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EXHIBIT 10.41
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SERIES C CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Among
AURORA ELECTRONICS, INC.
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P.
and
The Several Other Persons Named
In Schedule I Hereto
Dated as of October 2, 1997
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TABLE OF CONTENTS
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I. PURCHASE AND SALE OF THE SERIES C PREFERRED SHARES............. 1
SECTION 1.01. Issuance and Sale of the Series C
Preferred Shares................................ 1
SECTION 1.02. Closing Date.................................... 2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 2
SECTION 2.01. Organization and Qualification.................. 2
SECTION 2.02. Subsidiaries.................................... 2
SECTION 2.03. Capitalization.................................. 3
SECTION 2.04. Authorization of Agreements, Etc................ 4
SECTION 2.05. Validity........................................ 5
SECTION 2.06. Governmental Approvals.......................... 5
SECTION 2.07. Financial Statements, Etc....................... 5
SECTION 2.08. SEC Filings..................................... 6
SECTION 2.09. Absence of Certain Changes or Events............ 7
SECTION 2.10. Actions Pending................................. 7
SECTION 2.11. Compliance with Law............................. 8
SECTION 2.12. Offering of the Securities...................... 8
SECTION 2.13. Brokers......................................... 8
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS............... 9
SECTION 3.01. Authorization................................... 9
SECTION 3.02. Validity........................................ 9
SECTION 3.03. Investment Representations...................... 9
SECTION 3.04. Government Approvals............................ 10
IV. CONDITIONS PRECEDENT .......................................... 10
SECTION 4.01. Conditions Precedent to the Obligations
of the Purchasers............................... 10
SECTION 4.02. Condition Precedent to the Obligations
of the Company.................................. 12
V. SURVIVAL OF REPRESENTATIONS; INDEMNITY......................... 12
SECTION 5.01. Survival of Representations..................... 12
SECTION 5.02. General Indemnity............................... 12
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TABLE OF CONTENTS
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SECTION 5.03. Conditions of Indemnification................... 13
VI. CERTAIN REGISTRATION RIGHTS.................................... 14
VII. MISCELLANEOUS ................................................. 14
SECTION 7.01. Expenses, Etc................................... 14
SECTION 7.02. Survival of Agreements.......................... 14
SECTION 7.03. Parties in Interest............................. 14
SECTION 7.04. Notices......................................... 15
SECTION 7.05. Entire Agreement; Assignment.................... 16
SECTION 7.06. Counterparts.................................... 16
SECTION 7.07. Governing Law................................... 16
INDEX TO EXHIBITS, SCHEDULES AND ANNEX
Exhibit Description
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A Form of Certificate of Designations
Schedule Description
I Purchasers and Shares of Series C
Convertible Preferred Stock
ii
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SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT dated as
of October 2, 1997, among AURORA ELECTRONICS, INC., a Delaware corporation (the
"Company"), WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P., a Delaware limited
partnership ("WCAS VII") and the several other persons named in Schedule I
hereto (such persons, together with WCAS VII, being hereinafter called
individually a "Purchaser" and collectively the "Purchasers").
WHEREAS, the Company desires to sell to the Purchasers, and the
Purchasers desire to purchase from the Company, on the terms and subject to the
conditions set forth herein, an aggregate 25,000 shares of Series C Convertible
Preferred Stock, $.01 par value ("Series C Preferred Stock"), of the Company at
a purchase price of $100 per share; and
WHEREAS, in order to induce the Purchasers to consummate the
transactions contemplated by this Agreement, the Company has agreed to grant to
the Purchasers certain registration rights with respect to the shares of Common
Stock, $.03 par value ("Common Stock"), of the Company that will be issuable
upon the conversion of the Series C Preferred Stock being purchased hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
I.
PURCHASE AND SALE OF
THE SERIES C PREFERRED SHARES
SECTION 1.01. Issuance and Sale of the Series C Preferred Shares.
