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EXHIBIT 99.6
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SECURITIES PURCHASE AND EXCHANGE AGREEMENT
Among
AURORA ELECTRONICS, INC.
THE SEVERAL PURCHASERS NAMED IN ANNEX I HERETO
and
WCAS CAPITAL PARTNERS II, L.P.
Dated as of January 30, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.01 Purchase and Sale of the Bridge Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.02 Purchase and Sale of the Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.03 Purchase and Sale of the Aurora
Preferred Stock to WCAS ▇▇ ▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.04 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF AURORA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.01 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.02 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.03 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.04 Authorization of Agreements, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.05 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.06 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.07 Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.08 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.09 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF
THE PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.01 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.02 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.03 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.01 Conditions Precedent to the Obligations
of the Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02 Condition Precedent to the Obligations
of Aurora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V. TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.01 Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.02 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.01 Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.02 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.03 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.04 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.05 Entire Agreement; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.06 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.07 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
TESTIMONIUM
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INDEX TO ANNEXES
Annex Description
ANNEX I The Purchasers
INDEX TO EXHIBITS
Exhibit Description
EXHIBIT A-1 Form of Aurora Bridge Notes
EXHIBIT A-2 Form of Aurora Senior Subordinated Notes
EXHIBIT B Form of Certificate of Designation
EXHIBIT C Form of Certificate of Amendment
EXHIBIT D Form of Amended and Restated Registration Rights
Agreement
EXHIBIT E Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇
INDEX TO SCHEDULES
Schedule Description
2.02 Subsidiaries
2.03 Subscriptions, Warrants, Etc.
2.07 Undisclosed Liabilities
2.09 Certain Changes
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SECURITIES PURCHASE AND EXCHANGE AGREEMENT dated as of January
30, 1998, among AURORA ELECTRONICS, INC., a Delaware corporation ("Aurora"),
Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P., a Delaware limited partnership
("WCAS VII"), and the other several Purchasers named in Annex I hereto
(collectively the "Purchasers") and WCAS Capital Partners II, L.P., a Delaware
limited partnership ("WCAS ▇▇ ▇▇" and, collectively with the Purchasers the
"Participants").
WHEREAS, pursuant to an Agreement and Plan of Merger of even
date herewith (the "Merger Agreement") among Aurora, ▇▇▇▇▇ Acquisition Corp., a
newly organized wholly-owned Delaware subsidiary of Aurora ("Sub"), and The
Cerplex Group, Inc., a Delaware corporation ("Cerplex"), Aurora desires to
acquire Cerplex through the merger (the "Merger") of Sub with and into Cerplex;
and
WHEREAS, pursuant to an Irrevocable Proxy and Option Agreement
of even date herewith (the "Option Agreement"), certain stockholders of Cerplex
who own in the aggregate a majority of the outstanding shares of Cerplex
entitled to vote have agreed, among other things, (i) to grant irrevocable
proxies coupled with an interest to representatives of Aurora to vote their
shares of Cerplex in favor of the Merger, (ii) to grant to Aurora an option to
purchase their Cerplex shares for the consideration to be received by them in
the Merger, and (iii) not to transfer or otherwise dispose of their Cerplex
shares or any interest therein except pursuant to the Merger or such option,
all on the terms and subject to the conditions contained in the Option
Agreement; and
WHEREAS, pursuant to a Stockholders Agreement of even date
herewith (the "Stockholders Agreement") among WCAS VII, Aurora and Cerplex,
