Securities Purchase Agreement - PRIMEDIA Inc. and KKR 1996 Fund LP
SECURITIES PURCHASE AGREEMENT [Common]
SECURITIES PURCHASE AGREEMENT dated as of August 24, 2001 between
PRIMEDIA Inc., a Delaware corporation ("PRIMEDIA") and KKR 1996 Fund
L.P., a Delaware limited partnership (the "PURCHASER").
I. STOCK SALE TO THE PURCHASER
1.1 PURCHASE OF COMMON STOCK AND SERIES K CONVERTIBLE PREFERRED STOCK.
Subject to all of the terms and conditions of this Agreement, the
Purchaser hereby agrees to purchase from PRIMEDIA, and PRIMEDIA agrees to sell
to the Purchaser, 10,800,000 shares of PRIMEDIA common stock, par value $.01 per
share (the "COMMON STOCK") for $4.70 per share, for an aggregate purchase price
of $50,760,000 (the "COMMON STOCK PURCHASE PRICE") and 15,795,744.70 shares of
Series K Convertible Preferred Stock (the "SERIES K PREFERRED STOCK," and
together with the Common Stock, the "PURCHASER SHARES"), convertible into
15,795,744.70 shares of Common Stock at an exercise price of $4.70 per share for
an aggregate purchase price of $74,240,000 (the "SERIES K PURCHASE PRICE" and
together with the Common Stock Purchase Price, the "PURCHASE PRICE"). The
closing of the purchases (the "CLOSING") will take place at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on
August 24, 2001. At the Closing, the Purchaser will pay to PRIMEDIA the Purchase
Price, in immediately available funds, against its receipt of duly executed
stock certificates, representing the Purchaser Shares, registered in the name of
the Purchaser on the books of PRIMEDIA.
1.2 MANAGEMENT RIGHTS. After the Closing and for so long as the
Purchaser owns any equity or debt securities of PRIMEDIA, the Purchaser shall
have the right to elect at least one member of the Board of Directors to
PRIMEDIA. The Purchaser shall also have at all times after the closing the right
to (i) inspect and copy books and records of PRIMEDIA; (ii) visit and inspect
the PRIMEDIA properties; (iii) receive financial statements, operating reports
and budgets of PRIMEDIA; (iv) receive materials sent to the PRIMEDIA Board of
Directors; and (v) consult with and provide non-binding advice to PRIMEDIA
management on significant corporate actions.
II. PURCHASER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1 INVESTMENT INTENTION. The Purchaser represents and warrants that
it is purchasing the Purchaser Shares solely for its own account for the purpose
of investment and not with a view to or for sale in connection with any
distribution of any thereof. The Purchaser agrees that it will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any of the Securities, as defined below (or solicit any offers to buy, purchase,
or otherwise acquire or take a pledge of any of the Securities), except in
compliance with the Securities Act of 1933, as amended (the "ACT"), and the
rules and regulations thereunder.
2.2 LEGENDS. The certificate (or certificates) representing the
Purchaser Shares and the common stock into which the Series K Preferred Stock is
convertible (collectively, the "SECURITIES") shall bear the following legend
(until such time as subsequent transfers thereof are no longer restricted in
accordance with the Act):
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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR
ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND ARE
OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER."
2.3 FEDERAL SECURITIES LAWS MATTERS. The Purchaser represents that it
is familiar with Release No. 5226 issued by the Securities and Exchange
Commission (the "SEC") under the Act, it has consulted with its counsel with
regard thereto, and it is fully aware of the position of the SEC limiting the
resale to the public of any of the Securities.
2.4 COMPLIANCE WITH RULE 144. If any of the Securities are disposed of
in accordance with Rule 144 under the Act, the Purchaser shall deliver to
PRIMEDIA at or prior to the time of such disposition an executed copy of Form
144 (if required by Rule 144) and such other documentation as PRIMEDIA may
reasonably require in connection with such sale.
2.5 ABILITY TO BEAR RISK. The Purchaser represents and warrants that
(a) the financial situation of the Purchaser is such that it can afford to bear
the economic risk of holding the unregistered the Securities for an indefinite
period and (b) it can afford to suffer the complete loss of its investment in
the Securities.
2.6 ACCESS TO INFORMATION; EVALUATION OF RISKS. The Purchaser
represents and warrants that (a) it understands and has taken cognizance of all
the risk factors related to the purchase of the Securities, (b) it has received
and carefully reviewed information regarding the business of PRIMEDIA and has
been granted the opportunity to ask questions of, and receive answers from,
representatives of PRIMEDIA concerning the terms and conditions of the purchase
of the Securities and to obtain any additional information which it deems
necessary to verify the accuracy or completeness of the information furnished to
it and (c) its knowledge and experience in financial and business matters is
such that it is capable of evaluating the risks of the investment in the
Securities.
III. RULE 144
PRIMEDIA agrees that it will use its best efforts to file in a timely
manner all reports required to be filed by it pursuant to the Securities
Exchange Act of 1934, as amended, and, upon request of the Purchaser or a
transferee of the Securities, will furnish the Purchaser with such information
as may be necessary to enable the Purchaser to effect routine sales pursuant to
Rule 144 under the Act.
