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EXHIBIT 10.20
SECOND AMENDMENT TO
STOCK OPTION AGREEMENT
This Second Amendment to Stock Option Agreement is made and entered into by
and between National Education Corporation, a Delaware Corporation ("Company")
and Steck-Vaughn Publishing Corporation ("Optionee") as of March 31, 1996.
Recitals
1. Company and Optionee entered into that certain Stock Option Agreement
(the "Stock Option Agreement") dated as of February 28, 1995 pursuant to which
the Company granted Optionee a stock option to purchase from the Company
290,000 shares of the stock of Optionee owned by the Company.
2. The Stock Option Agreement has heretofore been amended by that
certain First Amendment to Stock Option Agreement (the "First Amendment") dated
as of December 31, 1995.
3. Company and Optionee desire to again amend the Stock Option Agreement
to extend certain dates and to amend certain other matters contained therein.
Agreement
Now, Therefore, for $10.00 and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged by the Company and
Optionee hereby agree as follows, to wit:
1. Section 2 of the Stock Option Agreement is hereby amended in its
entirety to hereafter read as follows, to wit:
2. Term of Option
Unless earlier exercised pursuant to Section 3 of this Agreement, the
Option shall terminate on, and shall not be exercisable after the earlier
of (a) June 30, 1997, or (b) the date, if any, the Option is terminated
pursuant to Section 8 below.
2. Subsection 3.1 of the Stock Option Agreement is hereby amended in its
entirety to hereafter read as follows, to wit:
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3.1 Exercisability
This Option may only be exercised, in whole or in part, once at any
time after the earlier of (i) August 31, 1996 or (ii) any time one or more
Events of Default (which have not been cured within any applicable cure
period) have occurred under and as defined in that certain Revolving Line
of Credit Note dated February 28, 1995 in the original principal amount of
$10,000,000.00 executed by the Company and payable to the order of Optionee
as renewed, modified and extended by that certain Renewal and Extension
Agreement (the "First Renewal") dated as of December 31, 1995 between the
Company and Optionee and that Second Renewal and Extension Agreement (the
"Second Renewal") dated as of March 31, 1996 between the Company and
Optionee (said Revolving Line of Credit Note as so renewed, modified and
extended by said First Renewal and Second Renewal being herein referred to
as the "Note"), until the expiration of the term of the Option as provided
in Section 2 hereof. For purposes hereof, a business day shall mean any
day which is not a Saturday, Sunday or federal legal holiday.
3. Section 8 of the Stock Option Agreement is hereby amended in its
entirety to hereafter read as follows, to wit:
8. Redemption
At any time on or after the Credit Line Termination Date (hereafter
defined) and provided that the Option has not theretofore been exercised,
the Company may redeem the Option upon written notice of such redemption
and payment of the Redemption Price (hereafter defined) by the Company to
Optionee. Upon the written notice of such redemption and payment of the
Redemption Price by the Company to Optionee on or after the Credit Line
Termination Date, the Option, to the extent not theretofore exercised,
shall terminate for all purposes and shall not be of any further force and
effect; provided that such termination shall not impair or affect
Optionee's rights with respect to Shares previously exercised pursuant to
the Option or Shares previously acquired by Optionee pursuant to the
Option. The "Redemption Price" shall mean the greater of (i) the Yield
Amount (hereafter defined) plus the Adjustment Amount (hereafter defined)
or (ii) $900,000 plus, if the Redemption Price is paid by the Company to
Optionee after March 31, 1996, an amount equal to $1,250 per day for each
day after March 31, 1996 until and including the earlier of (x) June 30,
1996 or (y) the date of payment of the Redemption Price by the Company to
Optionee. The "Yield Amount" shall mean an amount equal to (i) twenty-five
percent (25%) per annum on the principal balance from time to time
outstanding under the Note from the Grant Date to and including the Credit
Line Termination Date; less (ii) all interest which at any time has accrued
under
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the Note from the Grant Date to and including the Credit Line Termination
Date. The "Adjustment Amount" shall mean an amount equal to twenty-five
percent (25%) per annum on the Yield Amount from the Credit Line