WCAS VII has agreed (i) to vote its shares of Aurora in favor of approval of
the Certificate of Amendment (as defined herein), (ii) subject to consummation
of the Merger, to convert all currently outstanding shares of convertible
preferred stock of Aurora into Common Stock, $.01 par value ("Aurora Common
Stock"), (iii) to make further assurances to Cerplex with respect to Aurora's
obligations under the Merger Agreement and this Agreement and (iv) to grant,
together with Parent, an option to Cerplex to purchase certain securities of
Cerplex held by WCAS VII and Aurora in the event the Merger Agreement
terminates and the Merger is not consummated in accordance with the Certificate
of Incorporation of Aurora, all on the terms and subject to the conditions
contained in the Stockholders Agreement; and
WHEREAS WCAS ▇▇ ▇▇ holds $10,000,000 principal amount of
Aurora's 10% Senior Subordinated Notes Due September 30, 2001 (the "▇▇ ▇▇
Notes") together with accrued interest thereon, being all the issued and
outstanding ▇▇ ▇▇ Notes; and
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WHEREAS, on December 5, 1997, in order to alleviate Aurora's
working capital shortage, the Purchasers purchased an aggregate $2,800,000
principal amount of Aurora's 10% Senior Subordinated Demand Notes (the "Demand
Notes") for cash in the amount of $2,800,000; and
WHEREAS, pursuant to a Note and Warrant Assignment and
Transfer Agreement of even date herewith (the "Cerplex Note Purchase
Agreement"), simultaneously with the execution and delivery hereof, WCAS VII is
purchasing (i) an aggregate $18,069,275 principal amount of 9.50% Senior
Subordinated Notes due 2001 (the "Cerplex Subordinated Notes") of Cerplex,
representing all the issued and outstanding Cerplex Subordinated Notes,
together with accrued interest thereon, and (ii) certain warrants (the "Cerplex
Warrants") to purchase shares of Common Stock, $.001 par value ("Cerplex Common
Stock") of Cerplex for cash at a price equal to 30% of the sum of the principal
amount of, and accrued interest on, the Cerplex Subordinated Notes (such price
being hereinafter called the "Cerplex Note and Warrant Purchase Price"); and
WHEREAS, pursuant to a Forbearance Agreement of even date
herewith and a Seventh Amendment to Credit Agreement and Limited Waiver
Agreement of even date herewith (the "Forbearance Agreement"), Citibank, N.A.
has agreed to waive certain defaults and forbear from enforcing certain of its
rights under the Credit Agreement dated as of October 12, 1994, as amended (the
"Cerplex Credit Agreement"), among Cerplex, the lenders named therein and ▇▇▇▇▇
Fargo Bank, N.A., as Agent, pending consummation of the Merger and repayment of
the obligations of Cerplex under the Cerplex Credit Agreement, all on the terms
and subject to the conditions set forth in the Forbearance Agreement; and
WHEREAS, Aurora desires to obtain proceeds from a new Senior
lender of at least $17,000,000 (the "New Senior Loan") on terms acceptable to
Aurora; and
WHEREAS, pursuant to a letter agreement of even date herewith
(the "Chase Waiver"), The Chase Manhattan Bank N.A. ("Chase") is consenting to
the New Senior Loan and to the subordination to the New Senior Loan of Chase's
currently outstanding loan pursuant to the Credit Agreement dated as of March
29, 1996, as amended (the "Existing Aurora Credit Agreement"), among Aurora
Electronics Group, Inc., the guarantors named therein, the lenders named
therein, and Chase (formerly known as Chemical Bank), as Agent, all on the
terms and subject to the conditions set forth in the Chase Waiver; and
WHEREAS, in order to provide for the working capital needs of
Aurora and for other purposes, WCAS VII is willing, between the date hereof and
the consummation of the Merger, upon the terms and subject to the conditions
herein provided (i) on the date hereof, to purchase $3,200,000 principal amount
of
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Aurora's 10% Subordinated Bridge Notes in the form annexed hereto as Exhibit
A-1 (the "Bridge Notes"), and (ii) from time to time between the date hereof
and the consummation of the Merger, to purchase up to an additional $2,000,000
aggregate principal amount of Bridge Notes; and
WHEREAS, Aurora wishes to issue and sell (i) subject to the
rights offering referred to below, to the Purchasers, severally and not
jointly, up to an aggregate 15,000 units (the "Units") each consisting of (x)
$1,000 principal amount of Aurora's 10% Senior Subordinated Notes Due 2004 (the
"Aurora Senior Subordinated Notes"), in the form annexed hereto as Exhibit A-2,
and (y) 12 shares of Senior Convertible Preferred Stock, par value $1 per share