(a) Subject to the terms and conditions set forth herein, on the
Closing Date (as hereinafter defined) the Company shall issue, sell and deliver
to each Purchaser, and each Purchaser shall purchase from the Company, the
number of shares of Series C Preferred Stock set forth opposite the name of such
Purchaser on Schedule I hereto under the caption "Series C Preferred Shares"
(the aggregate number of shares of Series C
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Preferred Stock so purchased are referred to herein as the "Series C Preferred
Shares"), for a purchase price of $100 per share. On the Closing Date, the
Company shall issue a certificate or certificates in definitive form, registered
in the name of each Purchaser, representing the number of Series C Preferred
Shares being purchased by it hereunder.
(b) As payment in full for the Series C Preferred Shares being
purchased by it hereunder, and against delivery of the certificate or
certificates therefor as aforesaid, on the Closing Date each Purchaser shall
transfer immediately available funds by wire transfer to an account designated
by the Company, an amount equal to $100 multiplied by the number of Series C
Preferred Shares to be purchased by such Purchaser in accordance with paragraph
(a) above.
SECTION 1.02. Closing Date. The transfer, sale and delivery of
the Series C Preferred Shares (the "Closing") shall take place at the offices of
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ October 2, 1997 (such date and time of the Closing being herein
called the "Closing Date").
II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
SECTION 2.01. Organization and Qualification. The Company is a
corporation validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and assets and to carry on its business as it is now
being conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
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have a material adverse effect on the properties, assets, financial condition,
prospects, operating results or business of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Effect").
SECTION 2.02. Subsidiaries. (a) Except as set forth on Schedule
2.02 hereto, neither the Company nor any of its subsidiaries owns of record or
beneficially, directly or indirectly, (i) any shares of outstanding capital
stock or securities convertible into capital stock of any other corporation or
(ii) any participating interest in any partnership, joint venture or other
non-corporate business enterprise. Each subsidiary of the Company is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and assets and to carry on
its business as it is now being conducted. Each subsidiary of the Company is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction in which the character of its properties owned or leased or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not have a Material Adverse Effect. All the
outstanding shares of capital stock of the Company's subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth on Schedule 2.02, are owned by the Company or by a wholly-owned subsidiary
of the Company, free and clear of any liens, claims, charges, restrictions,
rights of others, security interests, prior assignments or other encumbrances
(collectively, "Claims"), and there are no proxies, voting or transfer
agreements or understandings outstanding with respect to any such shares.
(b) Schedule 2.02 includes a complete and accurate list of each
subsidiary of the Company, indicating the jurisdiction of incorporation, each
jurisdiction in which such subsidiary is qualified as a foreign corporation, its
capital structure (including all authorized and outstanding shares), and the
nature and level of ownership in such subsidiary by the Company, any subsidiary
of the Company and any other person (for purposes of this Agreement, "person"
shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, or an
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unincorporated organization). Complete and correct copies of the Certificate of
Incorporation and By-laws of the Company and of each subsidiary of the Company
have previously been delivered to the Purchasers.
(c) For purposes of this Agreement, the term "subsidiary", when
used with respect to the Company, shall mean any corporation or other business
entity, a majority of whose outstanding equity securities is at the time owned,
directly or indirectly, by the Company and/or one or more other subsidiaries of
the Company.
SECTION 2.03. Capitalization.
(a) The authorized capital stock of the Company consists of (i)
50,000,000 shares of Common Stock and (ii) 1,000,000 shares of Preferred Stock,
$.01 par value ("Preferred Stock"), of the Company of which 400,000 shares have
been designated Convertible Preferred Stock and 25,000 shares have been
designated Series B Convertible Preferred Stock. As of the date hereof,
6,847,563 shares of Common Stock, 400,000 shares of Convertible Preferred Stock
and 25,000 shares of Series B Convertible Preferred Stock are issued and
outstanding, all of which were duly authorized and validly issued and are fully
paid and nonassessable.
(b) Upon the filing with the Secretary of State of the State of
Delaware of a Certificate of Designations of the Company in the form attached
hereto as Exhibit A (the "Certificate of Designations"), 25,000 shares of
Preferred Stock shall be designated as authorized Series C Preferred Stock.