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IV. REGISTRATION RIGHTS
The Purchaser will have such rights to have the Common Stock and the
common stock into which the Series K Preferred Stock is converted into
registered under the Act as is provided initially under the Registration Rights
Agreement, dated as of August 24, 2001, among PRIMEDIA, the Purchaser and
certain other parties listed therein, and thereafter, as is provided in the
Second Amended and Restated Registration Rights Agreement, dated as of August
24, 2001, among PRIMEDIA, the Purchaser and other holders or purchasers of
shares of common stock of PRIMEDIA.
V. MISCELLANEOUS
5.1 NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified mail,
return receipt requested, postage prepaid, to the parties to this Agreement at
the following addresses or to such other address as either party to this
Agreement shall specify by notice to the other:
if to PRIMEDIA, to it at:
PRIMEDIA Inc.
745 Fifth Avenue
New York, NY 10151
Attention: Beverly Chell, Esq.
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Gary I. Horowitz, Esq.
if to the Purchaser, to it at:
KKR 1996 Fund L.P.
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
Attention: Perry Golkin
With a copy to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
Attention: Scott Bowie, Esq.
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All such notices and communications shall be deemed to have been received on the
date of delivery or on the third business day after the mailing thereof.
5.2 BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Except as provided in Article V, nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein.
5.3 WAIVER. Either party hereto may by written notice to the other (a)
extend the time for the performance of any of the obligations or other actions
of the other under this Agreement; (b) waive compliance with any of the
conditions or covenants of the other contained in this Agreement; and (c) waive
or modify performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained herein. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach and no failure by any party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
5.4 AMENDMENT. This Agreement may be amended, modified or supplemented
only by a written instrument executed by the Purchaser and PRIMEDIA.
5.5 ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by PRIMEDIA without the prior written consent of the Purchaser. The
Purchaser may assign its rights and delegate its responsibilities hereunder to
an affiliate and any such delegation shall relieve the Purchaser of its
obligations hereunder.
5.6 EXPENSES. PRIMEDIA agrees that, whether or not the transactions
contemplated by this Agreement are consummated, PRIMEDIA will pay or cause to be
paid all costs and expenses arising in connection with the preparation,
execution, administration and enforcement of, and the preservation of rights
under, this Agreement, including, without limitation:
(a) all taxes (other than taxes based on income), fees or other
charges which may be payable in connection with the sale or purchase of the
Purchaser Shares pursuant to this Agreement;
(b) all expenses incurred by the Purchaser in connection with the
maintenance of its books and records, preparation of tax returns and
delivery of tax information to its partners; and
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(c) all reasonable travel and other out-of-pocket expenses of the
general partner of the Purchaser incurred in connection with the
Purchaser's ownership of the Purchaser Shares.
In addition, after consummation of the transactions contemplated by this
Agreement and so long as the Purchaser owns any shares of common stock acquired
pursuant to this Agreement, PRIMEDIA will reimburse the Purchaser or the general
partner of the Purchaser for all costs incurred in transmitting information
regarding PRIMEDIA to the limited partners of the Purchaser or in distributing
dividends or other distributions received from PRIMEDIA to the limited partners
of the Purchaser.
5.7 INDEMNIFICATION. Whether or not the transactions contemplated
hereby are consummated, PRIMEDIA agrees to indemnify and hold harmless the
Purchaser, its limited and general partners and its affiliates (and the
partners, members, directors, officers, affiliates and controlling persons of
each of the foregoing) (each a "PURCHASER INDEMNITEE") from and against any
liabilities, obligations, losses, damages, deficiencies, obligations, fines and
assessments, penalties, actions, judgments, suits, claims, costs, injuries,
demands, proceedings, investigations, arbitrations (including shareholder
claims, actions, injuries, demands, suits, judgments, proceedings,
investigations or arbitrations) and disbursements, including, without
limitation, accountant's and attorney's fees and expenses incurred by a
Purchaser Indemnitee before or after the date of this Agreement and arising out
of, resulting from, or relating to (i) the operations of PRIMEDIA, (ii)
Purchaser's purchase and/or ownership of the Securities or (iii) any litigation
to which a Purchaser Indemnitee is made a party in its capacity as a shareholder
or owner (or a partner, member, director, officer, affiliate or controlling
person of a shareholder or owner) of securities of PRIMEDIA.
5.8 LIMITED LIABILITY OF PARTNERS, MEMBERS. Notwithstanding any other
provision of this Agreement, neither the general partner, the limited partners
or members nor any future general partner, limited partner or member of the
Purchaser shall have any personal liability for performance of any obligation of
the Purchaser under this Agreement in excess of the respective capital
contribution of such general partner, limited partners and members to the
Purchaser.
5.9 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of New York.
5.10 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
5.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, PRIMEDIA and the Purchaser have executed this
Agreement as of the day and year first above written.
PRIMEDIA, INC.
By: /s/ Beverly Chell
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Name: Beverly Chell
Title: Vice-Chairman and Secretary
KKR 1996 FUND L.P.
By: KKR Associates 1996 L.P.
Its General Partner
By: KKR 1996 GP LLC
By: /s/ Michael Tokarz
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A Member