("Aurora Preferred Stock"), having the terms set forth in the form of
Certificate of Designations annexed hereto as Exhibit B, for a purchase price
of $2,200 per Unit payable in cash or by surrender or exchange of other
indebtedness of Aurora or Cerplex as hereinafter provided; and (ii) to WCAS ▇▇
▇▇ an aggregate 33,000 shares of Aurora Preferred Stock in exchange for
surrender for cancellation of the ▇▇ ▇▇ Notes and all interest accrued thereon;
and
WHEREAS Aurora wishes to afford to its public stockholders the
right to participate in the purchase of the Units on the same basis as the
Purchasers and, to that end, proposes to offer to such holders rights to
purchase their proportionate share of the Units based on fully-diluted holdings
of Aurora Common Stock; and
WHEREAS the Purchasers and WCAS ▇▇ ▇▇ are willing, on the
terms and subject to the conditions herein set forth, to purchase such Units
and Aurora Preferred Stock, including without limitation, in the case of the
Purchasers, any Units offered to but not subscribed for by the public holders
of Aurora Common Stock; and
WHEREAS, in order to provide sufficient Aurora Common Stock to
permit conversion of the Aurora Preferred Stock, Aurora wishes to increase the
authorized Aurora Common Stock from 50 million shares to 300 million shares,
pursuant to a Certificate of Amendment in the form annexed hereto as Exhibit C
(the "Certificate of Amendment"); and
WHEREAS, in connection with the Merger, (i) the Participants
and Aurora wish to amend and restate the Registration Rights Agreement dated as
of March 29, 1996, among Aurora and the other parties named therein, as
heretofore amended, pursuant to the Amended and Restated Registration Rights
Agreement substantially in the form annexed hereto as Exhibit D (the "Restated
Registration Rights Agreement"), to include among the shares entitled to
registration thereunder the shares of Aurora Common Stock issuable upon
conversion of shares of Aurora Preferred
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Stock and shares issued to certain affiliates of Cerplex in the Merger;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
ARTICLE I.
THE CLOSING
SECTION 1.01 Purchase and Sale of the Bridge Notes.
(a) Purchase and Sale on the Date Hereof. Simultaneously
with the execution and delivery hereof, Aurora is executing and delivering to
WCAS VII $3,200,000 principal amount of the Bridge Notes, dated the date hereof
and registered in the name of WCAS VII. Receipt of such Bridge Notes is hereby
acknowledged by WCAS VII. In consideration of such Bridge Notes, and against
delivery thereof as aforesaid, WCAS VII is transferring to Aurora the sum of
$3,200,000 by wire transfer. Receipt of such wire transfer is hereby
acknowledged by Aurora.
(b) Purchases and Sales Between the Date Hereof and the
Closing Date.
(i) Subject to the terms and conditions set forth herein,
from time to time prior to the Closing Date (as hereinafter defined),
or the earlier termination of this Agreement, on a date (a "Drawdown
Date") designated by Aurora to WCAS VII upon not less than five days'
prior written notice (a "Bridge Notice"), Aurora shall execute and
deliver to WCAS VII additional Bridge Notes, dated such Drawdown Date
and registered in the name of WCAS VII, in a principal amount that,
taken together with any such additional Bridge Notes theretofore so
executed and delivered pursuant to this paragraph (b), does not exceed
$2,000,000 (or such higher limit, if any, as WCAS VII shall, in its
sole discretion, agree). Any Bridge Notice delivered hereunder shall
be executed by the principal financial officer of Aurora and shall
specify that the proceeds of such purchase and sale are to be relent
to Cerplex for working capital purposes.
(ii) As payment in full for the additional Bridge Notes being
purchased by it hereunder on any Drawdown Date, and against delivery
of such Notes as aforesaid, WCAS VII shall deliver to Aurora on each
Drawdown Date a certified or official bank check in New York Clearing
House funds payable to the order of Aurora in the amount of the
principal amount of additional Bridge Notes so being purchased by it,
or
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shall transfer such sum to the account of Aurora by wire transfer.
SECTION 1.02 Purchase and Sale of the Units.
(a) Subject to the terms and conditions set forth herein, on
the Closing Date, Aurora shall execute and deliver to each Purchaser the number
of Units (consisting of Aurora Senior Subordinated Notes and certificates
representing shares of Aurora Preferred Stock registered in the name of such
Purchaser) set forth opposite such Purchaser's name in Annex I hereto.