(c) Except as set forth in the Company SEC Filings or on Schedule
2.03 hereof, as of the date hereof, no subscription, warrant, option,
convertible security, stock appreciation or other right (contingent or other) to
purchase or acquire any shares of any class of capital stock of the Company or
any of its subsidiaries is authorized or outstanding and (except as otherwise
expressly contemplated by this Agreement) there is not any commitment of the
Company or any of its subsidiaries to issue any shares, warrants, options or
other such rights or to
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distribute to holders of any class of its capital stock any evidences of
indebtedness or assets. Schedule 2.03 sets forth a complete and correct list of
the number of warrants or options, including a listing of the vesting schedules
thereof, held by each person with respect to the outstanding capital stock of
the Company.
(d) Except as set forth on Schedule 2.03, neither the Company nor
any of its subsidiaries has any obligation (contingent or other) to purchase,
redeem or otherwise acquire any shares of its capital stock or any interest
therein or to pay any dividend or make any other distribution in respect
thereof.
SECTION 2.04. Authorization of Agreements, Etc. (a) Each of (i)
the execution and delivery by the Company of this Agreement, (ii) the
performance by the Company of its obligations hereunder, (iii) the issuance,
sale and delivery by the Company of the Series C Preferred Shares, and (iv) the
issuance and delivery of the shares of Common Stock issuable upon the conversion
of the Series C Preferred Shares (collectively, the "Conversion Shares") have
been duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government, the
Certificate of Incorporation or By-laws of the Company, or any provision of any
indenture, agreement or other instrument to which the Company or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any Claim in favor of any third person upon any of the assets of
the Company or any of its subsidiaries.
(b) The Series C Preferred Shares have been duly authorized by
the Company and, when sold and paid for in accordance with this Agreement, will
be validly issued, fully paid and nonassessable shares of Series C Preferred
Stock. The Conversion Shares, when issued and delivered upon the conversion of
the Series C Preferred Shares, will be duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock. Neither the issuance, sale and
delivery of the Series C Preferred Shares to the Purchasers hereunder, nor the
issuance
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and delivery of the Conversion Shares, is subject to any preemptive rights of
stockholders of the Company or to any right of first refusal or other similar
right in favor of any person.
SECTION 2.05. Validity. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
SECTION 2.06. Governmental Approvals. Subject to the accuracy of
the representations and warranties of the Purchasers set forth in Article III
hereof, no registration or filing with, or consent or approval of, or other
action by, any Federal, state or other governmental agency or instrumentality is
or will be necessary for the valid execution, delivery and performance of this
Agreement, the issuance, sale and delivery of the Series C Preferred Shares or
the issuance and delivery of the Conversion Shares upon the conversion of the
Series C Preferred Shares, other than (i) the filing of the Certificate of
Designations with the Secretary of State of the State of Delaware in accordance
with the Delaware General Corporation Law (the "Delaware GCL") with respect to
the designation of the Series C Preferred Stock, and (ii) such filings with and
approvals of the Securities and Exchange Commission ("SEC") or any state
securities commission or similar regulatory body as may be necessary in
connection with the commencement or consummation of the transactions
contemplated herein.
SECTION 2.07. Financial Statements, Etc. (a) The Company has
furnished to the Purchasers: (i) the audited consolidated balance sheet of the
Company and its subsidiaries as of September 30, 1996 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the fiscal year then ended certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the independent
certified public accountants retained by the Company, and (ii) the unaudited
consolidated balance sheet of the Company and its subsidiaries as of June 30,
1997 and the related consolidated statements of operations and cash flows for
the nine months then ended, certified by the principal financial officer of the
Company. All such financial statements (including any related schedules and/or
notes) have been prepared in accordance with
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generally accepted accounting principles in the United States ("GAAP")
consistently applied and consistent with prior periods, (i) except that such
interim statements are subject to year-end and audit adjustments (which consist
of normal recurring accruals) and do not contain certain footnote disclosures,
and (ii) except as otherwise disclosed in such financial statements or in the
Company SEC Filings (as defined below). Such balance sheets fairly present in
all material respects the financial position of the Company and its subsidiaries
as of their respective dates, and such statements of operations, stockholders'
equity and cash flows fairly present in all material respects the results of
operations of the Company and its subsidiaries for the respective periods then
ended, subject, in the case of unaudited financial statements, to normal
year-end and audit adjustments and the absence of certain footnote disclosures.
