the name and at the address specified below and delivered thereto.
2
Date: __________ __, ____.
--------------------------------
(Signature of Owner)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
The signature to the foregoing Warrant Subscription Form must correspond to
the name as written upon the face of the accompanying Warrant or any prior
assignment thereof in every particular without alteration or enlargement or any
change whatsoever.
3
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised portion of the Warrant evidenced by the within Warrant
Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
WARRANT ASSIGNMENT FORM
Dated ________
FOR VALUE RECEIVED,_________________________________________
hereby sells, assigns and transfers unto,
_______________________________________________(the "ASSIGNEE"),
(please type or print in block letters)
___________________________________________________________(insert address)
its right to purchase shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
_______________________ Attorney, to transfer the same on the books of
the Company, with full power of substitution in the premises.
Signature___________________
NOTICE:
The signature to the foregoing Warrant Assignment Form must correspond
to the name as written upon the face of the accompanying Warrant or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT APPEAR IN THE
TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only,
is not a part of this document and may be discarded.)
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
- ------------------------------ ------------------------------ ------------------------------ ------------------------------
- ------------------------------ ------------------------------ ------------------------------ ------------------------------
2.01...........purch/sale.sect
2.02...................closing
3.03..........govt auth seller
3.04..........noncontra.seller
3.05..............cap.and.v.r.
3.05(D).............exc.as.set
3.06.........captlzn.vtg.rghts
3.06(a)...cap.vr.giving.effect
3.06(B)........as.set.forth.in
3.07.....captlzn.vtg.rghts.JLC
3.07(B)..............except.as
3.08............valid.issuance
3.09................litigation
3.11.......shareholder.arrange
5............closing condition
5.03(A)(II)........rep.war.buy
6.02............indemnifcation
7.01..........terminate ground
8.01...................notices
8.02...........certain wrc cov
8.04..................expenses
8.04(A)..........sell.pay.250k
8.06.............governing law
8.07..............jurisdiction
8.08..........jury trial waive