(b) Anything in paragraph (a) above to the contrary
notwithstanding, in the event that (A) the Rights Offering shall have become
effective as herein contemplated and (B) holders of Aurora Common Stock (or
transferees of stock purchase rights granted to such holders pursuant to the
Rights Offering) shall have elected to purchase Units pursuant thereto and
shall have complied with the requirements for payment therefor, the number of
Units to be purchased by each Purchaser shall be reduced pro tanto (subject to
rounding to the nearest one-tenth of a Unit), so that the aggregate number of
Units purchased by all the Purchasers shall be 15,000 minus the number of Units
so purchased by such holders.
(c) As payment in full for the Units being purchased by it on
the Closing Date, and against delivery thereof as aforesaid, each Purchaser
other than WCAS VII shall on the Closing Date:
(i) surrender to Aurora for cancellation a Demand Note, in the
principal amount set forth opposite the name of such Purchaser in
Annex I hereto, together with interest accrued thereon to the Closing
Date; and
(ii) deliver to Aurora a certified or official bank check in New York
Clearing House funds payable to the order of Aurora in an amount equal
to $2,200 times the number of Units to be purchased by such Purchaser
hereunder, as may be reduced pursuant to Section 1.02(b) above, less
the amount of principal and interest surrendered under clause (i)
above).
(d) As payment in full for the Units being purchased by WCAS
VII on the Closing Date, and against delivery thereof as aforesaid, WCAS VII
shall on the Closing Date:
(i) surrender to Aurora for cancellation a Demand Note, in the
principal amount set forth opposite the name of WCAS VII in Annex I
hereto, together with interest accrued thereon to the Closing Date;
and
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(ii) surrender to Aurora for cancellation each Bridge Note issued
hereunder to WCAS VII, together with interest accrued thereon to the
Closing Date; and
(iii) deliver to Aurora the Cerplex Subordinated Notes and the Cerplex
Warrants, duly endorsed for transfer, it being understood that such
securities will be valued for such purpose at the Cerplex Note and
Warrant Purchase Price; and
(iv) deliver to Aurora a certified or official bank check in New York
Clearing House funds payable to the order of Aurora in an amount equal
to $2,200 times the number of Units to be purchased by WCAS VII
hereunder, as may be reduced pursuant to Section 2.01(b) above, less
(A) the amount of principal and interest surrendered under clauses (i)
and (ii) above and (B) the Cerplex Note and Warrant Purchase Price.
SECTION 1.03 Purchase and Sale of the Aurora Preferred Stock
to WCAS ▇▇ ▇▇.
(a) Subject to the terms and conditions set forth herein, on
the Closing Date Aurora shall issue and sell to WCAS ▇▇ ▇▇, and WCAS ▇▇ ▇▇
shall purchase from Aurora, 33,000 shares of Aurora Preferred Stock (such
shares, together with the shares included in the Units being purchased by the
Purchasers pursuant to Section 1.02 above, being herein referred to
collectively as the "Aurora Preferred Shares") in consideration for the
surrender by WCAS ▇▇ ▇▇ of $10,000,000 principal amount of ▇▇ ▇▇ Notes
(together with accrued interest thereon). Aurora shall issue and deliver to
WCAS ▇▇ ▇▇ a stock certificate or certificates in definitive form, registered
in the name of WCAS ▇▇ ▇▇, evidencing the Aurora Preferred Shares being
purchased by it hereunder.
(b) As payment in full for the Aurora Preferred Shares
being purchased by it hereunder, and against delivery of the stock certificate
or certificates therefor as aforesaid, WCAS ▇▇ ▇▇ shall surrender to Aurora the
▇▇ ▇▇ Notes, duly endorsed for transfer, with all signatures guaranteed.
SECTION 1.04 Closing Date. The closing of the transactions
contemplated hereby shall take place at the offices of Reboul, MacMurray,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at
10 a.m., New York time, on the Effective Date of the Merger, or at such other
date and time prior to the Merger as may be mutually agreed upon among the
majority of the Participants and Aurora (such date and time of closing being
herein called the "Closing Date").