(b) Except as and to the extent (i) reflected on the consolidated
balance sheet of the Company and its subsidiaries as of September 30, 1996 (the
"September 30, 1996 Balance Sheet"), (ii) incurred since September 30, 1996 in
the ordinary course of business consistent with past practice, or (iii) set
forth on Schedule 2.07 hereto, neither the Company nor any of its subsidiaries
has any material liabilities or obligations of any kind or nature, whether known
or unknown, secured or unsecured, absolute, accrued, contingent or otherwise,
and whether due or to become due, that would be required to be reflected on a
balance sheet, or the notes thereto, prepared in accordance with GAAP. Since
September 30, 1996, neither the Company nor any of its subsidiaries has suffered
any Material Adverse Effect.
SECTION 2.08. SEC Filings. The Company has filed all forms,
reports and documents required to be filed with the SEC since September 30,
1992, and the Company has made available to the Purchasers, as filed with the
SEC, complete and accurate copies of (i) the Annual Report of the Company on
Form 10-K for the year ended September 30, 1996, and (ii) all other reports,
statements and registration statements (including Current Reports on Form 8-K)
filed by the Company with the SEC since September 30, 1992, in each case
including all amendments and supplements (collectively, the "Company SEC
Filings"). The Company SEC Filings (including, without limitation, any financial
statements
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or schedules included therein) (i) were prepared in compliance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, and the rules and regulations thereunder, as the case may
be, and (ii) did not at the time of filing (or if amended, supplemented or
superseded by a filing prior to the date hereof, on the date of that filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
SECTION 2.09. Absence of Certain Changes or Events. Except as set
forth on Schedule 2.09 hereto or as otherwise disclosed in the Company SEC
Filings or the financial statements of the Company and its subsidiaries as of
and for the nine months ended June 30, 1997 referred to above, and except as
otherwise expressly contemplated by this Agreement, since September 30, 1996,
neither the Company nor any of its subsidiaries has (i) issued any stock, bonds
or other corporate securities; (ii) borrowed or refinanced any amount or
incurred any material liabilities (absolute or contingent), other than revolving
credit facility borrowings and trade payables incurred in the ordinary course of
business consistent with past practice; (iii) discharged or satisfied any
material Claim or incurred or paid any obligation or liability (absolute or
contingent) other than current liabilities shown on the September 30, 1996
Balance Sheet and current liabilities incurred since the date of such balance
sheet in the ordinary course of business consistent with past practice; (iv)
declared or made any payment or distribution to stockholders, or purchased or
redeemed any shares of its capital stock or other securities; (v) mortgaged,
pledged or subjected to lien any of its assets, tangible or intangible, other
than liens for current real property taxes not yet due and payable; (vi) sold,
assigned or transferred any of its tangible assets, or cancelled any debts or
Claims, except in the ordinary course of business consistent with past practice;
(vii) sold, assigned or transferred any patents, trademarks and trade names,
trademark and trade name registrations, servicemark, brandmark and brand name
registrations and copyrights, the applications therefor and the licenses with
respect thereto or other intangible assets; (viii) waived any rights of
substantial value, whether or not in
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the ordinary course of business; (ix) made any material increase in the
compensation (including, without limitation, the rate of commissions) payable
to, or any payment of a material cash bonus to any director, officer, employee
of, or consultant or agent to, the Company or any of its subsidiaries or any
other material change in the terms or conditions of any employment relationship;
(x) announced any plan or legally binding commitment to create any employee
benefit plan, program or arrangement or to amend or modify in any material
respect any existing employee benefit plan, program or arrangement; (xi)
eliminated the vesting conditions or otherwise accelerated the payment of any
compensation, including any stock options; or (xii) except in connection with
this Agreement and the transactions contemplated hereby, entered into any
agreement, letter of intent or similar undertaking to take any of the actions
listed in clauses (i) through (xi) above.