Termination Date to and including the date of payment of the Redemption
Price by the Company to Optionee. For purposes of this Section 8, the
Credit Line Termination Date means (i) June 30, 1996, if the indebtedness
evidenced by the Note is paid in full on such date and the Company has not
prior to June 30, 1996 agreed by a written notice delivered to Optionee
that the revolving line of credit available under and evidenced by the Note
has been terminated, (ii) the date on which the indebtedness evidenced by
the Note is fully paid, if the indebtedness evidenced by the Note is not
fully paid on June 30, 1996, or (iii) the date on which both the
indebtedness evidenced by the Note has been fully paid and the Company has
agreed by a written notice delivered to Optionee that the revolving line of
credit available under and evidenced by the Note has been terminated, if
the Company has agreed by a written notice delivered to Optionee that the
revolving line of credit available under and evidenced by the Note is
terminated prior to June 30, 1996. The Redemption Price may be paid by the
Company to Optionee, at the Company's option, in either or a combination of
(i) cash, or (ii) shares of Optionee's common stock owned by the Company
having a fair market value equal to the Redemption Price (or such balance
thereof not otherwise paid in cash) based upon the close price for shares
of Optionee's common stock on the NASDAQ National Market on the most recent
day that Optionee's shares of common stock were traded on the NASDAQ
National Market prior to the date of full payment of the Redemption Price
by the Company to Optionee, provided that such shares of Optionee's common
stock paid in payment of the Redemption Price are paid and delivered by the
Company to Optionee free and clear of all liens and encumbrances. In the
event Optionee's common stock is no longer traded on the NASDAQ National
Market, then the fair market value of Optionee's common stock for purposes
of determining payment of the Redemption Price shall be determined on such
other basis as the Company and Optionee shall mutually agree. The
Redemption Price may be prepaid by the Company to Optionee in such
proportions and at such times as the Company may elect provided that the
Option shall not be redeemed until the Redemption Price is fully paid and
the other terms of this Section 8 are complied with by the Company.
Notwithstanding anything contained in this Section 8 to the contrary, and
unless Optionee otherwise agrees in writing, the Company shall have no
right to redeem and terminate the Option pursuant to this Section 8 at
anytime any one or more Events of Default (as defined in the Note) exists
and is continuing. Nothing contained in this Agreement (i) shall be
construed to extend or to commit to extend the revolving line of credit
available under the Note or the maturity of the Note past June 30, 1996; or
(ii) impair or affect Optionee's rights and remedies with respect to any
collateral securing the indebtedness evidenced by the Note. The redemption
of the Option pursuant to this Section 8 may be made after notice
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of exercise of the Option has been given by the Optionee to the Company
provided that written notice of such redemption and payment of the
Redemption Price is made by the Company to Optionee prior to the Exercise
Date specified in Optionee's notice of exercise of the Option to be given
to the Company pursuant to Section 3.2.
4. THIS SECOND AMENDMENT TO STOCK OPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
5. The Company covenants and warrants to Optionee that the execution and
delivery of this Second Amendment to Stock Option Agreement by the Company is
not in contravention of and will not cause a default under any agreement to
which the Company is a party.
6. To the extent of any conflict between the terms of this Second
Amendment to Stock Option Agreement and the First Amendment, the terms and
provisions of this Second Amendment to Stock Option Agreement shall govern and
control.
7. Except as amended hereby and by the First Amendment, the Stock Option
Agreement shall remain in full force in effect in accordance with its terms.
IN WITNESS WHEREOF, the parties have entered into this Second Amendment to
Stock Option Agreement as of the date first above written.
"COMPANY" "OPTIONEE"
NATIONAL EDUCATION CORPORATION STECK-VAUGHN PUBLISHING
CORPORATION
By: By:
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Name: Name:
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Title: Title:
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