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF AURORA
Aurora represents and warrants to, and agrees with, the
Participants as follows:
SECTION 2.01 Organization and Qualification. Aurora 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. Aurora 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 on the properties, assets, financial condition,
prospects, operating results or business of Aurora 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 Aurora 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 Aurora 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 Aurora 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 Aurora's subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth on Schedule 2.02, are owned by Aurora or by a wholly-owned subsidiary of
Aurora, 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) For purposes of this Agreement, the term
"subsidiary", when used with respect to Aurora, shall mean any corporation or
other business entity, a majority of whose outstanding equity securities is at
the time owned, directly or indirectly, by Aurora and/or one or more other
subsidiaries of Aurora.
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SECTION 2.03 Capitalization.
(a) The authorized capital stock of Aurora 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 Aurora of which 400,000 shares have been
designated Convertible Preferred Stock, 25,000 shares have been designated
Series B Convertible Preferred Stock, 25,000 shares have been designated Series
C Convertible Preferred Stock and 20,000 shares have been designated Series D
Convertible Preferred Stock. As of the date hereof, 6,847,583 shares of Common
Stock, 400,000 shares of Convertible Preferred Stock, 25,000 shares of Series B
Convertible Preferred Stock, 25,000 shares of Series C Convertible Preferred
Stock and 20,000 shares of Series D 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 in the form attached hereto
as Exhibit B and a Certificate of Amendment in the form attached hereto as
Exhibit C, 213,000 shares of Preferred Stock shall be designated as authorized
Senior Convertible Preferred Stock, and the authorized Aurora Common Stock
shall be 300 million shares.
(c) Except as set forth in Aurora's SEC Filings or on
Schedule 2.03 hereto, 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 Aurora or
any of its subsidiaries is authorized or outstanding and (except as otherwise
expressly contemplated by this Agreement) there is not any commitment of Aurora
or any of its subsidiaries to issue any shares, warrants, options or other such
rights or to 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 Aurora.
(d) Except as set forth on Schedule 2.03, neither Aurora 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 Aurora of this Agreement, (ii) the
performance by Aurora of its obligations hereunder, (iii) the issuance, sale
and delivery by Aurora of the Aurora Preferred Shares and the Aurora Senior
Subordinated Notes,
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and (iv) the issuance and delivery of the shares of Aurora Common Stock
issuable upon the conversion of the Aurora 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
Aurora, or, subject to the receipt of required consents from the lenders under
the Existing Aurora Credit Agreement, any provision of any indenture, agreement
or other instrument to which Aurora 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 Aurora or any of its
subsidiaries.
(b) The Aurora Preferred Shares have been duly authorized by
Aurora and, when sold and paid for in accordance with this Agreement, will be
validly issued, fully paid and nonassessable shares of Aurora Preferred Stock.
The Conversion Shares, when issued and delivered upon the conversion of the
Aurora Preferred Shares, will be duly authorized, validly issued, fully paid
and nonassessable shares of Aurora Common Stock. Neither the issuance, sale
and delivery of the Aurora Preferred Shares to the Participants hereunder, nor
the issuance and delivery of the Conversion Shares, is subject to any
preemptive rights of stockholders of Aurora 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 Aurora and constitutes the legal, valid and binding obligation
of Aurora, enforceable against Aurora in accordance with its terms.
SECTION 2.06 SEC Filings. Aurora has filed all forms,
reports and documents required to be filed with the SEC since September 30,
1992, and Aurora has made available to the Participants, as filed with the SEC,
complete and accurate copies of (i) the Annual Report of Aurora on Form 10-K
for the year ended September 30, 1997, and (ii) all other reports, statements
and registration statements (including Current Reports on Form 8-K) filed by
Aurora with the SEC since September 30, 1992, in each case including all
amendments and supplements (collectively, "Aurora's SEC Filings"). Aurora's
SEC Filings (including, without limitation, any financial statements 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
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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 2.07 Actions Pending. Except (i) for any actions,
suits, investigations or proceedings which individually do not involve claims
against Aurora or any of its subsidiaries for more than $25,000, or (ii) as set
forth in Aurora's SEC Filings, there is no action, suit, investigation or
proceeding pending or, to the best knowledge of Aurora, threatened against or
affecting Aurora, or any of its properties or rights, before any court or by or
before any governmental body or arbitration board or tribunal. There is no
judgment, decree, injunction or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against Aurora.