SECTION 2.10. Actions Pending. Except (i) for any actions, suits,
investigations or proceedings which individually do not involve claims against
the Company or any of its subsidiaries for more than $50,000, (ii) as set forth
on Schedule 2.10 hereto, or (iii) as set forth in the Company SEC Filings, there
is no action, suit, investigation or proceeding pending or, to the best
knowledge of the Company, threatened against or affecting the Company, or any of
its properties or rights, before any court or by or before any governmental body
or arbitration board or tribunal. Except as set forth on Schedule 2.10 hereto,
there is no judgment, decree, injunction or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against the Company.
SECTION 2.11. Compliance with Law. Neither the Company nor any of
its subsidiaries is in default in any respect under any order or decree of any
court, governmental authority, arbitrator or arbitration board or tribunal or
under any laws, ordinances, governmental rules or regulations to which the
Company or any of such subsidiaries or any of their respective properties or
assets is subject, except where such default would not have a Material Adverse
Effect.
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SECTION 2.12. Offering of the Securities. Neither the Company nor
any person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Series C Preferred
Shares or any similar securities of the Company has offered any such securities
for sale to, or solicited any offers to buy any such securities from, or
otherwise approached or negotiated with respect thereto with, any person or
persons, under circumstances that involved the use of any form of general
advertising or solicitation as such terms are defined in Regulation D of the
Securities Act; and, assuming the accuracy of the representations and warranties
of the Purchasers set forth in Article III hereof, neither the Company nor any
person acting on the Company's behalf has taken or will take any action
(including, without limitation, any offer, issuance or sale of any securities of
the Company under circumstances which might require the integration of such
transactions with the sale of the Series C Preferred Shares under the Securities
Act or the rules and regulations of the SEC thereunder) which would subject the
offering, issuance or sale of the Series C Preferred Shares to the Purchasers to
the registration provisions of the Securities Act.
SECTION 2.13. Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by the
Company directly with the Purchasers, without the intervention of any other
person on behalf of the Company in such manner as to give rise to any valid
claim by any other person against the Purchasers for a finder's fee, brokerage
commission or similar payment.
III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and
warrants to the Company as follows:
SECTION 3.01. Authorization. The execution, delivery and
performance by such Purchaser of this Agreement and the purchase and receipt by
such Purchaser of the Series C Preferred
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Shares being acquired by it hereunder, have been duly authorized by all
requisite action on the part of such Purchaser, and will not violate any
provision of law, any order of any court or other agency of government, the
charter or other governing documents of such Purchaser, or any provision of any
indenture, agreement or other instrument by which such Purchaser or any of such
Purchaser's properties or assets are bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in any Claim upon any
of the properties or assets of such Purchaser.
SECTION 3.02. Validity. This Agreement has been duly executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms.
SECTION 3.03. Investment Representations.
(a) Such Purchaser is acquiring the Series C Preferred Shares
being purchased by such Purchaser hereunder for such Purchaser's own account,
for investment, and not with a view toward the resale or distribution thereof.
(b) Such Purchaser understands that he, she or it, as the case
may be, must bear the economic risk of such Purchaser's investment for an
indefinite period of time because the Series C Preferred Shares are not
registered under the Securities Act or any applicable state securities laws, and
may not be resold unless subsequently registered under the Securities Act and
such other laws or unless an exemption from such registration is available. Such
Purchaser also understands that, except as provided in the Registration Rights
Agreement (as defined below), as amended herein, it is not contemplated that any
registration will be made under the Securities Act or that the Company will take
steps which will make the provisions of Rule 144 under the Securities Act
available to permit resale of the Series C Preferred Shares.
(c) Such Purchaser is able to fend for itself in the transactions
contemplated by this Agreement and such Purchaser has the ability to bear the
economic risks of the investment in
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the Series C Preferred Shares being purchased hereunder for an indefinite period
of time. Such Purchaser further acknowledges that he, she or it, as the case may
be, has received copies of the Company SEC Filings and has had the opportunity
to ask questions of, and receive answers from, officers of the Company with
respect to the business and financial condition of the Company and the terms and
conditions of the offering of the Series C Preferred Shares and to obtain
additional information necessary to verify such information or can acquire it
without unreasonable effort or expense.