SECTION 2.08 Compliance with Law. Neither Aurora 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 Aurora
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.
SECTION 2.09 Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Aurora directly with the Participants, without the intervention of any other
person on behalf of Aurora in such manner as to give rise to any valid claim by
any other person against the Participants for a finder's fee, brokerage
commission or similar payment.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANTS
Each Participant represents and warrants to, and agrees with,
Aurora as follows:
SECTION 3.01 Authorization. The execution, delivery and
performance by such Participant of this Agreement and the purchase and receipt
by such Participant of the Aurora Preferred Shares and the Aurora Senior
Subordinated Notes, as the case may be, being acquired by it hereunder, have
been duly authorized by all requisite action on the part of such Participant,
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
Participant, or any provision of any indenture, agreement or other instrument
by which such Participant or any of such Participant's properties or assets are
bound, or conflict with,
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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 Participant.
SECTION 3.02 Validity. This Agreement has been duly executed
and delivered by such Participant and constitutes the legal, valid and binding
obligation of such Participant, enforceable against such Participant in
accordance with its terms.
SECTION 3.03 Investment Representations.
(a) Such Participant is acquiring the Bridge Notes or the
Units, as the case may be, being purchased by such Participant hereunder for
such Participant's own account, for investment, and not with a view toward the
resale or distribution thereof.
(b) Such Participant understands that he, she or it, as
the case may be, must bear the economic risk of such Participant's investment
for an indefinite period of time.
(c) Such Participant is able to fend for itself in the
transactions contemplated by this Agreement and such Participant has the
ability to bear the economic risks of the investment in the Bridge Notes or the
Units, as the case may be, being purchased hereunder for an indefinite period
of time. Such Participant further acknowledges that he, she or it, as the case
may be, has received copies of Aurora SEC Filings and has had the opportunity
to ask questions of, and receive answers from, officers of Aurora with respect
to the business and financial condition of Aurora and the terms and conditions
of the offering of the Bridge Notes or the Units, as the case may be, and to
obtain additional information necessary to verify such information or can
acquire it without unreasonable effort or expense.
(d) Such Participant has such knowledge and experience in
financial and business matters that such Participant is capable of evaluating
the merits and risks of its investment in the Bridge Notes or the Units, as the
case may be. Such Participant further represents that such Participant that is
a limited partnership has not been formed solely for the purpose of purchasing
the Bridge Notes or the Units, as the case may be.
(e) If such Participant is a limited partnership, such
Participant represents that it has been organized and is existing as a limited
partnership under the laws of the State of Delaware.
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ARTICLE IV.
CONDITIONS PRECEDENT
SECTION 4.01 Conditions Precedent to the Obligations of the
Participants. The obligations of the Participants hereunder are, at their
option, subject to the satisfaction, on or before the Closing Date, and, in the
case of paragraphs (d) and (e) below, the obligations of WCAS VII on each
Drawdown Date, of the following conditions:
(a) Consummation of Merger. The Merger shall have become
effective under the General Corporation Law of the State of Delaware.
(b) Certificate of Designations. The Certificate of
Amendment and the Certificate of Designations shall have become legally
effective with the Secretary of State of the State of Delaware.
(c) New Senior Loan. Aurora shall have obtained at least
$17,000,000 of proceeds from the New Senior Loan on terms reasonably acceptable
to WCAS VII, as determined in good faith by WCAS VII.
(d) Opinion of Counsel. The Participants shall have
received from ▇▇▇▇▇▇ & ▇▇▇▇ L.L.P., counsel for Aurora, an opinion dated the
Closing Date, in the form annexed hereto as Exhibit E.
(e) No Order. No governmental entity (including a federal
or state court) of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which materially restricts, prevents or prohibits
consummation of any transaction contemplated by this Agreement; provided,
however, that the parties shall use their reasonable best efforts to cause any
such decree, judgment, injunction or other order to be vacated or lifted.
SECTION 4.02 Condition Precedent to the Obligations of
Aurora. The obligations of Aurora hereunder on the Closing Date are subject to
the due filing with the Secretary of State of the State of Delaware and the
legal effectiveness of the Certificate of Incorporation and the Certificate of
Designations on or prior to the Closing Date.
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ARTICLE V.
TERMINATION AND ABANDONMENT
SECTION 5.01 Termination and Abandonment. This Agreement may
be terminated and the transactions contemplated hereby may be abandoned by a
majority in interest of the Participants (i) if the Effective Time of the
Merger shall not have occurred on or prior to June 30, 1998 and (ii) if the
Merger Agreement has terminated.
SECTION 5.02 Effect of Termination. In the event of
termination of this Agreement pursuant to this Article V, this Agreement shall
forthwith become void, without liability on the part of any party hereto,
except that nothing herein shall relieve any party from liability for any
breach of this Agreement.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.01 Expenses, Etc. Aurora shall reimburse the
Participants or pay on their behalf any reasonable fees and expenses incurred
by them or any of them 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 the Participants" shall include,
without limitation, the fees, disbursements and expenses of counsel,
accountants, financial advisors and other experts retained by the Participants
in connection with this Agreement and the transactions contemplated hereby.
SECTION 6.02 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 Aurora 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 Aurora hereunder shall be
deemed to constitute representations and warranties made by Aurora.
SECTION 6.03 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.
SECTION 6.04 Notices. Any notice or other communications
required or permitted hereunder shall be deemed to be
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sufficient if contained in a written instrument delivered in person or duly
sent by first class certified mail, postage prepaid, 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 Aurora, to:
Aurora Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
if to any Participant, to:
Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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.
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SECTION 6.05 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 be amended or modified nor any provisions
waived except in a writing signed by Aurora and the Participants. This
Agreement shall not be assigned by operation of law of otherwise without the
consent of the other parties hereto.
SECTION 6.06 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 6.07 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, Aurora and the Participants have executed
this Agreement as of the day and year first above written.
AURORA ELECTRONICS, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P.
By WCAS VII Partners, L.P.,
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
General Partner
WCAS CAPITAL PARTNERS II, L.P.
By WCAS ▇▇ ▇▇ Partners,
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
General Partner
WCAS INFORMATION PARTNERS, L.P.
By WCAS Info Partners,
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Attorney-in-fact
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Individually and
as Attorney-in-Fact
20
Annex I
-------
===============================================================================================================================
MAXIMUM
PRINCIPAL AMOUNT OF MAXIMUM NUMBER OF AGGREGATE
MAXIMUM AURORA SENIOR SHARES OF AURORA PURCHASE PRICE PRINCIPAL AMOUNT
NAME OF PURCHASER NUMBER OF UNITS SUBORDINATED NOTES PREFERRED STOCK OF UNITS OF DEMAND NOTE
-------------------------------------------------------------------------------------------------------------------------------
Welsh, Carson, ▇▇▇▇▇▇▇▇ & 14,253.2 $14,253,200 171,040 $31,357,200 $2,660,600
▇▇▇▇▇ VII, L.P.
-------------------------------------------------------------------------------------------------------------------------------
WCAS Information Partners, 194.5 194,500 2,334 427,900 36,300
L.P.
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 77.7 77,700 932 170,900 14,500
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 116.8 116,800 1,401 256,900 21,800
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 116.8 116,800 1,401 256,900 21,800
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 58.4 58,400 701 128,500 10,900
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ 39.1 39,100 469 86,000 7,300
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 68.0 68,000 816 149,600 12,700
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 3.7 3,700 45 8,200 700
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 19.3 19,300 231 42,400 3,600
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 31.1 31,100 373 68,400 5,800
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇ 15.5 15,500 186 34,100 2,900
-------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 5.9 5,900 71 13,000
-------------------------------------------------------------------------------------------------------------------------------
TOTAL 15,000.0 $15,000,000 180,000 $33,000,000 $2,800,000
===============================================================================================================================