(d) Such Purchaser has such knowledge and experience in financial
and business matters that such Purchaser is capable of evaluating the merits and
risks of its investment in the Series C Preferred Shares. Such Purchaser further
represents that he, she or it, as the case may be, is an "accredited investor"
as such term is defined in Rule 501 of Regulation D of the SEC under the
Securities Act with respect to its purchase of the Series C Preferred Shares,
and that any such Purchaser that is a limited partnership has not been formed
solely for the purpose of purchasing the Series C Preferred Shares.
(e) If such Purchaser is a limited partnership, such Purchaser
represents that it has been organized and is existing as a limited partnership
under the laws of the State of Delaware.
SECTION 3.04. Governmental Approvals. No registration or filing
with, or consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary by such Purchaser
for the valid execution, delivery and performance of this Agreement.
IV.
CONDITIONS PRECEDENT
SECTION 4.01. Conditions Precedent to the Obligations of the
Purchasers. The obligations of the Purchasers hereunder are, at their option,
subject to the satisfaction, on or before the Closing Date, of the following
conditions:
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(a) Certificate of Designations. The Certificate of Designations
shall have been duly filed with the Secretary of State of the State of Delaware
and shall have become legally effective.
(b) Opinion of Counsel. The Purchasers shall have received from
▇▇▇▇▇▇ & ▇▇▇▇ L.L.P., counsel for the Company, an opinion dated the Closing
Date, satisfactory in form and substance to the Purchasers and their counsel.
(c) All Proceedings to Be Satisfactory. All corporate and other
proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
shall have been taken or obtained by the Company and all documents incident
thereto shall be satisfactory in form and substance to the Purchasers and their
counsel.
(d) Supporting Documents. On or prior to the Closing Date the
Purchasers and their counsel shall have received copies of the following
supporting documents:
(i) copies of (1) the Certificate of Incorporation of the Company
and the charter documents of each of its subsidiaries, including all
amendments thereto, certified as of a recent date by the Secretary of
State or the appropriate official of the relevant state of
incorporation, (2) certificates of said Secretary or official, dated as
of a recent date, as to the due incorporation and good standing of the
Company and each such subsidiary, and listing all documents on file with
said official, and (3) a telegram or facsimile from said Secretary or
official as of the close of business on the next business day preceding
the Closing Date as to the continued due incorporation and good standing
of the Company and each such subsidiary and to the effect that no
amendment to the respective charter documents of such corporations has
been filed since the date of the certificate referred to in clause (2)
above; and
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company, dated the Closing Date and
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certifying (1) that attached thereto is a true and complete copy of the
By-laws of the Company as in effect on the date of such certification
and at all times since May 20, 1993; (2) that attached thereto is a true
and complete copy of resolutions adopted by the Board of Directors of
the Company authorizing the execution, delivery and performance of this
Agreement, the designation, issuance, sale and delivery of the Series C
Preferred Shares, the reservation, issuance and delivery of the
Conversion Shares and that all such resolutions are still in full force
and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement; (3) that the Certificate of
Incorporation of the Company has not been amended since the date of the
last amendment referred to in the certificate delivered pursuant to
clause (i)(2) above; and (4) as to the incumbency and specimen signature
of each officer of the Company executing this Agreement, the stock
certificates representing the Series C Preferred Shares and any
certificate or instrument furnished pursuant hereto, and a certification
by another officer of said corporation as to the incumbency and
signature of the officer signing the certificate referred to in this
paragraph (ii).
All such documents shall be satisfactory in form and substance to the
Purchasers and their counsel.
SECTION 4.02. Condition Precedent to the Obligations of the
Company. The obligations of the Company hereunder are subject to the due filing
with the Secretary of State of the State of Delaware and the legal effectiveness
of the Certificate of Designations on or prior to the Closing Date.
V.
SURVIVAL OF REPRESENTATIONS; INDEMNITY
SECTION 5.01. Survival of Representations. Subject as set forth
below, all representations and warranties made by any party hereto in this
Agreement or pursuant hereto shall survive for a period of one year after the
Closing Date.
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SECTION 5.02. General Indemnity.
(a) Subject to the terms and conditions of this Article V, the
Company hereby agrees to indemnify, defend and hold the Purchasers harmless from
and against all demands, claims, actions or causes of action, assessments,
losses (including diminution in value of the Series C Preferred Shares),
damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and expenses (collectively,
"Damages"), asserted against, resulting to, imposed upon or incurred by the
Purchasers by reason of or resulting from a breach of any representation,
warranty or covenant of the Company contained in or made pursuant to this
Agreement.
(b) Subject to the terms and conditions of this Article V, the
Purchasers hereby agree to indemnify, defend and hold the Company harmless from
and against all Damages asserted against, resulting to, imposed upon or incurred
by the Company by reason of or resulting from a breach of any representation,
warranty or covenant of the Purchasers contained in or made pursuant to this
Agreement.
SECTION 5.03. Conditions of Indemnification. The respective
obligations and liabilities of the Purchasers, on the one hand, and the Company,
on the other hand (the "indemnifying party"), to the other (the "party to be
indemnified") under Section 5.02 hereof with respect to claims resulting from
the assertion of liability by third parties shall be subject to the following
terms and conditions:
(a) within 20 days after receipt of notice of commencement of any
action or the assertion in writing of any claim by a third party, the party to
be indemnified shall give the indemnifying party written notice thereof together
with a copy of such claim, process or other legal pleading, and the indemnifying
party shall have the right to undertake the defense thereof by representatives
of its own choosing;
(b) in the event that the indemnifying party, by the 30th day
after receipt of notice of any such claim (or, if earli-
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er, by the tenth day preceding the day on which an answer or other pleading must
be served in order to prevent judgment by default in favor of the person
asserting such claim), does not elect to defend against such claim, the party to
be indemnified will (upon further notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such claim on behalf
of and for the account and risk of the indemnifying party, subject to the right
of the indemnifying party to assume the defense of such claim at any time prior
to settlement, compromise or final determination thereof, provided that the
indemnifying party shall be given at least 15 days prior written notice of the
effectiveness of any such proposed settlement or compromise;
(c) anything in this Section 5.03 to the contrary notwithstanding
(i) if there is a reasonable probability that a claim may materially and
adversely affect the indemnifying party other than as a result of money damages
or other money payments, the indemnifying party shall have the right, at its own
cost and expense, to compromise or settle such claim, but (ii) the indemnifying
party shall not, without the prior written consent of the party to be
indemnified, settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the party to be indemnified a release from all
liability in respect of such claim; and
(d) in connection with any such indemnification, the indemnified
party will cooperate in all reasonable requests of the indemnifying party.
VI.
CERTAIN REGISTRATION RIGHTS
The Company hereby affirms and agrees that the registration
rights granted to the Purchasers and certain other stockholders of the Company
as set forth in the Registration Rights Agreement, dated as of March 29, 1996
(said agreement, as previously amended, the "Registration Rights Agreement"),
among
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the Company, the Purchasers and the other parties named therein, shall continue
in full force and effect, provided, however, that the Company and the Purchasers
acknowledge and agree that the Registration Rights Agreement is hereby amended
such that (i) the term "Convertible Preferred Stock" shall hereinafter refer to
and include the Series C Preferred Stock and (ii) the term "Preferred Shares"
shall hereinafter refer to and include the Series C Preferred Shares.
VII.
MISCELLANEOUS
SECTION 7.01. Expenses, Etc. The Company shall reimburse WCAS VII
or pay on its behalf any reasonable fees and expenses incurred by WCAS VII in
connection with the negotiation and preparation of this Agreement and the
related documents contemplated hereby. For purposes hereof, the "fees and
expenses incurred by WCAS VII" shall include, without limitation, the fees,
disbursements and expenses of counsel, accountants, financial advisors and other
experts retained by WCAS VII in connection with this Agreement and the
transactions contemplated hereby.
SECTION 7.02. Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance, sale and delivery of the Series C
Preferred Shares pursuant hereto, notwithstanding any investigation made at any
time by or on behalf of any party hereto. All statements contained in any
certificate or other instrument delivered by the Company hereunder shall be
deemed to constitute representations and warranties made by the Company.
SECTION 7.03. Parties in Interest. All covenants and agreements
contained in this Agreement by or on behalf of any party hereto shall bind and
inure to the benefit of the respective successors and assigns of such party
hereto whether so expressed or not.
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SECTION 7.04. Notices. Any notice or other communications
required or permitted hereunder shall be deemed to be sufficient if contained in
a written instrument delivered in person or duly sent by first class certified
mail, postage pre-paid, by nationally recognized overnight courier, or by
telecopy addressed to such party at the address or telecopy number set forth
below or such other address or telecopy number as may hereafter be designated in
writing by the addressee to the addressor listing all parties:
if to the Company, to:
Aurora Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
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with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
if to any Purchaser, to:
Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of mailing, on the fifth business day following the date of such
mailing, (c) in the case of delivery by overnight courier, on the business day
following the date of delivery to such courier, and (d) in the case of telecopy,
when received.
SECTION 7.05. Entire Agreement; Assignment. This Agreement
(including the Schedules and Exhibits hereto) and the Registration Rights
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and may not
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be amended or modified nor any provisions waived except in a writing signed by
the Company and the Purchasers. This Agreement shall not be assigned by
operation of law of otherwise without the consent of the other parties hereto.
SECTION 7.06. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 7.07. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the Company and the Purchasers have executed
this Agreement as of the day and year first above written.
AURORA ELECTRONICS, INC.
By
-----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and
Chief Executive Officer
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P.
By WCAS VII Partners, L.P.,
General Partner
By
-----------------------------------------
General Partner
WCAS INFORMATION PARTNERS, L.P.
By WCAS Info Partners,
General Partner
By
-----------------------------------------
General Partner
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Individually and
as Attorney-in-Fact
22
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EXHIBIT 4.12
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇
January 6, 1998
Aurora Electronics. Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
SUBJECT Financial Support Agreement, dated as of September 30, 1996, as
amended, (the "Agreement"), among Aurora Electronics, Inc., a Delaware
corporation (the "Company"), Aurora Electronics Group, Inc., a
California corporation and wholly owned subsidiary of the Company
("AEG"), Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P., a Delaware limited
partnership ("WCAS VII"), and WCAS Capital Partners II, L.P., a
Delaware limited partnership ("WCAS ▇▇ ▇▇" and together with WCAS VII
being hereinafter collectively referred to as the "Guarantors").
Pursuant to the Agreement, the Guarantors were to receive Warrants to
purchase common shares of the Company (the "Warrants") as recognition of the
financial risk of guaranteeing certain amounts owed by AEG for loans pursuant to
the Credit Agreement (the "Credit Agreement") among the Company, AEG and Chase
Manhattan Bank as a lender and agent for the lenders. The following warrants
have been issued as of this date:
DATE WCAS VII WCAS ▇▇ ▇▇ TOTAL EXERCISE PRICE
--------------------------------------------------------------------------------------
9/30/96 276,000 9,714 285,714 $2.100
6/01/97 340,941 12,000 352,941 1.700
6/06/97 43,909 1,546 45,455 1.650
1/27/97 548,864 19,318 568,182 1.760
10//28/97 942,439 33,171 975,610 1.025
27
-2-
Although the terms of the Agreement provide for WCAS VII and WCAS ▇▇ ▇▇
to be issued additional Warrants, WCAS VII and WCAS ▇▇ ▇▇ do hereby waive and
forego the right to receive the additional Warrants due by reason of additional
guarantees issued or outstanding at this time.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, General Partner
WCAS VII
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, General Partner
WCAS ▇▇ ▇▇ Partners
28
Schedule I
Name of Purchaser Series C Preferred Shares
----------------- -------------------------
Welsh, Carson, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇ VII, L.P. 23,757
WCAS Information Partners, L.P. 324
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 130
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 194
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 194
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 97
▇▇▇▇▇▇ ▇. ▇▇▇▇ 65
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 113
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 6
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 32
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 52
▇▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇ 26
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10
------
Total 25,000
======
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